William Brannen v. Her Majesty the Queen, [1992] 1 CTC 2329, 92 DTC 1147

Allan, D.T.C.C.J.:—The taxpayer has appealed from the respondent's assessment of his 1989 return of income.

The parties to this appeal filed an agreed statement of facts, as follows:

1. In the 1989 taxation year, the Appellant and his spouse, Ethel Brannen, were married.

2. The Appellant filed his 1989 tax return and claimed a married amount of $388.70, calculated as follows:

Base amount	$5,561.00
Spouse's net income	5,172.30
	$388.70

3. Based on information slips attached to the Appellant's return, the Minister of National Revenue calculated Mrs. Brannen's net income as follows:

Old age security pension	$3,949.86
Net federal supplement	652.29
Retirement benefit	706.20
Interest	516.24
	$5,824.59

4. The Minister of National Revenue included the amount of net federal supplements paid of $652.29 received by Mrs. Brannen, and calculated that her total 1989 income for the purpose of calculating the Appellant's entitlement to a married tax credit was $5,824.59.

5. By Notice of Assessment dated May 8, 1990, the Minister of National Revenue reduced the married amount claimed to nil, calculated as follows:

Base amount	$5,561.00
Less Spouse's net income	5,824.59
	Nil

6. By Notification filed on May 10, 1990, the Appellant objected to the said assessment.

7. By Notification dated March 19, 1991, the Minister of National Revenue confirmed the said assessment.

The parties agree that the issue to be decided is whether the appellant is entitled pursuant to paragraph 118(1)(a) to deduct a married tax credit of $388.70 in the 1989 taxation year. That issue depends upon which of the taxpayer or his spouse is required to include in "net income" the amount of the guaranteed income supplement” received by appellant's spouse in that year.

The respondent in assessing appellant's return, added the amount of the federal supplements under the O/d Age Security Act received by appellant's spouse, to her other income in calculating whether the taxpayer was entitled to a married tax credit. The result brought the spouse's net income to a total which exceeded the maximum married tax credit.

While the supplement is not taxable and is deductible in arriving at the taxpayer's “taxable income”, the argument of the respondent is that the amount of the federal supplement received by the spouse (in this case Mrs. Brannen) under the Old Age Security Act, R.S.C. 1985, c. O-9, must be included in the spouse's “net income" for the purpose of calculating the taxpayer's entitlement to a married tax credit. The agent for the appellant contends that the amount of the supplement should not be added to the income of the spouse for this purpose.

I requested written arguments from the parties, which have been filed. Neither party has cited me a case which deals with the issue, although the question must have arisen thousands of times. The cases which have been cited to me are not of assistance in deciding this question.

The appellant's argument states:

1. Section 110(1)(f) includes Old Age Security supplements as a "social assistance payment" for the purpose of removing the amount from taxable income.

2. Section 56(1)(u) deems social assistance" amounts to be income of the higher income spouse for the year.

3. The explanatary (sic) notes to subclause 26(5), (adding Sec 56(1)(u) to the Income Tax Act) Bill C-139, clearly show that the requirement to include "social assistance" payments in the income of the higher income spouse, was to treat other types of “social assistance” on the same basis as supplements paid under the Old Age Security Act. The higher income spouse is to maintain his or her entitlement to the "married amount".

It is necessary to consider the following provisions of section 56 of the Income Tax Act. Section 56 is included in that portion of the Act headed "Computation of Income”, and in the Subdivision thereof entitled "Other Sources of Income”. It specifies in numerous paragraphs, various kinds of receipts which a taxpayer is required to include in declaring his income. The paragraphs of section 56 which are relevant to the issue here, read as follows:

(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,

(a) Pension benefits, unemployment insurance benefits, etc.—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 allowance under the Old Age Security Act and the amount of any similar payment under a law of a province,

(u) Social assistance payments.— a social assistance payment made in the year

(i) on the basis of a means, needs or income test, and

(ii) in respect of the taxpayer or of a person who, at the time of the payment, is related to the taxpayer or is a person in respect of whom any individual was entitled to receive a family allowance payment under the Family Allowances Act, 1973

and received by

(iii) the taxpayer, other than a married taxpayer who resides with his spouse at the time of the payment and whose income for the year is less than his spouse's income for the year, or

(iv) the spouse of the taxpayer with whom the taxpayer resides at the time of the payment if the spouse's income for the year is less than the taxpayer's income for the year;

Although "social assistance payment" might be thought to include a federal supplement under the Old Age Security Act, it cannot, in my view, have that meaning in section 56 of the Income Tax Act.

My reason for saying this is that paragraph 56(1)(a) specifically provides that "the amount of any pension, supplement, or spouse's allowance under the Old Age Security Act” shall be included in computing a taxpayer's income. And paragraph 56(1)(u) specifically requires a “social assistance payment" received by the taxpayer or the taxpayer's spouse also to be included in computing the taxpayer's income.

Logically, “supplement” must be assigned a meaning different from "social assistance payment" where, as here, they are specified separately in the same section as two kinds of income which are required to be included in a taxpayer's income.

The rules of statutory interpretation require words to be given meanings. Thus where two terms are used in the same statute, different meanings ordinarily ought to be ascribed to each in order to give each a meaning. A fortiori, where two terms or words or phrases are used in the same section of the statute, different meanings ought to be assigned to the different terms words or phrases.

Section 110 referred to by the appellant, is included in that portion of the Income Tax Act headed "Computation of taxable income" and comes under a sub-heading "Other deductions permitted".

The relevant parts of section 110 read as follows:

(1) For the purpose of computing the taxable income of a corporation for a taxation year, there may be deducted such of the following amount as are applicable:

(f) Deduction for payments.— any amount that is

(iii) a social assistance payment made on the basis of a means, needs or income test by a registered charity or under a program (other than a prescribed program) provided for by an Act of the Parliament of Canada or a law of a province where the payment is received by the individual in respect of whom the social assistance was provided or by a person who, at the time the payment was made, resided with the individual,

to the extent that it has been included in computing the taxpayer's income for the year;

Paragraph 56(1)(u) does not require the supplement to be included in the income of the taxpayer, as contended by the appellant. Nor does section 110 include Old Age Security supplements as a “social assistance payment" in specific terms.

As neither of these phrases, "supplement under the O/d Age Security Act" nor "social assistance payment" are included in the other, I must conclude they are meant to refer to two different things in section 56. I am satisfied that the rules of statutory interpretation support this view.

I am unable to find any provision in the Act to support the contention of the appellant. On the other hand, it appears to me that subsection 56(1) requires the appellant's spouse in computing her income to include the supplements she received under the Old Age Security Act.

I am satisfied the respondent correctly included the supplements in the income of the spouse in order to determine the married tax credit, if any, to which the appellant was entitled.

I therefore dismiss the appeal.

Appeal dismissed.