Kaiser v. The Queen, 95 DTC 13, [1994] 2 CTC 2385 (TCC)

Rowe D.J.T.C.C.:—This appeal was heard under the General Procedure of this Court.

The appellant appeals from an assessment of income tax for his 1990 taxation year.

The basis of the assessment was that the appellant, subsequent to July 13, 1990 received, in his capacity as a beneficiary of his father's estate, the sum of $92,427, being an amount received on account of, or in satisfaction of, a superannuation or pension benefit, specifically a payment out of or under a United States Individual Retirement Account (IRA).

The issue to be decided is whether the amount received by the appellant from his father’s estate is an amount received out of or under a foreign retirement arrangement established under the laws of the United States, except to the extent that the amount would not, if the taxpayer were resident in the United States, be subject to income taxation in that country, pursuant to clause 56(1 )(a)(i)(C.1) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act").

An agreed statement of facts, filed as Exhibit A-1 reads as follows:

1. The appellant is a United States citizen who is resident in Canada.

2. The father of the appellant, Raymond J. Kaiser (the "father"), a U.S. citizen and a resident of the United States, accumulated funds in several U.S. Individual Retirement Accounts during his lifetime (the "IRAs"). The IRAs were a “foreign retirement arrangement" as defined in subsection 248(1) of the Income Tax Act and Regulation 6803 of the Income Tax Regulations, as applicable to the appellant’s 1990 taxation year.

3. The father died on June 23, 1990. The appellant was one of the beneficiaries of the father’s estate and in accordance with the terms of the father’s will was entitled to one- third of the assets of the father’s estate.

4. The appellant was also one of the beneficiaries designated by the father to the custodians of the IRAs to receive proceeds of the IRAs upon his death. As such, upon the death of the father, the appellant was entitled to receive the sum of $91,502.99 (Cdn.) as a payment out of or under the father’s IRAs ("the IRA proceeds").

5. In addition to the IRA proceeds, the appellant was entitled to receive amounts accumulated in respect of the IRAs as a payment out of or under the father's IRA's from the date of the father’s death until the date the monies were received by the appellant, being the sum of $925 ("the additional proceeds").

6. The appellant received payment of the IRA proceeds and the additional proceeds on and after August 17, 1990.

7. Clause 56(1)(a)(i)(C.1) of the Act was added by S.C. 1991, c. 49, subsection 32(1) (the "amending Act"). Subsection 32(12) of the amending Act provides that subsection 32(1) “is applicable with respect to payments received after July 13, 1990”.

8. As the IRA proceeds and the additional proceeds were taxable income to the appellant in the United States, the appellant was required by the United States Internal Revenue Code to report the IRA proceeds and the additional proceeds to the United States Internal Revenue Service and he did so by filing a 1990 United States individual income tax return.

9. The IRA proceeds and the additional proceeds would also have been taxable income to the appellant in the United States had. he been a resident of that country.

10. The appellant reported the amount of the IRA proceeds and the additional proceeds, being in the aggregate $92,427 (Cdn.), in his income in filing his Canadian income tax return for the 1990 taxation year and claimed and received a tax credit in the amount of $15,743.98 (Cdn.) for the U.S. taxes paid on the IRA proceeds and the additional proceeds. True copies of his 1990 Canadian income tax return and the notice of assessment shall be exhibits in these proceedings.

11. Upon being issued a notice of assessment, the appellant believed that this inclusion of the IRA proceeds and the additional proceeds in his Canadian return of income was in error and filed a notice of objection.

The appellant’s return of income for the 1990 taxation year was filed as Exhibit A-2 and the relevant notice of assessment was filed as Exhibit A-3.

Counsel for the appellant submitted the inclusion of the IRA proceeds and the additional proceeds as income in his 1990 taxreturn was in error and those funds are not to be included in income by virtue of the provisions of clause 56(1 )(a)(i)(C.1 ) of the Act because they do not represent a superannuation or pension benefit of the appellant. Counsel further submitted that the wording of the relevant provision does not encompass, as income, proceeds of a foreign retirement arrangement paid to a designated beneficiary upon death. Prior to the passage of clause C.1, the jurisprudence permitted a Canadian resident with an IRA in the United States to collapse it, remove the funds to Canada and not pay income tax thereon. In the submission of counsel, the new provision was aimed at that specific situation and was not intended, either in spirit or by the wording, to apply to a designated beneficiary of an IRA which had belonged to someone else. The Act does not apply so as to tax an inheritance in the hands of a beneficiary and there has been no inheritance tax in Canada since the repeal of the taxing legislation in 1971.

