Agpro Services Inc. v. M.N.R., docket 96-136-CPP

Date: 19991217

Docket: 96-136-CPP

BETWEEN:

AGPRO SERVICES INC.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Margeson, J.T.C.C.

[1] On September 20, 1996 the Minister of National Revenue (the "Minister") made a decision denying the Appellant's request for refund of certain Canada Pension Plan ("CPP") contributions as an employer. In the years 1991 and 1992 the Appellant deducted and remitted the required employee contributions to CPP, and likewise calculated and remitted the required employer contributions to CPP. As a result, the Appellant received refunds of employer contributions in the amounts of $1.91 for 1991 and $4.81 for 1992 for a total of $6.00.

[2] The Appellant disagreed with this conclusion and appealed to the Minister alleging that the overpayment should have been $3,084.60. By letter dated September 20, 1996, the Chief of Appeals advised the Appellant that the assessment was correctly assessed in accordance with CPP Sections 9, 19 and 21: Subsections 8(1) and 8(2) and CPP Regulations; Part 1; Paragraph 5(2)(b) and 5(5).

[3] Further the Appellant was advised that if he disagreed with the decision he could appeal to the Tax Court of Canada within 90 days of the mailing date of this letter.

[4] On December 15, 1996 the Appellant filed an appeal with the Tax Court of Canada from the decision of the Minister dated September 20, 1996 which the Minister referred to as an assessment.

[5] At the opening of the trial the Minister made a preliminary motion that this Court had no jurisdiction to grant the relief with respect to the Appellant's application for refunding certain CPP contributions and that this Court had no jurisdiction to grant the relief sought by the Appellant in the absence of any assessment pertaining to the Appellant's CPP contributions and argued that there was no assessment. The Court indicated that it would hear the appeal and decide the issue of jurisdiction upon the conclusion of the evidence and the matter proceeded to trial.

Evidence

[6] Lynn Loftus was an Appeals Officer with Revenue Canada. She introduced Exhibit A-1 which was the letter from the Chief, Appeals Division, for Revenue Canada in Prince Edward Island to the Appellant (hereinafter referred to as "AGPRO") advising it that the Minister had correctly assessed the Appellant in accordance with the CPP Act and advising the Appellant that it might appeal to the Tax Court of Canada in accordance with the Act. She also enclosed a form entitled "How to Appeal to the Tax Court of Canada". She said that her jurisdiction was found under Section 27 of the CPP. This Section entitles the Minister to determine a question with respect to the contributions of the employer and the employee under the Act. Following that, Section 28 extends the right to appeal this determination to the Tax Court of Canada. Both Sections referred to the actions of the Minister as having been a "determination" or a "decision".

[7] This witness reported on her findings on a CPT 110 which was introduced as Exhibit A-6. She confirmed that the appeal was from a notice of July 6, 1995 advising AGPRO that there were only four employees who were entitled to refunds as could be seen from Exhibit A-3. She said that she had access to the statement of account for source deductions for AGPRO which was introduced as Exhibit A-2. She confirmed that the adjustment was $6.00. She said that she reviewed the appeal by AGPRO of these figures. Her duty was to review the Notice of Appeal disputing these amounts. She reviewed Exhibit A-3 as well as other material and documents and made an appeal report. She said that the PD24(E)s statement of overpayment and application for refund on behalf of AGPRO probably came in with the appeal and she reviewed them as well. She reviewed only the four names that were on the adjustment from St. John's. She concluded that these were part of the file.

[8] She said that her initial request from AGPRO was to decide whether or not pro-rating was allowed. She could not decide this issue as an Appeals Officer. She told AGPRO to address a particular issue following which AGPRO said that it wanted to address the four names on the adjustment letter from Revenue Canada.

