Citation: 2009TCC306
Date: 20090605
Docket: 2008-3819(IT)I
BETWEEN:
GEORGE VISSER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Beaubier, D. J.
[1]
This appeal pursuant to
the Informal Procedure was heard at Edmonton Alberta on
June 4, 2009. The Appellant testified and called his accountant Anthony
Jullion, C.G.A. The Respondent called Cheryl Ritchie, the Canada Revenue
Agency’s litigation officer.
[2]
The particulars stated
by the Respondent in paragraphs 11-14 inclusive of the Reply are as follows:
11. In so reassessing the Appellant for the 2006 taxation year, and
in confirming the reassessment, the Minister assumed the following facts:
(a)
the Appellant was issued a T4RIF slip from CWT
in the amount of $1,803 for the 2006 taxation year;
(b)
the amount of $1,803 is pension income;
(c)
the Appellant was the annuitant of RRIF;
(d)
the Appellant turned 71 in the 2006 taxation
year and a minimum amount must be withdrawn from the RRIF;
B. ISSUES TO BE DECIDED
12. The issue to be decided is:
(a)
whether the Appellant is required to include the
pension income of $1,803 as stated on the T4RIF into his income for the 2006
taxation year.
C. STATUTORY PROVISIONS, GROUNDS RELIED ON AND RELIEF SOUGHT
13. He relies on section 146.3, paragraph 56(1)(t) and regulation 215
and 7308 of the Income Tax Act, R.S.C. 1985, c.1 (5th Supp)
(the “Act”), as amended, for the 2006 taxation year.
14. He submits that the Appellant:
(a)
received pension income of $1,803 per the T4RIF
from CWT;
(b)
is required to include the amount of $1,803 into
his income for the 2006 taxation year;
[3]
The assumptions in
paragraph 11 are correct except for subparagraph (b).
[4]
The Appellant testified
that his RRSP purchased shares in Barrhead Park Processing Inc. (“Barrhead”).
These shares were transferred “in kind” into his RRIF which was managed by
Canadian Western Trust Company (“CWT”).
[5]
The Appellant was a
director of Barrhead. Barrhead became insolvent in 2003 and its last financial
statement was for the fiscal year ended August 31, 2004. On March 2, 2006 a Certificate
of Dissolution was issued for Barrhead
(Exhibit C-1).
[6]
CWT then issued the
T4RIF for $1,803 to the Appellant for his 2006 tax year. He did not receive any
shares or any benefit of any kind from CWT respecting the alleged $1,803, the
shares of Barrhead or the RRIF contents from CWT.
[7]
Canada Revenue Agency
issued this reassessment based upon the T4RIF.
[8]
Subsection 146.3(5) of
the Income Tax Act reads as follows:
Benefits taxable
(5) There shall be included in computing the income
of a taxpayer for a taxation year all amounts received by the taxpayer in the
year out of or under a registered retirement income fund other than the portion
thereof that can reasonably be regarded as
(a) part of the amount included in computing the income of
another taxpayer by virtue of subsections 146.3(6) and 146.3(6.2);
(b) an amount received in respect of the income of the
trust under the fund for a taxation year for which the trust was not exempt
from tax by virtue of subsection 146.3(3.1); or
(c) an amount that relates to interest, or to another
amount included in computing income otherwise than because of this section, and
that would, if the fund were a registered retirement savings plan, be a
tax-paid amount (within the meaning assigned by paragraph (b)
of the definition "tax-paid amount" in subsection 146(1)).
[9]
Paragraph 56(1)(t)
of the Income Tax Act requires the following to be included in the
income of the taxpayer:
(t)
Registered retirement income fund - amounts in respect of a registered
retirement income fund required by section 146.3 to be included in computing
the taxpayer’s income for the year;
[10]
The word “amount” is
defined in subsection 248(1) of the Income Tax Act as:
"amount"
means money, rights or things expressed in terms of the amount of money or the
value in terms of money of the right or thing, except that,
(a)
notwithstanding paragraph (b), in any case where subsection 112(2.1),
112(2.2) or 112(2.4), or section 187.2 or 187.3 or subsection 258(3) or 258(5)
applies to a stock dividend, the "amount" of the stock dividend is
the greater of
(i)
the amount by which the paid-up capital of the corporation that paid the
dividend is increased by reason of the payment of the dividend, and
(ii)
the fair market value of the share or shares paid as a stock dividend at the
time of payment,
(b)
in any case where section 191.1 applies to a stock dividend, the
"amount" of the stock dividend for the purposes of Part VI.1 is the
greater of
(i)
the amount by which the paid-up capital of the corporation that paid the
dividend is increased by reason of the payment of the dividend, and
(ii)
the fair market value of the share or shares paid as a stock dividend at the
time of payment,
and
for any other purpose the amount referred to in subparagraph (i), and
(c)
in any other case, the "amount" of any stock dividend is the amount
by which the paid-up capital of the corporation that paid the dividend is
increased by reason of the payment of the dividend;
[11]
Thus an “amount” or
shares is to be included in a taxpayer’s income if it is “received by the
taxpayer in the year out of or under a registered retirement income fund.” (subsection
146.3(5))
[12]
The uncontroverted
evidence is that the taxpayer only received a T4RIF. He did not receive
any shares or transfer of shares in Barrhead or $1,803 from CWT.
[13]
For this reason, the
appeal is allowed and this file is remitted to the Minister of National Revenue
for reconsideration and reassessment.
[14]
Barrhead is about 100
km northwest of Edmonton city limits – about a 1 ½ hour drive each
way from the Court itself. The Appellant brought his Certified General
Accountant with him from Barrhead to testify in this case which lasted about 2
hours in Court. The Appellant is awarded costs and disbursements in this appeal
which are fixed at $400.00. He is also to be refunded his filing fee of
$100.00.
Signed at Edmonton, Alberta, this 5th day of June 2009.
“D.W. Beaubier”
Email this Content