Counsel for the respondent submitted that the IRA was a foreign retirement arrangement as defined in subsection 248(1) of the Act as a “prescribed plan or arrangement" and by Regulation 6803 of the Income Tax Regulations (the "Regulations"), as applicable to the appellant's 1990 taxation year. Since it was an admitted fact that the IRA funds received by the appellant were derived from a foreign retirement arrangement, subsequent to July 13, 1990, the effective date of the legislation, the clear and unambiguous language of the Act and the Regulations are such that it is clear the amount of the IRA proceeds received by the appellant should be included in income and no extrinsic aids should be relied upon in attempting to discern the intention of Parliament.

The relevant provision is clause 56(1 )(a)(i)(C.1 ) of the Act, as follows:

56(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,

(a) any amount received by the taxpayer in the year as, on account or in lieu of payment of, or in satisfaction of,

(i) a superannuation or pension benefit including, without limiting the generality of the foregoing,

(C.1) the amount of any payment out of or under a foreign retirement arrangement established under the laws of a country, except to the extent that the amount would not, if the taxpayer were resident in the country, be subject to income taxation in the country,

The Honourable Judge Rip, Tax Court of Canada, decided Abrahamson v. M.N.R., [1991] 1 C.T.C. 2061, 91 D.T.C. 213 (T.C.C.), prior to the passage of clause C.1, and in that case, the issue was whether proceeds of an IRA, established by the taxpayer in 1975 under the United States Internal Revenue Code, using the proceeds of his U.S. employer's contributions to a pension plan from which he was withdrawing at the time, wasproperly included by the Minister of National Revenue in the taxpayer's income for 1986. In allowing the appeal, the Honourable Judge Rip considered the meaning of superannuation or pension benefit and at pages 2068-69 (D.T.C. 218) of his judgment stated:

I must decide if the respondent is correct. If the amount from the IRA is a "superannuation or pension benefit” it makes no difference whether the amounts withdrawn in 1986 were income or capital; they are included in the appellant's income: R. v. Herman, [1978] C.T.C. 442, 78 D.T.C. 6311 (F.C.T.D.) at page 446 (D.T.C. 6315). There is no definition of the term “superannuation or pension benefit" in the Act, but section 248 provides that:

. . ."superannuation or pension benefit” includes any amount received out of or under a superannuation or pension fund or plan and without restricting the generality of the foregoing includes any payment made to a beneficiary under the fund or plan or to an employer or former employer of the beneficiary thereunder,

(a) in accordance with the terms of the fund or plan,

(b) resulting from an amendment to or modification of the fund or plan, or

(c) resulting from the termination of the fund or plan. . . .

Counsel for the appellant brought to the Court's attention the following reported cases which refer to the words "superannuation or pension plan": Molleur v. M.N.R., [1965] C.T.C. 267, 65 D.T.C. 5166 (Ex. Ct.) at page 271 (D.T.C. 5169), West Hill Redevelopment Co. v. M.N.R., [1969] C.T.C. 581, 69 D.T.C. 5385 (Ex. Ct.) at page 597 (D.T.C. 5393), Herman, supra, Specht v. The Queen, [1975] C.T.C. 126, 75 D.T.C. 5069 (F.C.T.D.), Burke v. The Queen, [1976] C.T.C. 209, 76 D.T.C. 6075 (F.C.T.D.), Jackson v. M.N.R., [1951] C.T.C. 9, 5 D.T.C. 447 (Ex. Ct.) at page 14 (D.T.C. 449) and M.N.R. v. Eastern Abbattoirs Ltd., [1963] C.T.C. 19, 63 D.T.C. 1023 (Ex. Ct.) at page 22 (D.T.C. 1025).

