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Citation: 2003TCC599
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Date: 20031003
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Docket: 2003-698(IT)I
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BETWEEN:
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THE ESTATE OF THE LATE ALINE MINER,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Woods J.
[1] This is an appeal by The Estate of
Aline Miner in respect of an income tax assessment for the 2001
taxation year of Mrs. Miner. The assessment concerns
Part 1.2 tax, a special tax that effects a claw back[1] of old age security
benefits. The estate was represented by Mr. Dale Miner, the
executor of the estate and the son of Mrs. Miner.
[2] The appeal was heard under the
Court's Informal Procedure.
Facts
[3] Dale Miner's father was a
miner from Timmins, Ontario who died in 1992. Prior to his death,
the senior Mr. Miner received benefits from the Workplace Safety
and Insurance Board of Ontario because he suffered from
silicosis, a lung disease common to gold miners. Dale Miner's
mother, Aline Miner, applied for survivor benefits after her
husband's death on the basis that her husband's death was
caused by the silicosis. Claims were made in 1992 and 1996 and
denied. Eventually Mrs. Miner's claim was allowed by the
Workplace Safety and Insurance Appeals Tribunal.
[4] In 2001, the claim was satisfied
by the payment of an award to Mrs. Miner that compensated for
benefits retroactive to her husband's death in 1992. The
amount of the award that was included in computing Mrs.
Miner's income for tax purposes was $135,232 but the actual
award was higher than that. Also in 2001, Mrs. Miner received an
amount of $5,232 on account of old age security benefits.
[5] In a reassessment of tax for the
2001 taxation year, the Minister of National Revenue (the
"Minister") included tax of $5,232 under Part 1.2 of
the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1
(the "Act"). The Part 1.2 tax has the effect of
clawing back old age security benefits if a taxpayer's income
exceeds a certain level. The reassessment clawed back the entire
old age security benefits paid to Mrs. Miner in 2001, $5,232, on
the basis that her income for that year exceeded the maximum
level of $55,309.
[6] Mrs. Miner died a few days after
the reassessment was issued and her estate has appealed.
Issue
[7] The issue is whether Part 1.2 tax
is applicable where an amount is received in a year as a result
of a retroactive award of a tribunal.[2]
Statutory Provisions
[8] Paragraph 56(1)(v) of Part
I of the Act provides:
56(1) Without restricting the generality of section 3, there
shall be included in computing the income of a taxpayer for a
taxation year, ...
(v) Worker's compensation - compensation received
under an employees' or workers' compensation law of
Canada or a province in respect of an injury, a disability or
death;
Subsection 180.2(2) of Part 1.2 of the Act
provides:
180.2(2) Tax payable. Every individual shall pay a tax under
this Part for each taxation year equal to the amount determined
by the formula
A(1 - B)
where
A is the lesser of
(a)
the amount, if any, by which
(i) the total of all amounts each of which
is the amount of any pension, supplement or spouse's or
common-law partner's allowance under the Old Age Security
Act included in computing the individual's income under
Part I for the year
exceeds
(ii) the amount of any deduction allowed under
subparagraph 60(n)(i) in computing the
individual's income under Part I for the year, and
(b) 15% of the amount, if any, by which the
individual's adjusted income for the year exceeds $50,000;
and
B is the rate of tax payable by the
individual under Part XIII on amounts described in paragraph
(a) of the description of A.
Submissions of Parties
[9] The essence of Mr. Miner's
submission is that the application of the claw back in these
circumstances is unfair. If the death of Mr. Miner's father
was attributable to the silicosis, Mrs. Miner was entitled to
survivor benefits of $1,200 per month since 1992. If these
amounts had been paid on a monthly basis as required by the
legislation, there would be no claw back of old age security
benefits under subsection 180.2(2) because Mrs. Miner's
income for 2001 would not have exceeded the maximum.
[10] Counsel for the Crown is sympathetic to
Mr. Miner's argument but submits that the claw back is
clearly provided for in the legislation. Counsel referred to two
decisions of the Tax Court that support this position, Poulin
v. The Queen [3] and Bongiovanni v. R.[4]
[11] Counsel also submitted that the
doctrine of estoppel should not apply and in support referred to
the principles set out by the Supreme Court of Canada in
Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co.[5] and by
Bowman J.(as he then was) in Goldstein v. The Queen.[6]
Analysis
[12] There have been several cases on
similar facts before the Tax Court, the most recent being
Franklin v. The Queen.[7] In essence, what is sought is relief from
what appears to be a harsh result. The findings in the cases have
been consistent in requiring that the retroactive award be
included in computing income in the year of receipt and that the
old age security benefits be clawed back under Part 1.2. I agree
with the reasoning in these cases. The legislation is clear that
old age security benefits are clawed back under Part 1.2 even
though the event that led to the income level exceeding the
maximum was the receipt of a retroactive award of a tribunal.
[13] As for the doctrine of estoppel,
Martland J. set out the factors giving rise to estoppel in
Canadian Superior Oil as follows:
(a) A representation
or conduct amounting to a representation intended to induce a
course of conduct on the part of the person to whom the
representation is made.
(b) An act or
omission resulting from the representation, whether actual or by
conduct, by the person to whom the representation is made.
(c) Detriment to
such a person as a consequence of the act or omission.
[14] I agree with the submission of counsel
for the Crown that these factors are not applicable here. It
appears that the denial of Mrs. Miner's claim by the Ontario
Workplace Safety and Insurance Board was in error. If the error
had not been made, the tax under Part 1.2 would not have been
applicable. However, the error did not induce Mrs. Miner to take
action to her detriment. Accordingly, the circumstances do not
justify relief based on estoppel.
[15] Notwithstanding that the result seems
harsh, the appeal must be dismissed.
Signed at Ottawa, Canada this 3rd day of October, 2003.
J.M. Woods J.
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