Docket: 2012-1403(IT)I
BETWEEN:
KELLY MUELLER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on common
evidence with the appeal of
Brittany Mueller (2012-1404(IT)I) on December
5, 2012 at Toronto, Ontario
By: The Honourable Justice J.M.
Woods
Appearances:
|
Agent for the Appellant:
|
Kathryn
Mueller
|
|
Counsel for the Respondent:
|
Nicole Walton (student-at-law)
Rishma Bhimji
|
____________________________________________________________________
JUDGMENT
The
appeal with respect to an assessment made under the Income Tax Act for
the 2010 taxation year is dismissed.
Signed at Ottawa, Ontario this 8th day of January 2013.
“J. M. Woods”
Docket: 2012-1404(IT)I
BETWEEN:
BRITTANY MUELLER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on common
evidence with the appeal of
Kelly Mueller (2012-1403(IT)I)
on December 5, 2012 at Toronto, Ontario
By: The Honourable Justice J.M. Woods
Appearances:
|
Agent for the
Appellant:
|
Kathryn Mueller
|
|
Counsel for the
Respondent:
|
Nicole Walton (student-at-law)
Rishma Bhimji
|
____________________________________________________________________
JUDGMENT
The
appeal with respect to an assessment made under the Income Tax Act for
the 2010 taxation year is dismissed.
Signed at Ottawa, Ontario this 8th day of January 2013.
“J. M. Woods”
Citation: 2013 TCC 3
Date: 20130108
Docket: 2012-1403(IT)I
BETWEEN:
KELLY MUELLER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2012-1404(IT)I
AND BETWEEN:
BRITTANY MUELLER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1]
The appellants, Kelly and Brittany
Mueller, borrowed money under a special student line of credit offered by the
Bank of Montreal. The issue is whether interest paid on these loans is eligible
for the student loan tax credit provided under section 118.62 of the Income
Tax Act.
[2]
The appeals relate to
reassessments for the 2010 taxation year. The amount of interest at issue is
$2,885 for Kelly Mueller and $2,001 for Brittany Mueller.
[3]
Section 118.62 is reproduced
below.
118.62. Credit for interest on student loan
- For the purpose of computing an individual's tax payable under this Part
for a taxation year, there may be deducted the amount determined by the formula
A x B
where
A is the appropriate percentage for the
year; and
B is the total of all amounts (other
than any amount paid on account of or in satisfaction of a judgement) each of
which is an amount of interest paid in the year (or in any of the five
preceding taxation years that are after 1997, to the extent that it was not
included in computing a deduction under this section for any other taxation
year) by the individual or a person related to the individual on a loan made
to, or other amount owing by, the individual under the Canada Student Loans
Act, the Canada Student Financial Assistance Act or a law of a
province governing the granting of financial assistance to students at the
post-secondary school level.
[4]
The appellants, who are sisters,
were represented at the hearing by their mother, Kathryn Mueller.
Background
facts
[5]
For purposes of financing their college education, the appellants
each took out a line of credit with The Bank of Montreal under a program
designed especially for students. The appellants were previously denied student
loans offered under the federal government’s student loan program because their
parents’ income was too high.
[6]
The program offered by The Bank of
Montreal was called the Student Line of Credit. Under the promotional material
for the program, the Bank represented that the interest rate was lower than for
student loans, and that no principal repayments were required until one year
after graduation. The maximum amount that could be borrowed was $45,000.
[7]
Kathryn Mueller testified that she
was informed by someone at the Bank that the loans were tax deductible. This is
not referenced in the Bank’s promotional material that was entered into
evidence and no one from the Bank was called to testify.
Analysis
[8]
The tax relief for interest on
student loans in section 118.62 of the Act is designed to apply to loans
that are provided under legislation aimed at providing financial assistance to
students at the post-secondary level.
[9]
The difficulty in this
case is the requirement that the loans be
provided under one of the following: “the Canada Student Loans Act, the Canada
Student Financial Assistance Act or a law of a province governing the
granting of financial assistance to students.”
[10]
In the notices of appeal, the
appellants acknowledge that the loans were not eligible under any government
program. This is fatal to their claim.
[11]
The appellants suggest that that
the loans must be sanctioned under some legislation because the Bank is a
federally-regulated institution. This argument does not assist the appellants.
The only federal statutes that qualify for purposes of the tax credit are the
Canada Student Loans Act and the Canada Student Financial
Assistance Act. Neither of these statutes applies to the loans at issue.
[12]
Since the loans do not satisfy the
conditions set out in section 118.62 of the Act, there is no relief that
this Court can give.
[13]
Finally, I would comment that in
reaching this conclusion I was troubled that the Crown’s Replies did not
satisfactorily address all of the requirements of section 118.62 because they made
no mention of provincial legislation. If the loans were provided under a law of
a province, they might have qualified for the credit. Although the Replies
should have been more complete, I am satisfied that the appellants were not
prejudiced by this omission since they acknowledged in the notices of appeal
that the loans were not under any government program.
[14]
The appeals will be dismissed.
Signed at Ottawa, Ontario this 8th day of January
2013.
“J. M. Woods”
CITATION: 2013 TCC 3
COURT FILE NOS.: 2012-1403(IT)I and
2012-1404(IT)I
STYLE OF CAUSE: KELLY MUELLER v.
HER
MAJESTY THE QUEEN and
BRITTANY
MUELLER v.
HER
MAJESTY THE QUEEN
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: December 5, 2012
REASONS FOR JUDGMENT BY: The
Honourable Justice J.M. Woods
DATE OF JUDGMENTS: January 8, 2013
APPEARANCES:
|
Agent for the
Appellants:
|
Kathryn Mueller
|
|
Counsel for the
Respondent:
|
Nicole Walton (student-at-law)
Rishma Bhimji
|
COUNSEL OF RECORD:
For the Appellant:
Name: n/a
Firm:
For the
Respondent: William F. Pentney
Deputy
Attorney General of Canada
Ottawa, Canada
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