The reasons for judgment in most of these decisions refer to dictionary definitions of the words “superannuation” and "pension". These words are defined in the following dictionaries:

The Shorter Oxford English Dictionary superannuation . . the act of superannuating an official; also, the allowance or pension granted to one who is discharged on account of age. . . .

pension . . . an annuity or other periodical payment made, esp. by a government, a company, or an employer of labour, in consideration of past services . . ..

Random House Dictionary of the English Language superannuation . a pension or allowance to a superannuated person.

pension. . . a fixed amount, other than wages, paid at regular intervals to a person or the person's surviving dependants in consideration of past services, age, merit, poverty, injury, loss sustained, etc. . . . a retirement pension.

In the French language the words "superannuation or pension benefit" in subparagraph 56(1)(a)(i) are "d'une prestation de retraite ou d'autres pensions”.

Le Grand Robert de la Langue Française defines these words as follows:

prestation 1. Action de fournir; résultat de cette action . . . .

retraite . . . situation d'une personne qui cesse d’exercer une fonction, un emploi, d'accomplir un travail régulier rémunéré et qui a droit à une somme d'argent régulièrement versée (Pension). Vielli.

pension . . . Allocation périodique qui est payée à une personne pour assurer son existence, pour la récompenser de services rendus, pour l’indemniser . . ..

The same dictionary defines "pension de retraite" as "Le passage de l’activité . . . à la retraite. . . .

Hence, the words “superannuation or pension benefit” in subparagraph 56(1)(a)(i) contemplate a payment of a fixed or determinable allowance paid at regular intervals to a person usually, but not always, as a result of the termination of employment for the purpose of providing that person with a minimum means of existence; the formal program for the payment of the specified benefits, or the way the benefits are to be carried out, must be organized or promoted by a person other than the beneficiary since the beneficiary’s right to receive the superannuation or pension benefits is determined by the superannuation or pension plan contemplated by subparagraph 56(1 )(a)(i). In other words, the regularity and amount of the payments are made according to the terms of a plan and not at the discretion or direction of the beneficiary.

The Federal Court of Appeal in Vaillancourt v. The Queen, [1991] 2 C.T.C. 42, 91 D.T.C. 5408 (F.C.A.) dealt with the issue whether the word "property", as defined in subsection 248(1) of the Act, was broad enough to encompass a fractional interest in property. In the course of his reasons, allowing the appeal of the taxpayer, Decary J.A., writing for the Court, stated at pages 47-8 (D.T.C. 5411-12):

Rules for interpreting tax legislation

When the Court has to interpret the provisions of tax legislation allowing a reduction of the tax burden, the traditional rule was that the taxpayer’s argument clearly fellwithin the exemption provision and any doubt was resolved in favour of the Government. This strict rule of interpretation was qualified by the Supreme Court of Canada in Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536, [1984] C.T.C. 294, 84 D.T.C. 6305 as follows at pages 314-16 (D.T.C. 6322-23):

I would therefore reject the proposition that a transaction may be disregarded for tax purposes solely on the basis that it was entered into by a taxpayer without an independent or bona fide business purpose. A strict business purpose test in certain circumstances would run counter to the apparent legislative intent which, in the modern taxing statutes, may have a dual aspect. Income tax legislation, such as the federal Act in our country, is no longer a simple device to raise revenue to meet the cost of governing the community. Income taxation is also employed by government to attain selected economic policy objectives. Thus, the statute is a mix of fiscal and economic policy. The economic policy element of the Act sometimes takes the form of an inducement to the taxpayer to undertake or redirect a specific activity. Without the inducement offered by the statute, the activity may not be undertaken by the taxpayer for whom the induced action would otherwise have no bona fide business purpose. Thus, by imposing a positive requirement that there be such a bona fide business purpose, a taxpayer might be barred from undertaking the very activity Parliament wishes to encourage. At minimum, a business purpose requirement might inhibit the taxpayer from undertaking the specified activity which Parliament has invited in order to attain economic and perhaps social policy goals. Examples of such incentives I have already enumerated.