[9] She referred to Exhibit A-5, dated February 28, 1996 which was an application for determination of a question on appeal by AGPRO to Revenue Canada in Charlottetown. She could not look at this as an Appeals Officer. She did not consider the PD24(E)s. It was her position that AGPRO believed that Exhibit A-5 was the basis for the review, including the PD24(E)s and it was not. She could not say whether or not Exhibit A-4 was reviewed by St. John's or not. She then said that AGPRO had sent in an application for review of certain names and they had readjusted four of them. She did not review the PD24(E)s in total. She was not asked to review the PD24(E)s but only these four persons. She could not look into the question of determining whether or not pro-rating of the basic exemption was allowed by the legislation. She set this out in Section 3 of Exhibit A-6 on page 3. All AGPRO wanted was a consideration of these four names and it wanted to come to the Tax Court about it. It was her position that these four calculations were correct. She did not think that the appeal identified any specific issue.

[10] She went through the PD24(E)s with another person but she did not do the calculations. These were done by Elizabeth Frizzell. If AGPRO had provided any information to show that the calculations were wrong she would have considered that information. She was considering Exhibit A-3 which was provided to her by AGPRO and contained the four names only. She had considered Section 19 of the Act.

[11] The matter was adjourned to December 6, 1999 and the witness was questioned further. She said that she acted on behalf of the Minister in making the decision that she did. She made her recommendation to the Chief of Appeals and Exhibit A-3 showed the processing of the application for the refund, the result of which was to calculate an overpayment of $6.00 and interest of $1.47.

[12] She did not recalculate the PD24(E)s. It appeared that O. Byrne from Revenue Canada in St. John's had looked at all of the relevant information in making the calculation that these were the four persons who were entitled to a refund. It was her position that AGPRO had agreed that this is what it wanted to appeal.

[13] She had contacted Mr. Miller on behalf of AGPRO during the course of the appeal when they gathered the information about the basis of the appeal. She reviewed the Act, the information from the payor and the material from source deductions and talked to the Chief of Appeals in Prince Edward Island. She also referred to computer records of AGPRO but not specific persons. She accessed records in the Department but had no authority to release records. She referred to the income tax return of Wayne S. Sherran for the year 1992 which showed the amount of the contributions being $272.66. These contributions were from all sources. Irwin Wood made total contributions of $12.36 for 1992. A T4 for Irwin Wood for the year 1992 was submitted into evidence showing this amount. It was her position that the calculation of overpayment with respect to Mr. Wood had been properly calculated in accordance with Exhibit A-3.

[14] She said that the basic exemption in 1992 was $3,000.00 and $12.36 was refunded. This was rounded out to $12.00 on the computer printouts. If the employer would have made a matching contribution $2.69 would have been refunded back to the employer.

[15] Elizabeth Frizzell was a Collections Officer from Canada Customs and Revenue Agency. She was familiar with Exhibit A-3 but she was not asked to calculate the amounts. She was asked if she could give particulars for the calculations. She said that she could not but she could give a formula. The employer would be entitled to claim a portion of the basic exemption in accordance with the percentage of the year that was worked. This was set out in the employer's guide and in the Regulations under CPP which provided for pro-ration.

[16] The calculations were made on a daily basis and not a monthly one. She admitted that the tables do not do a pro-ration. She was familiar with the regulations with respect to contributions and she believed it was Regulation 5. She had printouts for Irwin Wood's deductions under the CPP for the years 1991, 1992 and 1993. In 1991 Mr. Wood did not file a return, in 1992 there was an overpayment of $12.36 and in 1993 there was no overpayment.

[17] Counsel for the Respondent objected to any questioning with respect to any names except the four referred to in Exhibit A-3 but this objection was overruled and the Court concluded that the appeal was with respect to all of the names shown in Exhibit A-4. With respect to Gordon Connell she said that in 1991 there was an overpayment of $41.16; in 1992 an overpayment of $59.07 and in 1993 no return was filed. She had no access to any other information to enable her to determine his position in 1993.

[18] For Terry Wilson there was no overpayment in 1991; there was an overpayment of $26.59 in 1992 and an overpayment of $39.65 in 1993.

[19] With respect to Karl Kenny in 1991 there was an overpayment of $9.33; 1992 an overpayment of $35.45 and in 1993 an overpayment of $41.13.

