Date:
20021121
Docket:
2000-4296-IT-I
BETWEEN:
ESTATE OF
FRANCES GELTMAN,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
____________________________________________________________________
Agent for
the Appellant: Harold Geltman
Counsel for
the Respondent: Susan Shaughnessy
____________________________________________________________________
Reasons
for Judgment
(Delivered
orally from the Bench at
Montréal, Québec, on September 3,
2002)
McArthur
J.
[1]
The issue raised by the Appellant is whether Canada Customs and
Revenue Agency has the right to apply subsection 70(5) of the
Income Tax Act in calculating the tax payable by his
mother's estate. Subsection 70(5) creates a fiction deeming a
disposition to occur immediately prior to death.
[2]
In applying this subsection to the Appellant, the Minister of
National Revenue deemed Frances Geltman to have disposed of her
registered retirement income fund prior to death and thereby
adding $65,567.39 to her income. The Appellant set out the issues
to be decided in his Answer to the Reply to the Notice of Appeal
as follows:
a)
Does the Department of Canada Customs and Revenue Agency have the
right to decide the status of the being of Frances Meltzer
Geltman to be one of: LIFE OR DEATH?
b)
Does the Department of Canada Customs and Revenue Agency have the
right to overrule: the following three documents from a STATE OF
DEATH TO A STATE OF LIFE?
a)
ATTESTATION DE DECES PAR LE MEDECIN D'URGENCES-SANTE January
5/99
b)
Declaration of Death January 5, 1999
c)
copy of an act of death March 18, 1999
c)
Does the Department of Canada Customs and Revenue Agency have the
right to overrule the URGENCES SANTE STATEMENT OF THE MEDICAL
CAUSE OF DEATH? February 9, 1999
d)
Does the Department of Canada Customs and Revenue Agency have the
right to decide in this statement:
"If
the payments do not continue to the spouse, we consider the
deceased to have received, immediately before death, and amount
equal to the fair market value of the plan at the time of
death".
"page 10 Canada Customs and Revenue Agency
"Preparing Returns for deceased persons ...
1999"
"Subject to further questioning: "inter
alia sections 3, 70 and subsection 146.3(6) of the Income
Tax Act R.C.S. 1985 c.1 (5th Supp.) as amended and applicable
for the taxation year in litigation."
Respondent reply to the notice of appeal #13 page
4.
The
Appellant claims that the Respondent has NO RIGHT to do what he
states:
"TO
EQUATE IMMEDIATELY BEFORE DEATH WITH AT THE TIME OF
DEATH"
If every
Government agency and department is given the same right, we
could have legal chaos.
If the
same rule of law is applied to genetic patents and present and
future genetic research in the public and private market areas,
it shall be CHAOS EXEMPTIONS, EXCEPTIONS, AND PROCEDURES FOR
MAKING DEATH EQUAL LIFE is not some kind of game to be played
with for tax points, profit AND OTHER KINDS OF EXPLOITIVE
GAINS.
[3]
Frances Geltman died in Montréal on January 5, 1999. An
income tax return for her was prepared by a chartered accounting
firm who calculated that $14,876.54 in tax was payable. Her son,
Harold Geltman, was the sole heir and liquidator of her estate
and he disagrees with the accountant's conclusion, although
he signed the income tax return. At the end of the hearing, I
gave oral judgment after acknowledging that Mr. Geltman's
position may have been equitable under the circumstances. I
cannot change the law as it is written in subsection 70(5). I
added that for the reasons given by counsel for the Respondent
and set out by Gibson J. of the Federal Court of Appeal in The
Queen v. Mastronardi, 77 DTC 5217, the appeal was
dismissed.
[4]
I will now expand on those reasons.
[5]
Subsection 70(5) of the Act reads in part as
follows:
70(5) Where in a
taxation year a taxpayer dies,
(a)
the taxpayer shall be deemed to have, immediately before the
taxpayer's death, disposed of each capital property of the
taxpayer and received proceeds of disposition therefor equal to
the fair market value of the property immediately before the
death;
In the
Appellant's instance, there was a deemed disposition of one
share of La Maison Oscar resulting in a capital gain of
$2,215.91 and the larger amount of $65,567.39 referred to as
pensions or superannuation. There was a slight adjustment to
these amounts.
[6]
Pursuant to subsection 146.3(6) of the Act, the amount
payable and received after the deregistration of the registered
retirement income fund was included in the Appellant's
income.
[7]
In RMM Canadian Enterprises Inc. v. The Queen, 97 DTC 302,
Judge Bowman commented as follows:
Even if
Parliament which, subject to constitutional limitations, is
supreme and has the power to deem cows to be chickens, cannot
turn a question of law into a question of fact.
No actual
disposition was made by Mrs. Geltman or her estate but by law,
the assets are deemed to have been disposed of.
[8]
In Mastronardi, the Federal Court dealt with subsection
70(5) and held that the plain meaning of a statute in the context
of a given set of facts should not be ignored to prevent an
apprehended injustice in the future on an entirely different set
of facts.
[9]
I find that the Minister of National Revenue correctly reassessed
the Estate of Frances Geltman for the 1999 taxation year in
accordance with the plain meaning of subsections 70(5) and
146.3(6) of the Act. The appeal is dismissed.
Signed at
Ottawa, Canada, this 21st day of November, 2002.
J.T.C.C.
COURT FILE
NO.:
2000-4296(IT)I
STYLE OF
CAUSE:
Estate of Frances Geltman and
Her Majesty the Queen
PLACE OF
HEARING:
Montréal, Québec
DATE OF
HEARING:
September 3, 2002
REASONS FOR
JUDGMENT BY: The Honourable Judge C.H.
McArthur
DATE OF
JUDGMENT:
September 10, 2002
APPEARANCES:
Agent for
the
Appellant:
Harold Geltman
Counsel
for the
Respondent:
Susan Shaughnessy
COUNSEL OF
RECORD:
For the
Appellant:
Name:
N/A
Firm:
N/A
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
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