Indeed, where Parliament is successful and a taxpayer is induced to act in a certain manner by virtue of incentives prescribed in the legislation, it is at least arguable that the taxpayer was attracted to these incentives for the valid business purpose of reducing his cash outlay for taxes to conserve his resources for other business activities. It seems more appropriate to turn to an interpretation test which would provide a means of applying the Act so as to affect only the conduct of a taxpayer which has the designed effect of defeating the express intention of Parliament. In short, the tax statute, by this interpretative technique, is extended to reach conduct of the taxpayer which clearly falls within "the object and spirit” of the taxing provisions. Such an approach would promote rather than interfere with the administration of the Income Tax Act, supra, in both its aspects without interference with the granting and withdrawal, according to the economic climate, of tax incentives. The desired objective is a simple rule which will provide uniformity of application of the Act across the community, and at the same time, reduce the attraction of elaborate and intricate tax avoidance plans, and reduce the rewards to those best able to afford the services of the tax technicians.

Professor Willis, in his article, supra, accurately forecast the demise of the strict interpretation rule for the construction oftaxing statutes. Gradually, the role of the tax statute in the community changed, as we have seen, and the application of strict construction to it receded. Courts today apply to this statute the plain meaning rule, but in a substantive sense so that if a taxpayer is within the spirit of the charge, he may be held liable

While not directing his observations exclusively to taxing statutes, the learned author of Construction of Statutes (2nd ed. 1983), at page 87, E.A. Dreidger, [sic] put the modern rule succinctly:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

This is the new approach which MacGuigan J. described in Lor-Wes Contracting Ltd. v. The Queen, [1985] 2 C.T.C. 79, 85 D.T.C. 5310 (F.C.A.) at page 83 (D.T.C. 5313) as a “words-in-total-context approach with a view to determining the object and spirit of the taxing provisions".

Additionally, in determining the object of the legislation, this Court no longer hesitates to refer to the parliamentary debates when the latter rise above mere partisanship, and in particular in tax matters to refer to the budget speech made by the Minister of Finance.

Counsel for the appellant filed, at Tab 11 of her Book of Authorities, the Commons Debates of October 7, 1991, on the topic of Bill C-18, regarding certain proposed amendments to the Income Tax Act, of which C.1 of paragraph 56(1 )(a) was included. I am unable to find any specific reference to the particular provision

1 See Lor-Wes Contracting Ltd., supra, at page 79 (D.T.C. 5313); Edmonton Liquid Gas Ltd. v. The Queen, [1984] C.T.C. 536 at 546-47, 38 D.T.C. 6526 at 6534; Canada (Attorney General) v. Young, [1989] 3 F.C. 647 at 657,27 C.C.E.L. 161 (C.A.); P.-A. Côté, The Interpretation of Legislation in Canada, 1st ed., Montréal, Yvon Blais, at pages 347-50.

and it may well be embraced by the comment of The Honourable John McDermid (for the Minister of Finance) where at page 3367 of Hansard he stated:

The final category of provisions included in Bill C-18 consists of a large number of what I call technical amendments. Many of these provide relief for taxpayers in unanticipated situations where the existing law would operate inappropriately. Other provisions ensure the internal consistency of fhe tax system or clarify ambiguous provisions. A few correct anomalies that unduly favour certain taxpayers and a few reflect minor policy changes. Almost all of the technical amendments formed part of draft legislation released by the government in July 1990 and again in a revised version in February of this year.

It is the position of counsel for the appellant that the reasoning of Judge Rip in Abrahamson, supra, is still valid because in order for clause C.1 to take effect, the prerequisite is that the definition of a "superannuation or pension benefit"must still be met. The appellant, then, having received the proceeds of the IRA did so purely as a designated beneficiary, does not meet the obvious criteria of the provisions, especially having regard to the heading which reads: Pension benefits, unemployment insurance benefits, etc.

On December 5, 1991 The Honourable John McDermid, during debate on the third reading of Bill C-18, spoke concerning certain provisions of the Bill but did not make any reference to the impact of C.1, nor did any of the honourable members opposite in response.

It is worthwhile to look again at the precise wording of clause 56(1)(a)(i)(C.1) and at its constituent components. It refers to a "superannuation or pension benefit including, without restricting the generality of the foregoing, the amount of any payment out of or under a foreign retirement arrangement" (emphasis added).

