Cowan v. The Queen, 2004 TCC 770 (Informal Procedure)

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Agent for the Appellant: Latif Rehman

Counsel for the Respondent: Craig Maw

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REASONS FOR JUDGMENT

(Delivered orally from the Bench at

Toronto, Ontario, on November 5, 2004)

McArthur J.

[1]      The Appellant appeals the reassessment of the Minister of National Revenue for her 1999 and 2000 taxation years. She had received an arbitration award of $35,000 from the City of Toronto. The amount of $17,500 was added to her income in the year 1999 and the amount of $17,500 was added to her income in the year 2000. The Appellant requests that the $35,000 be spread out over the years 1992 to 1999 which are the years for which the arbitration award was granted. The facts include the following.

[2]      The Appellant was employed by the City of Toronto. She filed thirty-six grievances through her Union from 1992 to 1999 resulting in her obtaining an arbitration award and pursuant to Minutes of Settlement, she received $35,000. Upon her request this amount was paid in two instalments of $17,500 each, one on December 2, 1999 and the other on January 13, 2000. These amounts had been included in her T4 slips for both years which she received from the City. These T4 slips were for the amounts of $59,313 and $64,212, respectively, and they of course, included salary amounts.

[3]      The City of Toronto did not file a Form T1198E which is a Statement of Qualifying Retroactive Lump-sum Payment. The Appellant has been attempting in recent months, if not over the past year, to obtain this form from the City without success. The issue is whether she was assessed correctly for 1999 and 2000, or whether the $35,000 award should have been spread out over the years from 1992 to 1999.

[4]      The Appellant's position primarily is that the Federal Government is unjustly enriched by the Minister's decision. She states that she has not been treated fairly and that the arbitration award should have been allocated over the years. Also, if this method resulted in retroactive interest being charged, then she would ask that this interest be waived.

[5]      The Appellant was represented by her agent, Latif Rehman, yet for the most part conducted her own appeals. The hearing was scheduled to commence at 9:30 a.m. but did not begin until about 4 o'clock in the afternoon. The Appellant was unable to appear at 9:30 a.m. and did not attend before 10:30 a.m. when another appeal was already underway. At that time, her request for adjournment was denied. This was her fourth such request. In addition to medical reasons, the Appellant stated she needed time to obtain a Form T1198E from the City of Toronto and she wished to have a friend testify. With respect to her medical condition, having requested and obtained an adjournment on March 8, 2004 before Justice Margeson, the judge speaking to her representative stated in part:

The next time, if you are asking for an adjournment, you had better have a proper doctor's certificate.

And he goes on to say:

The next time if she doesn't have a doctor's certificate and the Crown doesn't go along with it, or even if the Crown does, the Court is liable to dismiss it.

In her request again this morning, she did not have a doctor's certificate and the Crown did not consent to an adjournment. With respect to her other reasons in requesting an adjournment, I find she had almost a year to arrange for the form from the City of Toronto and for the witness. In any event, I do not believe the form or the witness would assist her in presenting her case. While the Appellant requested time to obtain and file Form T1198E, she acknowledged, I believe, that it would not benefit her at all under the present legislation.

[6]      Again, the thrust of her appeal is that the resulting tax she incurred by adding $17,500 to her income in each of 1999 and 2000 is not fair and the $35,000 award should be amortized over the years 1992 to 1999. In this regard, I refer to the recent comments of Rothstein J. in Chaya v. The Queen, 2004 F.C.J. 227, which judgment is dated October 4, 2004. The following applies equally to the present Appellant:

The Applicant says that the law is unfair and he asks the Court to make an exception for him; however, the Court does not have that power. The Court must take the statute as it finds it. It is not open to the Court to make exceptions to statutory provisions on the grounds of fairness or equity. If the Appellant considers the law unfair his remedy is with Parliament and not with the Court.

[7]      While in this instance it is unnecessary to analyze the effect of sections 110.2 and 120.31 of the Income Tax Act, I will do so briefly. These sections were enacted in 2000 to enable the taxpayer who receives a qualifying retroactive lump-sum to be able to soften the tax burden by applying a complex calculation. Exhibit R-1, Tab 7 is a letter from Canada Revenue Agency which carefully calculates the effect of the special tax situation. The Appeals Division Officer accurately concludes that the qualifying retroactive lump sum payment method would not have been beneficial to the Appellant. I do not believe the Appellant disagrees with this, but states it is not fair to retroactively apply interest on tax owing when she had absolutely no control over it. Very simply put, the applications of sections 110.2 and 120.31, in certain instances, permit a taxpayer to allocate portions of an amount over past taxation years. This would not assist the Appellant because the Act requires the application of interest retroactively. The interest would effectively extinguish the benefit. The Appellant requests that this interest requirement be waived because it is unfair.

[8]      In any event, the Appellant is unable to have the City of Toronto complete the required form which is a condition precedent before sections 110.2 and 120.31 can be applied. The result may not be fair to the Appellant but I must interpret the legislation as it is written. Again, as stated by Rothstein, J., I cannot change the legislation, only Parliament can and therefore, the appeals are dismissed.

Signed at Ottawa, Canada, this 6th day of December, 2004.

McArthur J.