[20] With respect to Phillip Miller in 1991 there was an overpayment of $10.13; 1992 there was no return and in 1993 there was an overpayment of $54.71.

[21] With respect to Wayne Sherran in 1991 there was an overpayment of $27.35; 1992 an overpayment of $38.47 and in 1993 no overpayment.

[22] She did not do calculations with respect to any other names.

[23] She said that there might have been one or more employers and this could have made a difference in the calculations. Further, she could not say if the employers were actually refunded.

[24] In cross-examination she said that she was not asked to verify the information but she may have been asked to review it. She familiarized herself with it. She reviewed the calculations in Exhibit A-3 and these were accurate based upon her review of all the material. There were two methods of calculating the payments. One could use the tables or one could do it manually. The tables have the yearly exemptions built into them and there would be no need to use the manual method of calculation if the employee did not work for the full year. With respect to Exhibit A-3 she said that the method used was the detailed method on a daily basis. She reviewed some of the names using the weekly method of pro-ration and the payroll records. There was less than $2.00 difference for one and a few cents for the second. She used a weekly exemption and she also used the daily one. She did not have enough information from the payroll records to do the calculations on the daily basis.

[25] She was referred to Exhibit A-3 and she said that the calculations appeared to be correct. She looked at the payroll records and the numbers appeared to be OK, there being only a difference of $2.00 more or less, but these were refunds to employees and they were not necessarily the same as the employer's refund.

[26] In the case of Wayne Sherran the employee's overpayment was different from the employer's overpayment and it was not significant. She reviewed Exhibit A-4, the PD24(E)s and she was familiar with how they should be filled out. Those contained in Exhibit A-4 were not filled out correctly. There should have been a T4 summary for each employee and they were not included. There was no pay period shown for each one only a social insurance number. She could not calculate the overpayment with this information.

[27] In redirect she said that the exemption in 1992 was $3,200 and an employee would be entitled to refund if all the amounts of income that he earned in that year from all sources was under $3,200. It was suggested to her that the refunds are automatically made to employees upon the filing of their income tax return but equal amounts are not necessarily paid to the employer. She could not know how the overpayment amount was calculated in each case unless she looked at the return but in all likelihood the pensionable earnings were less than the exemption if the employee received refund of all of the deductions. She admitted that the completion of a PD24(E) would be the only way that an employer could obtain a refund of an overpayment. She looked at the PD24(E)s for the years 1991, 1992 and 1993. The use of the annual contribution formula in the PD24(E)s was incorrect. Revenue Canada used a daily method in its calculations.

[28] She was asked whether or not she was familiar with Sections 8 and 9 of the Act and whether or not employers' contributions should be the same as those of the employees.

[29] Exhibit R-1 was introduced by consent. This was a working paper showing the method of calculation for Wayne Sherran for the year 1992. The information was obtained from the payroll records. This calculation produced a required contribution of $168.52. For Irwin Wood the total contribution was $12.36 and the required contribution was $12.36 for 1992. In the case of Wayne Sherran there was a small difference with Exhibit A-3 because the witness used a daily amount and she did not have the records that she required. In Exhibit A-3 the required contribution of $9.67 for Irwin Wood for 1992 was obtained by using the daily exemption method.

[30] Anthony Miller testified that he was the manager of AGPRO. He completed and submitted the PD24(E)s in this appeal. He requested a refund on behalf of the employer for overpayments of contributions.

[31] He was told that the PD24(E)s were not correct and on March 20, 1995 he filed amended PD24(E)s for 74 persons. These superseded the earlier ones which were the basis for the original assessment. These were not in the appeal file.

[32] He introduced Exhibit A-8 which were the applications for overpayment and refund on behalf of the employer for a number of employees and indicated at least in his case, that he had received the refund but indicated that the employer had not.

