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Citation: 2004TCC628
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Date: 20040922
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Docket: 2004-1214(OAS)
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BETWEEN:
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CHRISTIAN BOLDUC,
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Appellant,
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and
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THE MINISTER OF HUMAN RESSOURCES
DEVELOPMENT,
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Respondent.
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[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1] This is an appeal regarding the
Old Age Security Act(the "Act"), in particular
sections 2, 10, 12, 14, 27.1 and 28. The appeal also deals with
sections 3, 56 and 146.01 of the Income Tax Act.
[2] The issue is whether the
Respondent correctly included in the Appellant's income
$578 from a Registered Retirement Savings Plan ("RRSP")
during 2003 and if the Respondent correctly determined that his
income was $7,302.72 in order to calculate the Guaranteed Income
Supplement provided in Part II of the Act for the payment period
of April to June 2003.
[3] The Appellant acknowledged that
all of the Respondent's assumptions of fact set out in the
Response to the Notice of Appeal are true. The assumptions are as
follows:
[translation]
(a) In 1992, the
Appellant withdrew $8,672.92 from a Registered Retirement
Savings Plan (RRSP) to buy a house under the Home Buyers' Plan
(HBP);
(b) Under the Home
Buyers' Plan, the Appellant must include in his income, every
year from 1995 and for the 15 subsequent years, $578.41 as income
from a RRSP, corresponding to the annual amount he would have
been required to reimburse to his RRSP;
(c) In 2003, the
Appellant did not make any reimbursement to his RRSP;
(d) The Appellant
became eligible for the Old Age Pension and Guaranteed Income
Supplement in April 2003;
(e) In July 2002,
the Appellant filed an application for the Guaranteed Income
Supplement provided in Part II of the Old Age Security
Act for the period from July 2002 to June 2003;
(f) In this
application he declared that his annual income for 2001 was
$12,508.31;
(g) On January 15,
2003, the Appellant filled out a statement of estimated income
form for 2003 because his annual income was expected to decrease
from $12,508.31 to $7,302.72 starting in April
2003;
(h) The Appellant's
estimated income for 2003 was set out as follows:
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CPP/QPP benefits ($552.06 x 9 months) .........
Interest
........................................................
RRSP income........................................
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$6,624.72
$100.00
$578.00
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Total
..........................................................
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$7, 302.72
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(i) Based on
this information, the Respondent then estimated the Appellant's
income at $7,302.72 for the 2003 tax year in calculating the
Guaranteed Income Supplement.
[4] The Appellant is challenging the
reasonableness of the Human Resources Development Minister's
decision, although he recognizes the logic and the mechanical
nature of how his file was processed. Furthermore, he clearly
expressed his view and claims in the following letter of July 9,
2003:
[translation]
Human Resources Development
Income Security Programs
333 rue de la Gare-du-Palais,
Québec QC
...
To whom it may concern,
I would like to draw your attention again to the income of
$578.00 set out on line 120 of the application for the Guaranteed
Income Supplement.
This amount represents part of a withdrawal for the Home
Buyers' Plan made in 1992 without it being taxed.
At the time I had a choice between paying back the RRSP and
declaring it as taxable income starting in 1995 for a 15-year
period. I opted for the latter solution and thus will claim until
2010 $578.00 ($578.41) to the Revenue Department to enable it
to recuperate the taxes not paid in 1992.
The ambiguity [error in the original] no doubt stems from the
fact that this amount is placed on line 129 (RRSP income) of the
statement of income.
It is not an amount the increases my annual income as would be
the case of a withdrawal from a registered retirement savings
plan. It is not real income for the current year but an amount
claimed for tax purposes.
The amount of the Guaranteed Income Supplement is determined
each year because the real income of an individual may vary each
year. Accordingly, if someone withdrew $578.00 from a pension
fund in 2003, you would obviously take that into consideration in
determining the amount of the supplement since that person's
income would really increase by $578.00 that year.
However, in my case, this amount does not increase my income
each year because I do not receive it: I claim it for tax
purposes.
Enclosed are documents from the Department of Revenue that
confirm that the amount claimed truly concerns the HBP.
