Citation: 2013 TCC 186
Date: 20130614
Docket: 2012-3138(IT)I
BETWEEN:
PAUL TREMBLAY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Angers J.
[1]
The appellant is
appealing his reassessments for the 2009 and 2010 taxation year. A preliminary
objection by the respondent with regard to the appellant’s 2009 appeal was
withdrawn at the commencement of the hearing so that the appeal for the 2009
taxation year is validly before this Court.
[2]
In filing his returns
for each of his 2009 and 2010 taxation years the appellant made a joint election
in prescribed form with his spouse, as provided for by section 60.03 of
the Income Tax Act (the Act). It was an election to transfer to
her an amount of $4,523.40 in respect of alleged pension income, being half of the
amount he withdrew from his Registered Retirement Savings Plan (RRSP) in the 2009
taxation year, and an amount of $7,219.81, also in respect of alleged pension
income, being half of a subsequent RRSP withdrawal in his 2010 taxation year.
[3]
The Minister of
National Revenue (the “Minister”), by subsequent reassessments, disallowed the
said transfers to the appellant’s spouse for both of the taxation years at
issue.
[4]
It is admitted by the
appellant that he had reached 65 years of age before December 31 of each of
the relevant taxation years. He also admitted that he made lump sum withdrawals
of $9,046.81 in 2009 and $14,439.62 in 2010 from his RRSP with the Canadian
Imperial Bank of Commerce (CIBC).
[5]
For both taxation years
CIBC issued a T4RSP slip showing in the appropriate box that the above amounts were
withdrawn from his RRSP. Despite this fact, the appellant tried to obtain from
CIBC an amendment to the T4RSP slips to show that the amounts were annuity
payments and should have been entered as such in a different box on the T4RSP
slips. CIBC refused to do so.
[6]
The evidence indicates
clearly that the appellant never intended to convert the withdrawals into a Registered
Retirement Income Fund (RRIF) or a Life Income Fund (LIF). On the contrary, he
intended to use the funds for things like travel.
[7]
The appellant had applied
to CIBC for a self-directed RRSP in 1994. His contributions to the RRSP were
invested in guaranteed investment certificates (GICs) for various terms and at
various annual rates of interest on the principal. It is the appellant’s
position that these GICs are actually annuities that he bought through his
self-directed RRSP and that the amounts withdrawn from his RRSP are thus eligible
to be split with his wife as “pension income”. He in fact calls his GICs “annuity
certificates” on the grounds that the interest was payable on a periodic basis,
namely annually. He submits that the money withdrawn from the RRSP constitutes an
annuity payment under an RRSP and is included in “pension income” as defined in
subsection 118(7) of the Act and therefore qualifies as an annuity as
defined in the Act.
[8]
The issue before this
Court is whether the appellant is entitled to transfer to his spouse one‑half
of his RRSP withdrawals for each of the taxation years under appeal.
[9]
In order for the
appellant to allocate a portion of his RRSP withdrawals to his spouse, the
amounts must be ones that are included in the definition of “eligible pension
income” in subsection 118(7) of the Act.
[10]
“Eligible pension
income” as defined in subsection 118(7) of the Act means, if the
individual has attained the age of 65, as in this case, the pension income
received by the individual in the taxation year.
[11]
“Pension income” is
defined as follows:
“pension
income” received by an individual in a taxation year means the total of
(a)
the total of all amounts each of which is an amount included in computing the
individual’s income for the year that is
(i)
a payment in respect of a life annuity out of or under a superannuation plan, a
pension plan or a specified pension plan,
(ii)
an annuity payment under a registered retirement savings plan, under an
“amended plan” as referred to in subsection 146(12) or under an annuity in
respect of which an amount is included in computing the individual’s income by
reason of paragraph 56(1)(d.2),
(iii) a payment out of or under a
registered retirement income fund or under an “amended fund” as referred to in
subsection 146.3(11),
(iv) an annuity payment under a deferred profit
sharing plan or under a “revoked plan” as referred to in subsection 147(15),
(v) a
payment described in subparagraph 147(2)(k)(v),
or
(vi) the amount by which an annuity payment included
in computing the individual’s income for the year by reason of paragraph 56(1)(d) exceeds the capital
element of that payment as determined or established under paragraph 60(a), and
(b) the
total of all amounts each of which is an amount included in computing the
individual’s income for the year by reason of section 12.2 of this Act or
paragraph 56(1)(d.1) of the
Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952.
[12]
The withdrawals made by
the appellant from his self‑directed RRSP in both taxation years at
issues does not constitute any type of payment provided for in the definition.
The appellant has acknowledged that he did not convert his RRSP withdrawals into
an RRIF or an LIF. The evidence does not disclose that the withdrawn money was
used to purchase an annuity, which is a product that pays a steady stream of
income to the investor. Instead, the withdrawal was used to pay for travel and
related expenses.
[13]
In determining whether
there is an annuity payment under an RRSP referred to in subparagraph (a)(ii)
of the definition of pension income, reproduced above, what is to be considered
is the situation after the money is withdrawn from the RRSP, not before, nor
should there be any consideration of the type of investments that are made with
the money that is in the RRSP. The purchase of a GIC with RRSP money is only
one of several types of investments one can make within the RRSP. A GIC is a
secure investment that guarantees the original amount invested and provides an
agreed rate of return and is, therefore, not an annuity per se.
[14]
The amounts of
$9,046.81 and $14,439.62 were properly included in computing the appellant’s
income for his 2009 and 2010 taxation years respectively and half of those
amounts cannot be transferred to his spouse.
Signed at Ottawa, Canada, this 14th day of June 2013.
“François Angers”
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