[33] He also introduced Exhibit A-9 which was a T4 supplementary for Anthony E. Miller with AGPRO Services Inc. for the year 1993; Exhibit A-10 which was a notice of assessment for himself for the same year; Exhibit A-11 which was a statement of contributions for himself for the years 1983 to 1996; Exhibit A-12 which was a T4 supplementary for the year 1993 for Corey A. Miller; Exhibit A-13 which was a T4 supplementary for the year 1992 for Anthony E. Miller; Exhibit A-14 which was a summary for the years in question showing the alleged contributions, the employee contributions, the required contributions and the overpayment on behalf of a number of employees of AGPRO. This document was admitted subject to weight and counsel for the Respondent did not agree that the figures submitted there were correct although it was admitted that these were the amounts that were shown on the PD24(E)s and the T4s where indicated.

[34] The witness also listed additional claims for those names as set-out in Exhibit A-8. It was agreed that these names reflect the PD24(E)s submitted in Exhibit A-8. These amounts were submitted by AGPRO for refund.

[35] The witness said that he had prepared the application for refund. He had calculated the overpayments based upon the applicable exemptions in the years 1991, 1992 and 1993. These exemptions were $3,000 for 1991, $3,200 for 1992 and $3,300 for 1993. His work sheets summarize the PD24(E)s applications.

[36] Exhibit A-15 was that summary and it was accepted for the purposes of showing that this was the amount that AGPRO was claiming as a refund but it was not agreed that these amounts were owing by way of refund. He pointed out that Exhibit A-10, which was calculated by the Minister and his notice of assessment for the taxation year 1993 showed the same CPP overpayment as he had claimed in the PD24(E) for himself. It was calculated on the basis of the total earnings less the applicable exemption of $3,300 for that year.

[37] He said that everyone of the employees of AGPRO paid premiums on the first dollar of income and it should only have been calculated on the total income less the total basic exemption. The company likewise paid the same premiums. It was his position that Regulations 4 and 5 of the Act required payments to be made on the exempt amount and this was contrary to provisions of Sections 8 and 9 of the Act. The result is that the Minister is empowered by these regulations to collect premiums from the employers on all amounts including the exempt amount but this is not so for employees and the two amounts should be equal. Therefore Regulations 4 and 5 are contrary to Sections 8 and 9 of the Act and other sections.

[38] These regulations forced the employer to make contributions on the exempt amount and it should not be so. The employee is refunded the overpayment whereas the employer is not.

[39] He did not instruct anyone at Revenue Canada that he was considering only the four names as set out in Exhibit A-3. His application was always with respect to all of the employees for all three years. Exhibit A-3 refers to four persons only for the years 1991, 1992 and 1993 but refers to refunds for the years 1991, 1992 and 1993 at the top. It was his position that he could ask for refunds with respect to all employees listed on behalf of the employer for the years 1991, 1992 and 1993.

[40] The four names which the Minister considered in Exhibit A-3 were taken out of all of the names because there was a small mathematical error in calculating the amount of the refund. He agrees with the arithmetic miscalculation and that these errors were made by him. He accepted Exhibit A-3 as an assessment and after that he received a statement of account which assessed names in Exhibit A-3 only. This was all that he received.

[41] The T4 for Corey Miller was added to Exhibit A-14 by consent.

[42] The witness said that he called Revenue Canada in St. John's and asked what authority was being used to pro-rate the contributions of the persons referred to in the PD24(E)s for the years in question. They sent a letter to AGPRO saying that the authority was under Section 19 of the CPP Act. This letter from O. Byrne was admitted into evidence as Exhibit A-16. This was in reference to Section 19 and the witness said that this was a specific category only and the persons for whom he was seeking a refund on behalf of AGPRO were not in that list. He referred to page 6 of Exhibit A-6 where the writer had indicated that the pro-ration was departmental policy and not legislation and that the assessments are based on policy. It was his position that the employer paid all of the contributions as required and it was entitled to get an equal refund with the employee.