I therefore ask that you make the necessary adjustments.
Sincerely,
...
[5] The Appellant, who is nice and
very articulate, essentially said that he felt it was
unreasonable that his income calculated under the provisions of
the Income Tax Act was used to apply provisions for
calculating the Guaranteed Income Supplement for the period from
April to June 2003 because he did not actually receive that
income.
[6] He also noted that the Human
Resources Development Minister (the "Minister") should have
his own rules, criteria and conditions for calculating the
Guaranteed Income Supplement. According to the Appellant, this
would make it possible to consider the person's actual income
when eligibility for the supplement is being assessed. In other
words, the Appellant claimed that the purpose or objective of
determining eligibility would be better served if those
responsible for its application had the full power and authority
needed to establish available income and were not bound by the
provisions of the Income Tax Act.
[7] Although understandable, the
Appellant's arguments are not valid; in fact the Minister has
full competence and jurisdiction to act. The fact that one act is
referred to in applying another act is neither a failing nor a
fault. On the contrary, this allows for more coherence and ease
of application. In fact, it is much simpler, and above all more
coherent, that the same concepts have the same meanings: this
allows for better comprehension and makes application
simpler.
[8] Canadians are already faced with a
multitude of very complex laws and, increasingly, lawyers are
refusing to work as generalists and instead focusing their
abilities in very specific and specialized areas. Consequently,
when laws provide that some common concepts mean the same thing
it is an advantage and not a failing. Often the complexity is
compounded by several levels of government or authority in the
same area of activity.
[9] A specific illustration of this
difficulty is the issue of permanent total disability that does
not really have a definition that satisfies everyone.
[10] In the case at bar, the applicable
provisions are clear and do not allow for any equivocation or
ambiguity. Moreover, the provisions are based on an
unquestionable rationale and logic. First, the legislature
allowed any physical person to amass capital commonly called an
RRSP, with inarguable tax advantages, to make retirement planning
easier.
[11] Second, the legislature provided that
holders of RRSPs could withdraw all or part of the tax-sheltered
amount to make it easier to buy property (the Home Buyers' Plan
or "HBP") through a procedure that requires the withdrawal to be
repaid over a 15-year period.
[12] This reimbursement obligation is
sanctioned by a measure that has the same effect as if the
taxpayer had not made the withdrawal; specifically, the amount
that the taxpayer should have reimbursed is taxed as if that
amount had been withdrawn. In other words, the taxpayer must
assume a tax expense on an amount that was not received, but is
presumed to have been received, because of the choice made under
the HBP.
[13] Based on that, the Appellant claims
that it is essentially theoretical income that should be deducted
from the assumed income when calculating the supplement.
[14] The Appellant's claim is even more
understandable because the basis of the provisions concerning the
supplement is the difficult financial situation of the recipient
affected by this act.
[15] However, supporting the Appellant's
claims would have the effect of doing indirectly what he cannot
do directly, that is, withdraw an amount from his RRSP under the
HBP without paying tax on it.
[16] Moreover, this would have the effect of
compensating those who have chosen to take advantage of the HPB
in the years prior to retirement by not reimbursing the amounts
that, according to the Appellant, should be excluded from the
calculation of available income.
[17] The addition of theoretical income
following non-repayment of the RRSP would then essentially be
theoretical, since it would be deducted in the end because it is
not available. As a result, it would make it easier to qualify
for the Guaranteed Income Supplement program.
[18] Although we are looking at small
amounts, I understand that they have considerable importance to
someone who would like to qualify for the Guaranteed Income
Supplement program.
[19] However, it is also essential that both
the spirit and the letter of the Act are not mocked by one or
more decisions that would allow someone to do indirectly what
cannot be done directly.
[20] In the case at bar, the Respondent
correctly included in the Appellant's income the amount of
$578 as income from an RRSP for the 2003 tax year, which
brought his income to $7,302.72 for calculating the
Guaranteed Income Supplement.
[21] For all of these reasons the appeal
must be dismissed.
Signed at Ottawa, Canada, this 22nd day of September 2004.
Tardif J.
Translation certified true
on this 23rd day of December 2004.
Monica F. Chamberlain, Translator
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