REASONS
FOR JUDGMENT
Russell J.
Introduction:
[1]
This is an informal procedure appeal of the two
March 9, 2015 reassessments per the federal Income Tax Act (Act) of the
Appellant’s 2012 and 2013 taxation years respectively. The Appellant asserts
that in so reassessing the Minister of National Revenue (Minister) erred in
including a T4A’d payment of $35,614 from the Appellant’s former employer BCE
Inc. as income in the Appellant’s 2013 taxation year. The Appellant’s position
is that in so doing the Minister erred in not recognizing that the payment was
tax exempt.
Evidence:
[2]
The evidence at hearing disclosed that the
Appellant was a former employee of BCE Inc. (BCE) and as such a member of BCE’s
registered pension plan for its Ontario employees (BCE-RPPO). A letter to the
Appellant from BCE dated July 17, 2012 (Ex. A-1) informed she was one of former
members of the BCE-RPPO. The BCE-RPPO was affected by “partial
wind ups” in 1993, 1996 and 1999. Accordingly she was entitled to a “payment of surplus” from the BCE-RPPO provided
necessary regulatory consents are obtained. It stated also that the Appellant
had retained counsel named in the letter to represent her in negotiations
between BCE and the “BCE Ontario Employees’ Pension
Surplus Committee”. These negotiations led to achievement of a “Surplus Sharing Agreement”, signed February 28, 2012
(SSA). The letter informed further that to have the surplus paid out of the
pension fund of the BCE-RPPO to BCE in accordance with SSA, so that BCE could
then distribute the surplus as individually directed by the Appellant and like
former BCE employees, consent of the Ontario Superintendent of Financial
Services to a “surplus withdrawal application”
was required (and subsequently obtained).
[3]
The letter states also that the Appellant had
instructed her counsel to consent on her behalf to the SSA. The letter states
that under the terms of the SSA,
50% of the Net
Surplus (surplus minus expenses, adjusted to take into account benefit
enhancements paid to certain members at the time of the Partial Wind Ups, and
also adjusted for investment earnings to the date of payment) attributable to
each of the Partial Wind Ups will be payable to that particular Wind Up Group.
Each Sharing Group Member will receive a pro rata share of the Members’ Share
allocated to his or her Partial Wind Up Group based on the value of his or her
liabilities under the Plan at the applicable Partial Wind Up date subject to a
minimum allocation for each Sharing Group Member of $1,000.
[4]
The letter informed further that the Appellant’s
estimated share of the portion of the surplus assets payable to her “Partial Wind Up Group” was $34,700 and that she could
elect either, or a combination of two payment options. Option A was to have a
specified amount of her “surplus payment” contributed
to her RRSP, subject to her having the necessary contribution room. The
Appellant chose this option for 100% of what her actual surplus payment would
be, up to $5,500 in addition to the aforesaid estimated amount of $34,700.
Option B was to receive the balance of the “surplus
payment” not allocated to Option A in a lump sum cash payment less
applicable withholding taxes. The Appellant signed and dated (July 24, 2012) a
four page form accompanying the letter thereby indicating her choice to have
all her “surplus payment” contributed to her
personal RRSP with Great West Life.
[5]
A T4A slip was issued to the Appellant by BCE’s
agent RBC Investor Services for the Appellant’s 2013 taxation year (Ex. A-2),
referencing the amount of $35,614 as a “lump-sum
payment” to be entered on “line 130”. Ex. A-3 is a RBC “confirmation of payment” to the Appellant stating
that her “direct contribution” from the BCE-RRPO
“issued 15 February 2013 by RBC Investor Services”
will be credited to her Great West Life RRSP in the gross and net amounts of
$35,614.02. Attached to Ex. A-2 (entered also as Ex. R-1) was a 2012 taxation
year RRSP receipt showing the slightly greater amount of $34,814 having been
received by London Life (ostensibly for Great West Life) as “amount of retirement savings portion of premium”.
[6]
Neither party entered into evidence a copy of
the SSA itself.