[43] In cross-examination, he explained that Exhibit A-15 contained a list of names of the employees of AGPRO for 1991 in the first column. The second column showed the gross income. The third column showed the CPP paid by the employer. The fourth column showed AGPRO's calculation of what should have been paid by the employer. The fifth column was the difference or the refund. The number of weeks of work were referred to in the PD24(E)s. When asked how long the workers were employed, he said in the busy season it is full time and at the beginning and ending of the season it could be less than that. With respect to the years 1992 and 1993 he said that some of the T1s went to support some of his calculations and none of the rest were disputed by the Minister. With respect to Ian Legge for the year 1993 the PD24(E) showed his working period as July 19 to July 31 but he said he could have worked all of that time or he may have worked only a few days.

[44] When asked about the PD24(E) for Eugene Howatt, he was asked how many days he worked and said that it might have been part of the week or a whole week. The deductions were made according to the tables and that was what they thought they had to do.

[45] Following the Court's question, he said that they deducted for each period worked in accordance with the gross income in each weekly period. This resulted in excess deductions. The employer should have received back the same overpayment as the employee. He had other income by way of unemployment insurance which was not pensionable.

[46] Exhibit R-2 was a table of standards for 1998 for the CPP which was admitted by consent. It was admitted that the same rates were in effect for the years in question.

Argument on behalf of the Respondent

[47] In her argument, counsel for the Respondent said that there were two issues. One issue was the jurisdiction of the Court and the second was the issue of the merits of the appeal. Counsel asked the question as to whether or not the matter was properly before the Court and if it were whether or not the Court had jurisdiction to grant the remedy sought. Counsel's position was that the matter was not properly before the Court under Section 28 of the Canada Pension, Old Age Security Act (the "Act"). This was not an issue which was set out in Section 28 which allows an appeal to Tax Court of Canada. It is not specifically covered under Section 28 and probably falls under the jurisdiction of the Federal Court under residual powers. Further Subsection 12(4) the Tax Court of Canada Act does not give the Court jurisdiction to hear this appeal.

[48] Counsel did not relinquish the argument made at the opening of the trial that what was under consideration in the case at bar was not an assessment. She said that she did not have to rely upon that argument but she was still making it.

[49] It was her position that the above referred to sections of the Act deal with the collection of contributions. Sections 27 and 28, dealing with appeals, are under that Section. Division E of the Act deals with refunds and if the Minister wanted to give jurisdiction to the Tax Court of Canada to hear these appeals he would have set-out that right of appeal in Section E.

[50] Counsel also argued that the Tax Court of Canada did not have the right under Section 28 of the Act to grant the remedy sought. She referred to the case of McMillen Holdings Ltd. v. M.N.R. [1987] 2 CTC 2327, 87 DTC 585, where Judge Rip held that the refund sought was not in respect of an overpayment of tax and that there was no statutory authority for the payment of interest on a dividend refund made under Section 129 of the Income Tax Act. He held that the Appellant was not appealing the assessment of income tax or interest payable by it. The Appellant was asking the Court to make a direction or order to the Minister to pay interest. He concluded that the determination, calculation or amount of a refund and interest did not constitute the assessment of tax, interest or penalty and that the Court had no jurisdiction.

[51] She likened that case to the case at bar.

[52] In any event, if the Court should find that it has a jurisdiction to grant the relief and that the appeals were properly before the Court on the merits of the case, the main issue was whether or not the Minister had the authority to make the regulations regarding pro-ration of the basic exemption. There was several issues, one being the equality issue and the second one being the matter of the calculations.

[53] Subsection 40(k) gives the Minster the authority to make regulations generally for carrying out the purpose and provisions of the Act. Section 19 deals with the basic exemption and regulations 4 and 5 entitled the Minister pro-rate the basic exemption. That is what the Minister did in this case.

[54] With respect to the actual calculations Counsel argued that the burden was upon the Appellant to show that the Minster's assessment was incorrect and that the amount of the refund that he is claiming is correct.

