Citation: 2006TCC506
Date: 20060914
Docket: 2005-3955(OAS)
BETWEEN:
NIGEL HENRIQUES,
Appellant,
and
THE MINISTER OF HUMAN RESOURCES DEVELOPMENT CANADA,
Respondent.
REASONS FOR JUDGMENT
McArthur J.
[1] This matter came
before me by referral dated November 28, 2005 from the Office of the
Commissioner of Review Tribunals Canada Pension Plan/Old Age Security pursuant
to subsection 28(2) of the Old Age Security Act (the “Act”). The
Appellant appeals the decision of the Minister of Human Resources Development Canada
(the “Minister”) made August 16, 2005, regarding the calculation of his
entitlement to the Guaranteed Income Supplement (GIS) under the Act, for
the period of July 2005 to June 2006 (the “Payment Period”).
[2] The Appellant
describes himself as a very poor senior citizen receiving, together with his
wife, total combined pensions of $17,000 annually. He states they have been
able to survive for the past year by taking out a second mortgage on their
home.
[3] Mr. Henriques
had been employed by Westroc Industries Limited from November 1978 to January
1984 when he was terminated due to the reorganization of Westroc. He then
worked for Beaver Lumber, retiring in 1995 when he commenced receiving a modest
pension from Westroc.
[4] Out of the blue,
he received a one-time lump-sum pension surplus payment of $30,093 (the
“Lump-Sum Payment”) from the Westroc pension plan. Apparently the Westroc
pension money had been extremely well invested. The Lump-Sum Payment came as a
complete surprise. Of this amount, $9,028 was paid in income tax and he
retained $21,065. Mrs. Henriques explained that it came at a very fortuitous
time because they had been deeply in debt from medical and other expenses.
[5] Taken for the most part from the Minister's
assumptions in the Reply to the Notice of Appeal, the following facts are not
in dispute:
a)
The Appellant’s actual income for 2004 was $38,463.24 including
the Lump-Sum Payment of $30,093;
b)
The Appellant’s spouse’s actual income for 2004 was $8,406.84;
c)
Based on the Appellant’s actual income of $38,463.24 and the
Appellant’s spouse’s income of $8,406.84, the Respondent concluded that the
Appellant was not entitled to the GIS
for the Payment Period (as set out below):
The
Minister's wording which included "the Appellant was not entitled to the GIS
…" is a legal conclusion that is the issue herein that I am asked to
decide. The rest of the facts are as follows:
d)
The Lump-Sum Payment was a pension surplus payment, which was due
to the sharing of accumulated money from the Retirement Income Plan for
Salaried Employees of Westroc Inc.;
e)
The Lump-Sum Payment was in addition to the pension payments the
Appellant was already receiving;
f)
The Lump-Sum Payment was not arrears due for previous months; and
g)
The Lump-Sum Payment was not issued to replace weekly,
semi-monthly or monthly payments which could have continued.
[6] The Chronology
of Events as set out by the Minister in the Reply is as follows:
6.
The Appellant filed an Application for Renewal of the Guaranteed
Income Supplement for the Payment Period on March 29, 2005 (the “Application”).
7. In the Application the Appellant declared
his actual income for 2004 as follows:
|
|
Appellant
|
Spouse
|
|
CPP/RRQ benefits
|
3,883.44
|
8,406.84
|
|
Other pension income
|
4,486.80
|
|
|
Surplus pension from Westroc
|
30,093.00
|
|
|
Total
|
38,463.24
|
8,406.84
|
[7] The Minister
refused the Appellant’s request that his income, for the purpose of calculating
his entitlement to the GIS for the Payment Period, be based on estimated income
for the 2005 calendar year rather than actual income received and reported for
the 2004 taxation year. In other words, the Appellant sought to exclude the
Lump-Sum Payment from the calculation of his GIS entitlement.
[8] The issue is whether
the Minister correctly determined that the Appellant could not base his
entitlement to GIS for the Payment Period on an estimate of his income for the
2005 calendar year.
[9] Subsections
14(4) and 14(6) of the Act relied on by the Appellant, read as follows:
14(4) Where in a current payment period a person who is an applicant,
or who is an applicant’s spouse or common-law partner who has filed a statement
as described in paragraph 15(2)(a), suffers a loss of income due to termination
or reduction of pension income, the person may, … file a statement of the
person’s estimated income for the calendar year in which the loss is suffered,
other than pension income received by that person in that part of that calendar
year that is before the month in which the loss is suffered, in which case the
person’s income for the base calendar year shall be calculated as the total of
(a) the person’s income for that calendar year,
calculated as though the person had no pension income for that calendar year,
and
(b) any pension income received by the person in that
part of that calendar year that is after the month immediately before the month
in which the loss is suffered, divided by the number of months in that part of
that calendar year and multiplied by 12.