[7]
The Appellant’s representative testified that
upon speaking with a Canada Revenue Agency (CRA) officer she requested of CRA
that her claimed RRSP deduction be moved from her 2012 to her 2013 taxation
year; and this was done.
[8]
Key assumptions made by the Minister in raising
the appealed reassessment include, from the Reply:
i.
para. 12(b) - in the 2013 year the Appellant
received a surplus amount, a total of $35,614, from a BCE Inc. registered
pension plan;
ii.
para. 12(e) - the Appellant elected to
contribute funds to her RRSP from the surplus amount and on February 15, 2013,
during the first 60 days of the 2013 taxation year, funds in the total amount
of $35,614 were contributed to the Appellant’s RRSP with Great West Life;
iii.
para. 12(h) - on December 11, 2014 the Minister
reassessed the Appellant’s 2013 taxation year to include the surplus amount
paid to the Appellant in the amount of $35,614 that had not been previously
reported by the Appellant:
iv.
para. 12(j) - on March 9, 2015, as requested by
the Appellant, the Minister reassessed both the Appellant’s 2012 and 2013
taxation years to move part of the RRSP deduction in the amount of $35,418 from
the 2012 taxation year and to allow a deduction for this amount for the 2013
taxation year;
v.
para. 12(k) - the surplus amount received by the
Appellant from the BCE Inc. pension plan in the amount of $35,614 was income
for the 2013 taxation year.
Issue:
[9]
The issue is whether the T4’d subject payment of
$35,614 was reportable income to the Appellant for her 2013 taxation year.
Parties’ Submissions:
[10]
At the request of the Court the parties filed
written submissions post-hearing. The Appellant submits that wrongly two
receipts were issued for the same amount, the $35,614, the two receipts being
the T4A slip and the RRSP receipt. The SSA negotiated by BCE, BCE Ontario
Employees’ Pension Surplus Committee, the Appellant per counsel, et al
contemplated the RRSP receipt, however not the T4A slip. The Appellant asserts
that a T4A, “was never mentioned in the negotiated
agreement. (Whether this quoted assertion of the Appellant is a telling
point, the Appellant, upon whom lay the burden of initially adducing evidence
to make at least a prima facie case, did not submit in evidence the
referenced “negotiated agreement”, i.e.,
the SSA itself.)
[11]
The Appellant submits that the $35,614 should be
viewed as a direct transfer from one registered investment vehicle to another
absent any tax consequences. The T4A slip triggers an immediate tax consequence
as it requires that the T4A’d amount - the $35,614 - be added to the
Appellant’s income. The Appellant vigorously disputes that the subject payment
of the $35,614 was a payment of pension surplus. However, actual evidence of
this is quite lacking. In her written submissions, the Appellant cites no
provisions of the Act notwithstanding that the Respondent’s previously filed
and served written submissions summarized below referenced various provisions
of the Act and their applicability.
[12]
The Appellant also maintains that this situation
results in double taxation on the basis that the amount being paid into the
RRSP is made taxable by issuance of the T4A slip and it will again be taxed
when eventually the RRSP is paid out, as a RRIF, or in lump sum(s) or
otherwise.
[13]
The Respondent submits that the evidence
established that the subject payment was a surplus payment from the BCE-RPPO as
referred to in the description of the SSA in BCE’s July 17, 2012 letter. Thus
the $35,614 (per the T4A slip) was properly included in the Appellant’s 2013
taxation year income, noting that at the hearing the Appellant acknowledged
that counsel on her behalf had, 12 years after leaving BCE, executed the SSA
being an agreement that the Appellant and other individuals in like position
would receive a "surplus payment" from the BCE-RPPO, and in 2013 she
did receive this amount as "pension income" per the T4A slip, paid
directly to her own RRSP. This was done at the direction of the Appellant. The
Respondent submitted that the Appellant provided no evidence that the T4A slip
had been incorrectly issued and its issuance indicates that the reported sum of
$35,614 was received by the Appellant as a taxable amount.