[55] The evidence of Elizabeth Frizzell was that the basic exemption has to be pro-rated over a 52 week basis or on a 365 day basis or on a 12 month basis. However, the Appellant is not entitled to the complete exemption. When Elizabeth Frizzell did the calculations, the calculations she made were very close to those relied upon by St. John's and the difference was accounted for but the fact that she could not do the daily calculations because she did not have the information.

[56] The Appellant claimed all of the basic exemption for each employee.

[57] With respect to the case of Steve Tanguay shown in Exhibits A-3 and A-15 according to Revenue Canada the required payment should have been $28.06 whereas the Appellant claims there should have been no amount payable. This was because the Appellant used the complete exemption. Since the income was less than $3,000 the Appellant claims that nothing should have been paid. However, using the weekly method the calculation would have required a payment of $27.83.

[58] Likewise in the case of Wayne Sherran for the year 1992 Elizabeth Frizzle calculated the required payment to be $168.52, St. John's calculated $168.86 and Mr. Miller said it only should be $108.00. He deducted the full amount of the basic exemption.

[59] With respect to Wayne Sherran for the year 1992 there was no PD24(E). How can there be a refund. The information was incomplete. In respect of Irwin Wood for the year 1992 according to Exhibit A-3 the required contribution was $9.67. Ms. Frizzell calculated $12.36 and Mr. Miller claimed it was zero because he had deducted the whole amount of the exemption.

[60] With respect to Phillip Miller the Appellant says that the amount of the refund should be $12.05. Ms. Frizzell said that no return was filed and therefore there was no information for 1992 for which a refund could be calculated. Therefore, the Appellant cannot be correct in his calculations.

[61] With respect to Ivan Stone for the year 1992 the Appellant said that he should have contributed $16.50 according to Exhibit A-3. St. John's had calculated the amount required to be paid as $77.37. The calculation performed in Court by the pro-ration method established that the amount should have been $77.06. The PD24(E)s were not completed correctly according to the evidence of Ms. Frizzell. The information showed only the start and ending periods of the employment and not the different pay periods. This was not enough to allow the calculations to be done with accuracy. The witness who testified on behalf of the Appellant could not say how many days the employee worked. There was very little difference between the calculations of Ms. Frizzell and those done by St. John's.

[62] In the year 1993, with respect to Terry Wilson, the Appellant contended that the required contribution should be zero. Ms. Frizzell said that he should have paid $39.65 because he worked for other persons and yet Mr. Miller calculated only on the basis of his work for AGPRO. Therefore, he was not entitled to the refunds claimed by AGPRO.

[63] With respect to Anthony Miller for the year 1993 according to Exhibit A-15 he should have paid $145 and would have been entitled to refund of $61.18. Here he deducted the full basic exemption whereas using the weekly method his exemption would have been reduced to $888.46. Using the pro-rated method and the appropriate percentage he should have paid $205.28. AGPRO says it paid $206.18. It should have been paid only $145. Using the pro-rated method he was not entitled to any refund.

[64] The Appellant has not shown that the Minister's calculations were wrong. If AGPRO had made the calculations by using the pro-rated method the result would be the same. The Minister had the authority to pro-rate the basic exemption under the regulations.

[65] This appeal should be dismissed.

Argument on behalf of the Appellant

[66] In argument the Appellant said that what was involved in this case was an assessment under the CPP Act. The appeal by himself of the determination should be accepted because the Crown called no evidence and accepted the evidence given by him. He admitted the burden was on him to show that the Minister erred and he was convinced that he had met this burden. He said that the Appeals Officer considered only four names whereas he had submitted many more than that to the Minister for consideration. Further, the Appeals Officer did not give the Appellant the opportunity to present information before her which could have allowed her to allow the appeal from the determination at that stage. He relied upon the provisions of Section 27(2)(b) of the Act in that regard.