14(6) Where, in the circumstances described in paragraphs (a)
and (b), a person who is an applicant, or who is an applicant’s spouse or
common-law partner who has filed a statement as described in paragraph 15(2)(a),
suffers a loss of income due to termination or reduction of pension income,
the person may, …
(a) where the loss is suffered in the last calendar year
ending before the payment period, file a statement of the person’s estimated
income for the calendar year ending in the current payment period, in which
case the person’s income for that calendar year is deemed to be the person’s
income for the base calendar year; and
(b) where the loss is suffered in a month that is before
the payment period and after the last calendar year ending before the payment
period, file a statement of the person’s estimated income for the calendar year
ending in the current payment period showing also the amount of pension income
actually received by the person in that part of that calendar year that is
before the month in which the loss is suffered, in which case the person’s
income for the base calendar year shall be calculated as the total of
(i) the person’s income for that calendar year, calculated as
though the person had no pension income for that calendar year, and
(ii) any pension income received by the person in that part of
that calendar year that is after the month immediately before the month in
which the loss is suffered, divided by the number of months in that part of
that calendar year and multiplied by 12. [emphasis added]
[10] In addition,
section 14 of the Old Age Security Regulations (“Regulations”)
created under the Act defines “pension income” as follows:
14. For
the purposes of section 14 of the Act, "pension income" means
the aggregate of amounts received as
(a) …
(f) superannuation or pension
payments, other than a benefit received pursuant to the Act or any
similar payment received pursuant to a law of a provincial legislature;
[11] At first glance,
it is painfully obvious how any given individual might be confused when dealing
with entitlements to GIS. The wording of the Act is not only complex but
poorly drafted. My colleagues in the past have discussed this unfortunate
situation in the hope that it might be remedied. It has not and I simply
reiterate their concerns.
[12] Section 2 of the Act
states, with some exceptions that are not relevant in this appeal, that a
person’s income for the calendar year is to be his or her income as determined
in accordance with the Income Tax Act.
Normally, under subsection 14(1) of the Act, benefits for the year
ending in June are calculated based on the previous year’s calendar income. For
example, the Appellant’s 2004 yearly income would be used to calculate his
benefits for the old age security fiscal year of July 2005 to June 2006. At
this point, the Appellant would simply not qualify for GIS based on his 2004
income level as it included the Lump-Sum Payment.
[13] The Minister,
however, has the option to calculate GIS entitlement based on the Appellant’s
estimate of income for the 2005 calendar year rather than his actual income in
2004.
[14] The Minister
rejected the use of the estimated income form claiming that it can only be used
where the Appellant retired, where there was reduction or cessation of income,
or where the lump sum payment was paid in order to replace a weekly,
semi-weekly, or monthly payment. The Minister argues that none of these
conditions have been met and the Appellant cannot exercise the option provided
by the Act.
[15] As stated in Mattina
v. Canada (Minister of Human Resources Development Canada) 2006TCC324, the option is clearly available if an
individual suffers a reduction of pension income in the current payment period.
The receipt of the Lump-Sum Payment in the previous year would necessarily mean
a reduction of pension income in the current year. I should not read anything additional
into the express wording of the Act.
[16] The option is
available if the Lump-Sum Payment falls under the definition of “pension
income” as defined in section 14 of the Regulations. The definition of
“pension income” in the Regulations is restrictive rather than inclusive
as the term “means” appears in the preamble of the definition. Thus, the
Appellant must specifically fit the Lump-Sum Payment into one of the existing
categories as outlined in the subparagraphs of the definition. In my opinion,
the Lump-Sum Payment made from the pension plan falls under subsection 14(f)
of the Regulations as a pension payment. There is no need to further
restrict the scope of pension income as this has already been done in the
preamble of the definition. Section 14 of the Regulations reads:
14 For the purposes of section 14 of the Act, "pension
income" means the aggregate of amounts received as
…
(f) superannuation or pension payments, other than
…
(the exceptions do not apply).
[17] To summarize, the
Lump-Sum Payment falls within the definition of “pension income” as a pension
payment. As the payment occurred in 2004, there would necessarily be a
reduction of pension income for the 2005 calendar year. Thus, the conditions
for the option have been met and the Appellant is entitled to base his GIS
entitlement on an estimate of his 2005 calendar year income.
[18] The appeal is
allowed. The Appellant may calculate his 2005 GIS entitlement based on the
estimate of income for his 2005 calendar year.
Signed at Ottawa, Canada, this 14th day of September 2006.
"C.H. McArthur"
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