[14]
The Respondent further submits that the surplus
payment must be included in income per section 147.3 and paragraph 56(1)(a) of
the Act. As the transfer amount does not fall under subsections 147.3(1) to
(7), then per subsections 147.3(9) and (10) the transfer amount is included
under paragraph 56(1)(a). It does not fall within subsection 147.3(4) because
at least some portion of it relates to an actuarial surplus, as amply indicated
by the documentary evidence.
[15]
The Respondent’s response to the Appellant’s
double taxation submission is that the RRSP deduction completely offset the
subject income addition.
Analysis:
[16]
Paragraph 56(1)(a) and subsections 147.3(1) to
(10) of the Act provide as follows:
56(1)(a)
Amounts to be
included in income for year
56 (1) Without
restricting the generality of section 3, there shall be included in computing
the income of a taxpayer for a taxation year,
(a) any amount received by the taxpayer in the year as, on account
or in lieu of payment of, or in satisfaction of,
(i) a superannuation or pension benefit including, without limiting
the generality of the foregoing,
(A) the amount of any pension, supplement or spouse’s or common-law
partner’s allowance under the Old Age Security Act and the amount of any
similar payment under a law of a province,
(B) the amount of any benefit under the Canada Pension Plan or a
provincial pension plan as defined in section 3 of that Act,
(C) the amount of any payment out of or under a specified pension
plan, and
(C.1) the amount of any payment out of or under a foreign retirement
arrangement established under the laws of a country, except to the extent that
the amount would not, if the taxpayer were resident in the country, be subject
to income taxation in the country,
but not including
(D) the portion of a benefit received out of or under an employee benefit
plan that is required by paragraph 6(1)(g) to be included in computing the
taxpayer’s income for the year, or would be required to be so included if that
paragraph were read without reference to subparagraph 6(1)(g)(ii),
(E) the portion of an amount received out of or under a retirement
compensation arrangement that is required by paragraph 56(1)(x) or 56(1)(z) to
be included in computing the taxpayer’s income for the year,
(F) a benefit received under section 71 of the Canada Pension Plan
or under a similar provision of a provincial pension plan as defined in section
3 of that Act, and
(G) an amount received out of or under a registered pension plan as
a return of all or a portion of a contribution to the plan to the extent that
the amount
(I) is a payment made to the taxpayer under subsection 147.1(19) or
subparagraph 8502(d)(iii) of the Income Tax Regulations, and
(II) is not deducted in computing the taxpayer’s income for the year
or a preceding taxation year,
(ii) a retiring allowance, other than an amount received out of or
under an employee benefit plan, a retirement compensation arrangement or a
salary deferral arrangement,
(iii) a death benefit,
(iv) a benefit under the Unemployment Insurance Act, other than a
payment relating to a course or program designed to facilitate the re-entry
into the labour force of a claimant under that Act, or a benefit under Part I,
VII.1, VIII or VIII.1 of the Employment Insurance Act,
(v) a benefit under regulations made under an appropriation Act
providing for a scheme of transitional assistance benefits to persons employed
in the production of products to which the Canada-United States Agreement on
Automotive Products, signed on January 16, 1965 applies,
(vi) except to the extent otherwise required to be included in
computing the taxpayer’s income, a prescribed benefit under a government
assistance program, or
(vii) a benefit under the Act respecting parental insurance, R.S.Q.,
c. A-29.011;
….
Transfer — money
purchase to money purchase, RRSP or RRIF
147.3 (1) An amount
is transferred from a registered pension plan in accordance with this
subsection if the amount
(a) is a single amount;
(b) is transferred on behalf of a member in full or partial
satisfaction of the member’s entitlement to benefits under a money purchase
provision of the plan as registered; and
(c) is transferred directly to
(i) another registered pension plan to provide benefits in respect
of the member under a money purchase provision of that plan,
(ii) a registered retirement savings plan under which the member is
the annuitant (within the meaning assigned by subsection 146(1)), or
(iii) a registered retirement income fund under which the member is
the annuitant (within the meaning assigned by subsection 146.3(1)).