[67] He took the position that the real issue in this case is that the Act provides that the employers and employees are required to pay equal amounts under the Act and should be entitled to equal amounts by way of refund if there is an overpayment. It was the Appellant's contention that Section 40 of the Act is the enabling legislation which gives the Minister the right to make regulations with respect to the matters in issue. However, the Appellant argued that under the enabling legislation, Sections 8 and 9 the amount of the employees' contribution and the amount of the employers' contribution are equal. Further, Section 19 sets out the basic exemption for an employee and it was the Appellant's contention that the right of the Minister to pro-rate only applies within the exceptions set out in Section 19 and the employees in question in the case at bar are not covered by those exceptions. Therefore, the Minister has exceeded his authority in pro-rating for the individuals in question in this case. The action of prorating in this case is inconsistent with the equal treatment to be afforded to the employer and the employee under the Act.

[68] It was the Appellant's contention that when he completed the PD24(E)s admitted into evidence in this case that he was making an application for refund on behalf of the employer which he was entitled to do under the Act. His figures came from the taxpayer's returns, at least with respect to ten of the names that he submitted and the other information for the remainder were taken from the T1s and they are correct. Again, it was his position that the Act dictates that the refund to the employer be equivalent to the refund to the employee.

[69] He said that he has met the burden in this case, the appeal should be allowed and the matter sent back to the Minister for reassessment and reconsideration on the basis that the calculations he made for the refunds were correct.

[70] In rebuttal, counsel for the Respondent argued that the tables which were used to calculate the payments for the employees are pro-rated and at the end of the year if each of the employees have not earned in excess of the basic exemption, then they are entitled to a refund. If the arguments of the Appellant were correct then each person would be entitled to a full refund from each employer if pro-ration were not permitted. This cannot be the intention of the statute. To accept this would lead to an inequality in itself.

[71] Counsel agreed that Exhibit A-15 represented the basis of the calculations of the Appellant. She accepted the basis for the calculations but did not accept that the overpayment calculations were correct as calculated by the Appellant. In some cases the income tax returns were filed and in some cases they were not. She referred to particular calculations on the basis of the information submitted which showed that calculations of the Appellant were not correct. In some cases there was a T4 from only some employers whereas the names in issue might very well have worked for several employers and there is no way of checking this out. With respect to Exhibit A-16 she said this was not relevant and what someone in the Minister's office might have said in the letter to the Appellant is not evidence in this case.

[72] It was the position of counsel that pro-ration must be permitted otherwise where there was more than one employer the basic exemption would be applied to each one of them and this could not have been the intention of the Act. The Minister was entitled to pro-rate under the Regulations.

[73] Again counsel said she did not accept the Appellant's calculations on the basis for his calculations but if these calculations were correct then the only difference was created by pro-ration.

Analysis and Decision

[74] The Court will deal firstly with the question of the jurisdiction of the Court to hear this appeal. The jurisdiction of the Court is found in Section 12 of the Tax Court of Canada Act. This section gives the Court exclusive original jurisdiction to hear and determine references and appeals to the Court on matters arising under the CPP.

[75] Further, Section 27 of the CPP Act dictates that where any question arises under the Act with respect to contributions of an employer/employee, either one of them may apply to the Minister to determine the question. Further, Section 28 provides that an employee or an employer affected by the determination or by the decision on an appeal to the Minister under Section 27, may appeal to the Tax Court of Canada.

[76] The Court considers that there is no restriction on this right of appeal and it does not accept the argument of counsel for the Respondent that it does not give to the employer the right that it purports to because of the fact that it is found in a particular place or a particular section in the Act.

[77] In the case at bar the Appellant has followed a procedure set out in the Act and the Court is satisfied that the appeal is properly before this Court.

[78] The Court need not decide whether or not what is involved here is an "assessment" as such, even though that is what the Minister referred to it as when he responded to the Appellant when the Appellant's application for refund was not accepted. However, the Appellant posed a question under the Act, which was with respect to refunds claimed by him for all of the names on the PD24(E)s that he submitted to the Minister, the Minister made the calculations and made some changes with respect to mathematical miscalculations in some of them but by and large denied the Appellant's application for refunds on the basis of the Appellant's calculations.