The Supreme Court of Canada in R. v. Multiform Manufacturing Co., [1990] 2 S.C.R. 624, 58 C.C.C. (3d) 257, dealt with a search warrant which had been issued pursuant to section 443 of the Criminal Code, R.S.C. 1985, c. C-46 in respect of offences under the Bankruptcy Act, the argument before the Court being that the Criminal Code search warrant provisions were unavailable since section 6 of the Bankruptcy Act, R.S.C. 1985, c. B-3, contained specific provisions respecting search and seizure. At pages 630-31 of his judgment Lamer C.J.C. stated:

What then is the effect of the amendment? In my view, the amendment to section 443 of the Code makes it applicable to all cases involving violations of federal statutes.

When the courts are called upon to interpret a statute, their task is to discover the intention of Parliament. When the words used in a statute are clear and unambiguous, no further step is needed to identify the intention of Parliament. There is no need for further construction when Parliament has clearly expressed its intention in the words it has used in the statute. As Maxwell stated in The Interpretation of Statutes (12th ed. 1969), at pages 28-9:

If there is nothing to modify, alter or qualify the language which the statute contains, it must be construed in the ordinary and natural meaning of the words and sentences. "The safer and more correct course of dealing with a question of construction is to take the words themselves and arrive if possible at their meaning without, in the first instance, reference to cases.”

The rule of construction is "to intend the Legislature to have meant what they have actually expressed." The object of all interpretation is to discover the intention of Parliament, “but the intention of Parliament must be deduced from the language used,” for “it is well accepted that the beliefs and assumptions of those who frame Acts of Parliament cannot make the law.”

Where the language is plain and admits of but one meaning, the task of interpretation can hardly be said to arise.

Or, as Professor P.A. Côté succinctly puts it in The Interpretation of Legislation in Canada (1984), at page 2:

It is said that when an Act is clear there is no need to interpret it: a simple reading suffices.

To the same effect see Driedger, Construction of Statutes (2nd ed. 1983), at page 28.

Turning back to section 443 as it stood after its amendment, I am in complete agreement with Boilard J. when he says (at page 529 C.C.C.):

This amendment was not adopted for the sole purpose of codifying the common law rule which is distilled from the list of decisions set out above. Parliament clearly wanted to change the scope of section 443 and to extend it to all federal legislation.

In Avitan v. M.N.R., [1987] 1 C.T.C. 2434, 87 D.T.C. 336 (T.C.C.), the Honourable Judge Brulé, Tax Court of Canada, considered the relevant statutory provision which provided that moving expenses were deductible only to the extent they did not exceed the taxpayer's income for the year from his employment at the new work location. At pages 2435-36 (D.T.C. 338), Judge Brulé stated:

The reasons for which no income was received, no matter how unfortunate or unforeseeable, cannot change the nature of the expenses incurred or the rules governing their deductibility.

I would cite the words of Chief Justice Fauteux of the Supreme Court of Canada in the case of Ville de Montréal v. ILGWU Center Inc. et al., [1974] S.C.R. 59 at page 66:

The legislator is presumed to mean what he says; and there is no need to resort to interpretation when the wording is clear, as it is in this case.

In expressing that principle the Court was reiterating a well-established rule of construction. In 1844 Lord Chief Justice Tindal stated in the Sussex Peerage Case, (1844), 8 E.R. 1034, 11 Cl. & F. 85 at page 144 (U.K. H.L.):

. . .the only rule for the construction of Acts of Parliament is, that they should be construed according to the intent of the Parliament which passed the Act. If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense.

The Court cannot be guided by considerations of equity in the application of a clearly worded unambiguous tax statute. To use the words of Estey, J. of the Supreme Court of Canada in the case of R. v. Malloney's Studio Ltd., [1979] 2 S.C.R. 326, [1979] C.T.C. 206, 79 D.T.C. 5124 at at page 212 (D.T.C. 5129):

Indeed, “fairness and realism" have never been the governing criteria for the interpretation of taxing statutes, Lord Cairns in Partington v. Attorney General (1869), L.R. 4 H.L. 100 at page 122 (U.K.) put it this way:

I am not at all sure that, in a case of this kind—a fiscal case—form is not amply sufficient; because, as I understand the principle of all fiscal legislation, it is this: if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute, what is called equitable construction, certainly such a construction is not admissible in a taxing statute where you simply adhere to the words of the statute.