(2) An amount is
transferred from a registered pension plan in accordance with this subsection
if the amount
(a) is a single amount;
(b) is transferred on behalf of a member in full or partial
satisfaction of the member’s entitlement to benefits under a money purchase
provision of the plan as registered; and
(c) is transferred directly to another registered pension plan to
fund benefits provided in respect of the member under a defined benefit
provision of that plan.
(3) An amount is
transferred from a registered pension plan (in this subsection referred to as
the “transferor plan”) in accordance with this subsection if the amount
(a) is a single amount;
(b) consists of all or any part of the property held in connection
with a defined benefit provision of the transferor plan;
(c) is transferred directly to another registered pension plan to be
held in connection with a defined benefit provision of the other plan; and
(d) is transferred as a consequence of benefits becoming provided
under the defined benefit provision of the other plan to one or more
individuals who were members of the transferor plan.
(4) An amount is
transferred from a registered pension plan in accordance with this subsection
if the amount
(a) is a single amount no portion of which relates to an actuarial
surplus;
(b) is transferred on behalf of a member in full or partial
satisfaction of benefits to which the member is entitled, either absolutely or
contingently, under a defined benefit provision of the plan as registered;
(c) does not exceed a prescribed amount; and
(d) is transferred directly to
(i) another registered pension plan and allocated to the member
under a money purchase provision of that plan,
(ii) a registered retirement savings plan under which the member is
the annuitant (within the meaning assigned by subsection 146(1)), or
(iii) a registered retirement income fund under which the member is
the annuitant (within the meaning assigned by subsection 146.3(1)).
(4.1) An amount
is transferred from a registered pension plan in accordance with this
subsection if the amount
(a) is transferred in respect of the actuarial surplus under a
defined benefit provision of the plan; and
(b) is transferred directly to another registered pension plan and
allocated under a money purchase provision of that plan to one or more members
of that plan.
(5) An amount is
transferred from a registered pension plan in accordance with this subsection
if the amount
(a) is a single amount no portion of which relates to an actuarial
surplus;
(b) is transferred on behalf of an individual who is a spouse or
common-law partner or former spouse or common-law partner of a member of the
plan and who is entitled to the amount under a decree, order or judgment of a
competent tribunal, or under a written agreement, relating to a division of
property between the member and the individual in settlement of rights arising
out of, or on a breakdown of, their marriage or common-law partnership; and
(c) is transferred directly to
(i) another registered pension plan for the benefit of the
individual,
(ii) a registered retirement savings plan under which the individual
is the annuitant (within the meaning assigned by subsection 146(1)), or
(iii) a registered retirement income fund under which the individual
is the annuitant (within the meaning assigned by subsection 146.3(1)).
(6) An amount is
transferred from a registered pension plan in accordance with this subsection
if the amount
(a) is a single amount;
(b) is transferred on behalf of a member who is entitled to the
amount as a return of contributions made (or deemed by regulation to have been
made) by the member under a defined benefit provision of the plan before 1991,
or as interest (computed at a rate not exceeding a reasonable rate) in respect
of those contributions; and
(c) is transferred directly to
(i) another registered pension plan for the benefit of the member,
(ii) a registered retirement savings plan under which the member is
the annuitant (within the meaning assigned by subsection 146(1)), or
(iii) a registered retirement income fund under which the member is
the annuitant (within the meaning assigned by subsection 146.3(1)).
(7) An amount is
transferred from a registered pension plan in accordance with this subsection
if the amount
(a) is a single amount no portion of which relates to an actuarial
surplus;
(b) is transferred on behalf of an individual who is entitled to the
amount as a consequence of the death of a member of the plan and who was a
spouse or common-law partner or former spouse or common-law partner of the
member at the date of the member’s death; and
(c) is transferred directly to
(i) another registered pension plan for the benefit of the
individual,
(ii) a registered retirement savings plan under which the individual
is the annuitant (within the meaning assigned by subsection 146(1)), or
(iii) a registered retirement income fund under which the individual
is the annuitant (within the meaning assigned by subsection 146.3(1)).