[79] Following the procedure set out in the Act, the Minister told the Appellant that he could make an appeal of this decision to an Appeals Officer. This the Appellant did and the Appeals Officer found that the Appellant had not showed her that the Minister's calculations were wrong and at that stage of the proceedings she confirmed the Minister's actions.

[80] The Appellant then followed the proceedings set-out in the Act and filed what he referred to as an appeal to the Tax Court of Canada with respect to all of the names set-out in the PD24(E)s submitted to the Minister initially.

[81] The Court is satisfied that the Appellant was acting within the scope of the Act and followed the appropriate procedure. The Court is satisfied that it has jurisdiction to hear this appeal without deciding whether or not this is an appeal from an assessment. It is certainly an appeal from the decision made by the Minister from a determination or question by the Minister under Section 27 and this Court has the jurisdiction to hear the appeal.

[82] The main issue in this appeal is whether or not the Appellant has satisfied the Court on a balance of probabilities that the determination made by the Minister in refusing to grant the overpayment as requested was indeed wrong. The Appellant can accomplish this task by showing that the calculations that he made were the correct ones, or at least that some of the Minister's calculations were incorrect.

[83] The second substantial issue is whether or not the Minister had the right to pro-rate the basic exemption based upon the percentage of days of the year that an Appellant worked where he did not have insurable earnings in excess of the basic exemption. Counsel for the Respondent argued that the Minister acted properly and the Appellant argued that the Minister exceeded the authority vested in him under the statute and acted inconsistently with the Act when it purported to pro-rate under the Regulations.

[84] The Court is not satisfied that the Appellant has shown that the calculations that he made with respect to the amount of refunds was indeed correct. It is obvious that his calculations were based upon the information that he had before him and he did not have all of the information. It is obvious that his calculations were based upon the information set out in the PD24(E)s and the witness for the Respondent indicated quite clearly that this information was not correct.

[85] Further, some of the calculations were obviously based upon the position that all of these persons' names in the PD24(E)s worked for only one employer and this was not necessarily the case. The Minister was able to show by example through the evidence of Ms Frizzell and further by calculations made in Court that the conclusions reached by the Appellant were indeed not accurate, in some cases.

[86] Even if the Court were satisfied that the calculations that the Appellant made were indeed accurate, generally speaking, then the Appellant would still not be entitled to be successful in this appeal unless the Court was satisfied that the Minister had acted beyond its authority in pro-rating the basic exemption allowed to the person's named in the PD24(E)s submitted to the Minister. If the Minister acted within his authority under the Act and the Regulations then the Appellant cannot be successful in this appeal even if the Court accepted the accuracy of his calculations.

[87] The Court is satisfied that the Minister was entitled to pro-rate the basic exemption with respect to each employee based upon the percentage of time that the employee worked in the year. The Minister purported to act in accordance with the Regulations made under the enabling legislation and the Court cannot see anything in the Act or Regulations which satisfy it that the Minister acted incorrectly. The evidence indicated that pro-ration is done not only for employers but also for employees but in the case of employees the pro-ration is found in the tables themselves, while this is not so in the case of employers.

[88] It is correct to say that there is no automatic refund issued on behalf of an employer and an application has to be made for it. However, it is also correct to say that the Act provides for the process of an application for overpayment by an employer and where an overpayment is made and an application for a refund is made then this may be granted in an appropriate case. But the Appellant in the case at bar has not shown that it was entitled to any further refunds other then those allowed by the Minister when he considered the question raised by the Appellant when it filed the PD24(E)s in question here.

[89] The Court is satisfied that the Minister is not bound by an indication by one of its agents as to the basis for pro-rating and the right of the Minister to pro-rate must be found in the Act and the Regulations. The Court is satisfied that it is. The efforts of the Appellant, although valiantly presented, with great conviction, fall short of satisfying the Court that the Minister's calculations were incorrect.

[90] This appeal is dismissed and the Minister's determination is confirmed.

Signed at Ottawa, Canada, this 17^th day of December 1999.

"T.E. Margeson"

J.T.C.C.