We find a more recent application of this principle in the case of R. v. Taylor Estate, [1984] C.T.C. 244, 84 D.T.C. 6234 (F.C.T.D.) where Cattanach J. stated at page 252 (D.T.C. 6240):

I cannot refrain from expressing concurrence in the submission made by counsel for the defendant that there is an apparent inequity when he paid interim alimony to Janet Anderson which he was obligated to do by a valid court order to which failure to comply would render him liable to contempt and yet he is precluded from claiming that amount so paid as a deduction for income tax purposes.

The complete answer is in the stock expression that there is no equity in a taxing statute. A taxing statute shall receive the same interpretation as any other statute.

The principle expressed in Partington v. A.-G. (1869), L.R. 4 H.L. 100,(U.K.), is that if the person sought to be taxed comes within the letter of the law then he must be taxed no matter how great the hardship or the inequity may appear to be to the judicial mind. There must be adherence to the word of the statute.

I would conclude by quoting the following remark from the Tax Review Board case of Mitchell v. M.N.R., [1979] C.T.C. 2011, 79 D.T.C. 38 at 2013 (D.T.C. 40) (T.R.B.):

The Board understands that, according to equity, it would be reasonable that the appellant deduct the amount claimed. Unfortunately, the Income Tax Act is not a law of equity.

For these reasons, this appeal must fail.

In Hodson v. M.N.R., [1985] 2 C.T.C. 2326, 85 D.T.C. 615 (T.C.C.), the Honourable Judge Couture, Chief Judge, Tax Court of Canada, was invited by counsel for the taxpayer to recognize a deduction as claimed notwithstanding the provisions of paragraph60(b) of the Act. At page 2328 (D.T.C. 616), Chief Judge Couture stated:

As additional support for his submission that he is entitled to the deductions as claimed notwithstanding the provisions of paragraph 60(b), the Appellant contended that the legislator cannot in a statutory provision envisage at the time of its enactment all the legal and factual situations that may arise in the future and consequently it was the role of the judiciary to supplement to this deficiency in interpreting provisions of statutes by considering the relevant circumstances of each case and rendering judgments based on equity rather than on a strict interpretation of the words used by Parliament in the legislation.

In my opinion, the appellant is wrong on both counts, that is, his interpretation of the phrase "any variation thereof" in section 60.1 and also in his supplementary argument as to the role of the judiciary.

Role of judiciary

I will deal first with the appellant’s submission regarding the role of the judiciary in interpreting provisions of statutes as this portion of his submission does not present serious difficulty.

The jurisprudence on this issue is abundantly clear and a brief reference to some of the pronouncements enunciated by the Courts over the years should suffice to dispose of the appellant’s argument.

In A.G. v. Carlton Bank, [1899] 2 Q.B. 158, Lord Russel of Killowen, C.J. said at page 164:

The duty of the Court is, in my opinion, in all cases the same, whether the Act to be construed relates to taxation or to any other subject, namely to give effect to the intention of the Legislature as that intention is to be gathered from the language employed having regard to the context in connection with which it is employed. The Court must no doubt ascertain the subject matter to which the particular tax is by the statute intended to be applied, but when once that is ascertained, it is not open to the Court to narrow or whittle down the operation of the Act by seeming considerations of hardship or of business convenience or the like. courts have to give effect to what the Legislature has said.

In Lumsden v. C.I.R., [1914] A.C. 877, Lord Parmoor said at page 924:

In coming to a conclusion on this point the ordinary principles of construction must be followed. A statute is the expression of the will of the Legislature, and it is the duty of the courts to give effect to the language in which the will of the Legislature has been expressed. It is not the function of courts of law to entertain questions of policy, and I am unableto give any weight to arguments based on the consideration whether a particular interpretation is more favourable to the Crown or to the subject.

In Sutters v. Briggs, [1922] 1 A.C. 1, Viscount Birkenhead L.C. after dismissing the appeal made the following comments at page 8:

The consequences of this view will no doubt be extremely inconvenient to many persons. But it is not a matter proper to influence the House unless in a doubtful case affording foothold for balanced speculations as to the probable intention of the Legislature. Where, as here, the legal issues are not open to serious doubt our duty is to express a decision and leave the remedy (if one be resolved upon) to others.