(7.1) An amount
is transferred from a registered pension plan (in this subsection referred to
as the “transferor plan”) in accordance with this subsection if
(a) the amount is a single amount;
(b) the amount is transferred in respect of the surplus (as defined
by regulation) under a money purchase provision (in this subsection referred to
as the “former provision”) of the transferor plan;
(c) the amount is transferred directly to another registered pension
plan to be held in connection with a money purchase provision (in this
subsection referred to as the “current provision”) of the other plan;
(d) the amount is transferred in conjunction with the transfer of
amounts from the former provision to the current provision on behalf of all or
a significant number of members of the transferor plan whose benefits under the
former provision are replaced by benefits under the current provision; and
(e) the transfer is acceptable to the Minister and the Minister has
so notified the administrator of the transferor plan in writing.
(8) An amount is
transferred from a registered pension plan (in this subsection referred to as
the “transferor plan”) in accordance with this subsection if
(a) the amount is a single amount;
(b) the amount is transferred in respect of the actuarial surplus
under a defined benefit provision of the transferor plan;
(c) the amount is transferred directly to another registered pension
plan to be held in connection with a money purchase provision of the other
plan;
(d) the amount is transferred in conjunction with the transfer of
amounts from the defined benefit provision to the money purchase provision on
behalf of all or a significant number of members of the transferor plan whose
benefits under the defined benefit provision are replaced by benefits under the
money purchase provision; and
(e) the transfer is acceptable to the Minister and the Minister has
so notified the administrator of the transferor plan in writing.
(9) Where an
amount is transferred in accordance with any of subsections 147.3(1) to (8),
(a) the amount shall not, by reason only of that transfer, be
included by reason of subparagraph 56(1)(a)(i) in computing the income of any
taxpayer; and
(b) no deduction may be made under any provision of this Act in
respect of the amount in computing the income of any taxpayer.
(10) Where, on
behalf of an individual, an amount is transferred from a registered pension
plan (in this subsection referred to as the “transferor plan”) to another plan
or fund (in this subsection referred to as the “transferee plan”) that is a
registered pension plan, a registered retirement savings plan or a registered
retirement income fund and the transfer is not in accordance with any of
subsections 147.3(1) to (7),
(a) the amount is deemed to have been paid from the transferor plan
to the individual;
(b) subject to paragraph 147.3(10)(c), the individual shall be
deemed to have paid the amount as a contribution or premium to the transferee
plan; and
(c) where the transferee plan is a registered retirement income
fund, for the purposes of subsection 146(5) and Part X.1, the individual shall
be deemed to have paid the amount at the time of the transfer as a premium
under a registered retirement savings plan under which the individual was the
annuitant (within the meaning assigned by subsection 146(1)).
[17]
It seems that the Appellant’s appeal position
has been prompted by an experience that her husband (the Appellant’s herein
representative) had had with respect to a BCE pension entitlement of his own
whereby a pension related amount was paid on his account apparently without
incurring issuance of a T4A slip. There was no evidence called as to the
details of that, and in any event the relevance of such evidence would have
been highly questionable. It is trite law that the issue in a tax appeal is to
be determined on the basis of law applied to proven facts to establish whether
the appealed assessment etc. is right or wrong, and in particular absent any
regard for how some other taxpayer, presuming identical circumstances, may have
been or was treated.
[18]
The cornerstone of the Appellant’s submissions
is that the subject payment was not a pension surplus. No evidence was called
to support this surprising proposition - surprising for several reasons:
i.
the July 17, 2012 letter as noted in detail
above is replete with references to the subject payment being a “surplus” including describing the SSA as involving
negotiations as to the amount and sharing of a “surplus”
emanating from the BCE-RPPO;
ii.
the Appellant’s own counsel negotiated and
signed the SSA on her behalf, the very title of which agreement is, “Surplus Sharing Agreement”;
iii.
on July 24, 2012 the Appellant completed, signed
and subsequently submitted to BCE her four page Option Election Form (Ex. A-1),
by checking off Option A on page 2 reading, “I wish to
contribute $34,700 of my surplus payment to my personal RRSP.”
[bolding and italics added for emphasis] (In accordance with terms included in
this Option Election Form the inserted estimated figure of $34,700 was
ultimately revised to the Appellant’s actual credited figure being the subject
amount of $35,614);
iv.
the said Option Election Form also required
assurance that the Appellant had RRSP contribution room sufficient for receipt
of the subject payment. Similarly, the Form noted at page 3 that for Option B,
being the lump sum payment option, the lump sum would be paid “less applicable holding taxes”. To this I say it is
hardly to be expected that Option B would be taxable and Option A not.
[19]
The reason why “surplus”
is a key factor is because of certain provisions of the Act, as submitted by
the Respondent but unreferenced in the Appellant’s written submissions. (One
was acknowledged in passing in the Appellant’s prior oral representations at
the hearing, before the requested written representations were filed and
served).
[20]
Section 143.7 of the Act identifies several
situations involving transfer of assets from vehicle A to vehicle B that can be
effectuated without any tax consequence. They are found in subsections 147.3(1)
through (7).
[21]
Subsection 147.3(10), set out above, provides in
essence that where for an individual (thus including the Appellant), an amount
is transferred from a registered pension plan (thus including BCE-RPPO) to a
RRSP (thus including the Appellant’s Great West Life RRSP) and the transfer is
not in accordance with any of the several situations referenced in subsections
147.3(1) through (7), then per paragraph (a) the transferred amount is deemed
to have been paid to the individual and per paragraph (b), subject to an inapplicable
provision relating to a registered retirement income fund, that individual is
deemed to have paid the amount as a contribution to his/her RRSP.
[22]
And subsection 147.3(9), set out above,
essentially provides that where an amount is transferred in accordance with any
of subsections (1) through (8), then per paragraph (a) the amount shall not be
included in income per subparagraph 56(1)(a)(i) and per paragraph (b) no
deduction from income may be made under any provision of the Act in respect of
the amount.
[23]
The question becomes whether the herein payment
is within or without any of subsections 147.3(1) through (8). Neither party
raised any as being potentially applicable other than subsection 147.3(4). That
provision makes relevant the question of whether the subject amount is a
pension “surplus”. This provision, set out
above, essentially provides that an amount is transferred from a registered
pension plan (such as the BCE-RPPO) to an RRSP on a tax exempt basis if inter
alia per paragraph (a) “no portion of that amount
relates to an actuarial surplus”.
[24]
So, in a pension context does “surplus” equate to an “actuarial
surplus”? Presumably surplus means surplus to requirements and in the
absence of direct evidence on this seemingly obvious point I believe I can take
judicial notice that any surplus of a pension plan is determined in whole or
part on an actuarial basis. Thus I do conclude that the surplus in this case is
an actuarial surplus. The fact that the surplus arose through “partial wind ups” of the BCE-RPPO in 1993, 1996 and
1999 does not detract from my thinking that regardless, the BCE-RPPO assets and
liabilities would have had to have been reviewed actuarially to confirm that a
surplus as to needs existed and the quantum of that surplus. Importantly,
distribution of the surplus amount that has been determined, amongst various
and sundry past if not also present employees of BCE would still needed to be
negotiated, and that would explain the need for and the existence of the negotiated
SSA.
[25]
The fact that consent was required of the
Ontario Superintendent of Financial Services to a “surplus
withdrawal application” before the SSA could be implemented is
corroborative of this conclusion.