It is evident that these well articulated pronouncements attest to the fallacy of the submission of the appellant regarding the role and duty of the courts, and additional quotes would merely confirm a doctrine so clearly expressed therein.

In Mah v. M.N.R., [1990] 2 C.T.C. 2119, 90 D.T.C. 1582 (T.C.C.), the Honourable Judge Kempo, Tax Court of Canada,considered the matter of whether the various locations of taxpayers’ residences fell within the “prescribed areas" described in the statutory and regulatory language involved. At page 2121 (D.T.C. 1584) of her judgment, Judge Kempo stated:

The appellant argues that a single family residence located immediately outside the boundary of Smithers would qualify for the allowance in that having a population of one it thereby gathers the necessary 50 points on population alone to qualify. This, he says, makes the limitative requirements of the regulations somewhat ludicrous and certainly unequitable to those living inside Smithers on otherwise adjacent property.

I have a great deal of sympathy for this and the other analysis and arguments advanced by the appellant that major inequities arise out of the plain meaning of the subject regulations.

The difficulty that does present itself, however, is that the appellant is seeking to establish an ambiguity in the otherwise plain meaning of the word “area” simply because of the result. The principle of statutory interpretation that I am aware of is that the word or words themselves must firstly present an ambiguity before the Court may disregard the application and consequences of the plain meaning rule. Put another way, the inequitable result of legislation does not itself invite or allow a judicial finding that certain legislative terminology must therefore be ambiguous.

The interpretative consequences of the legislation (which may well have been intentional) is the drawing of arbitrary lines in which a taxpayer may be within or without. Unfairness of result in this case is one curable by Parliament and not by theCourts.

It may well be that Parliament did not intend to create the effect that will follow from the application of the subparagraph as amended. It would, to some extent, be seen as a departure from the intention not to tax an inheritance in the hands of a beneficiary but it may well have utilized the particular language so as to encompass the situation where a Canadian resident is the beneficiary of funds flowing out of a foreign retirement arrangement. However, such consideration, other than for purposes of illustration, is not the province of this Court. If an inequity is visited upon the appellant by reason of the IRA funds inherited by him being included in income by virtue of the plain reading of the relevant taxing provision, then that result cannot be overcome by interpreting the statute in a way not required to be done to overcome any purported latent ambiguity. The amount included in the income of the appellant was "the amount of any payment out of or under a foreign retirement arrangement". In turn, under Regulation 6803, a foreign retirement arrangement need only be a prescribed plan or arrangement to which subsection 408(a), (b) or (h) of the United States Internal Revenue Code of 1886, as amended from time to time, applies. To be taxable in this instance, the important qualification is that the funds represent an amount of any payment out of or under that foreign retirement arrangement, not that the amount is received by a particular person only under circumstances to which the statutory and common law definitions of “superannuation and pension benefit” apply. The use of the word "under" would not seem to be necessary if it were intended to be restricted to withdrawal only by the original contributor of the retirement arrangement. The use of the word "under" is capable of including an amount that flows to a recipient as a consequence of having been designated as a beneficiary upon the death of the IRA contributor.

Perhaps, the Member of Parliament for Renfrew-Nipissing-Pembroke, Mr. Len Hopkins put it best when, during the debate on Bill C-18 on December 5, 1991, he stated:

I can remember debates in this House when people used to go into tirades because there were so many things in one bill. We see here today that the very people who used to go into those tirades are presenting this 400-page bill to the House of Commons dealing with all those taxation items. It also deals with the Canada Pension Plan, unemployment insurance program and regional development programs. They are all in one bill.

I did that to show how complicated things can really get in this place. When people start talking about simplification, I wonder. I wonder how many hidden intricacies there are in this bill that have not been identified. We have seen legislation introduced in this House in the past in which after the legislation was put into practice it was found that it was quite different than some people thought it was going to be in the first instance. (Hansard, December 5, 1991, page 5841)

In the event the specific result applying here was not foreseen by Parliament, or the subsection, as amended, neverintended to serve as an advance scouting party for a renewed inheritance taxation scheme in this country, then Parliament can plainly undo what I find it has plainly done.

The assessment of the Minister is correct and the appeal is dismissed with costs to the respondent on a party-party basis.

Appeal dismissed.