[26]
Further, I cannot contemplate how a pension may
have surplus other than one identified or affirmed actuarially. I am assisted
in this regard by the decision of Kidd v. Canada Life Assurance Co.,
2013 ONSC 1868, cited by the Respondent. In the course of reasons for judgment,
Perell, J. for the Ontario Superior Court had cause to consider the term “pension surplus”. The dispute in this case arose from
mergers of certain pension plans in 1997. A consolidated pension plan was
created and the associated funds were merged into a single fund. A major issue
was who owns the surplus of the consolidated pension plan. The Court at
paragraph 30, stated that:
Pension surplus
is the excess value of the assets in a pension plan over the value of the
liabilities, both calculated in a manner prescribed by pension laws. The
amount of surplus at any given time is actuarially determined under set
guidelines and prescribed factors. It will become important to understand
that at any given time, a pension surplus is a legal fiction. A pension surplus
only becomes tangible and real when trust monies calculated at a particular
date or actually paid out to the owners of the surplus. [Underlining added]
[27]
This finding confirms my conclusion above that a
pension surplus is determined actuarially. Thus in respect of the surplus
amount identified for the Appellant in this appeal, it cannot be said per
paragraph 147.3(4)(a) that the $35,614 is not a transfer of, “a single amount no portion of which relates to an actuarial
surplus”. Restating to avoid the double negative, in my view the
transfer in the Appellant’s situation is a transfer of a single amount which
relates to an actuarial surplus in whole or part.
[28]
Thus as the subject payment as a transfer does
not accord with paragraph 147.3(4), then per subsection 147.3(10), “the transfer is not in accordance with any of subsections
147.3(1) to (7)”, and per paragraph (a) the amount is deemed to have
been paid to the Appellant and per paragraph (b) deemed to have been a
contribution to her RRSP. I note that apart from subsection 147.3(4) neither
party raised any of the section 147.3 subsections (1) to (8) as being of
potential application in the Appellant’s circumstances. I have briefly reviewed
same without noting any that obviously would apply. Subsection 147.3(4.1) does
allow transfer of an actuarial surplus, but in from a registered pension plan
under a defined benefit provision of that plan to another registered plan, and
allocated under a money purchase provision of that plan to one or more of its
members. Those circumstances are quite different from the Appellant’s.
[29]
The Appellant had argued strenuously that this
was not a surplus (presumably so as to not be ejected from subsection 147.3(4)
by reasons of paragraph (a) thereof); this notwithstanding that all her
documentation filed in evidence, including the Option Election Form that she
had signed, identified the amount as precisely that - a surplus. Also, I infer
from the fact the Appellant did not seek to enter in evidence the central
document being the SSA that it would not have benefitted her argument. Perhaps
if the Appellant does feel that the SSA is not properly reflective of the
applicable circumstances then she has a matter to take up with her lawyer who
represented her in negotiating the SSA.
[30]
The Appellant argued that the T4A slip should
not have been issued. The foregoing analysis shows why it was correctly issued
- the subject amount became an amount paid to the Appellant per paragraph
147.3(1) and thus an amount to be included in income per subparagraph
56(1)(a)(C) set out above, being an amount received by the taxpayer as a “payment out of or under a specified pension plan.” In
this instance the pension plan was the BCE-RPPO.
[31]
The Appellant also had concerns with having to
pay tax because the subject payment was rightly included in 2013 income while
the RRSP deduction ultimately was taken in the 2013 taxation year after initially
having been claimed in the 2012 taxation year. I see no difficulty with this. Certainly
some additional tax would have been owing for the 2012 year as a result of
removing the RRSP deduction therefrom. It is axiomatic that for the 2013 year
the RRSP deduction would completely offset the appealed addition to income for
that taxation year.
[32]
There is one more thing. While the Appellant has
to recognize the subject payment as income it should not be overlooked that she
had room to claim an RRSP deduction to completely offset that income. On the
other hand if the subject payment had qualified as non-taxable within the
various types of transfers encompassed by subsection 147.3 then per paragraph
147.3(9)(b) any RRSP deduction for it was prohibited. There is no residual tax
difference between these two situations, except perhaps that in the former
scenario, here applicable, the Appellant used up some of her RRSP contribution
room, which anyway she was willing to do from the start.
[33]
In contrast, the Appellant’s filing position was
that she could claim the RRSP deduction without at the same time having to
claim the contribution generating that deduction as income. Indeed it would be
startling in the extreme were the Act to condone so one-sided an
interpretation.
Conclusion:
[34]
The appeal is denied, without costs in this informal
procedure proceeding. The appealed reassessments for the Appellant’s 2012 and
2013 taxation years are affirmed.
Signed at Quebec City, Quebec, this 8th
day of January 2018.
“B. Russell”
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