Glenford E Culham v. Minister of National Revenue, [1985] 1 CTC 2227, 85 DTC 165

Christie, ACJTC:—This appeal relates to the appellant’s 1982 taxation year. The issue is whether the respondent was correct in the manner in which he calculated the appellant’s liability under subsection 161(2) of the Income Tax Act (“the Act”) to pay interest on unpaid instalments of tax.

Paragraph 150(l)(d); section 151; subsection 153(2); subsections 155(1) and (2); subsections 156(1) and (3) and section 156.1 of the Act and subsection 5300(1) of the Income Tax Regulations taken together, inter alia, provide this. Where deductions are made at source from remuneration or other payments received by an individual in a taxation year and the amount from which the deductions have been made is equal to or greater than A of his income for the year he shall, on or before April 30 in the next year, pay the remainder of tax payable as estimated in the return of income which he is required to file for each taxation year. If, however, the amount in respect of which deductions are made is less than /4 of the individual’s income for the year, he shall pay, on or before March 31, June 30, September 30 and December 31 in each year, '/4 of either

(a) the amount estimated by him to be his tax payable for the year, or

(b) his instalment base for the immediately preceding year, which is essentially the tax payable by him in that year.

If there is a deficiency after the instalments have been paid, it is payable on or before April 30 in the next year. Payments of tax by instalments is not required if the tax payable by an individual in a taxation year or for the immediately preceding year is not more than $400. Also, for individuals whose chief source of income is farming or fishing who are required to pay tax by instalments, there is one instalment of 7/; instead of four instalments of /4 and it is payable on or before December 31 in each taxation year. The remainder is payable on or before April 30 in the next year.

Where a taxpayer fails to pay instalments of tax which are required to be paid he shall pay interest under subsection 161(2) of the Act at the rate prescribed under subsection 4300(1) of the Income Tax Regulations from the day on which he was required to pay the instalment to the day payment is made and if payment is not made by April 30 of the following year which is the date the individual is required to file his return for the preceding year he becomes liable to pay interest on the amount at the same rate under subsection 161(1). That is to say in the words of counsel for the respondent: “Subsection 161(1) clicks in and take over’’.

A submission was made by the appellant to the effect, as 1 understood it, that if the legislation referred to was construed in its grammatical and ordinary sense, this could in theory or even in practice lead to unreasonable results. Suppose, for example, that in a taxation year the amount by which the appellant’s remuneration that is not deducted at source exceeds 25 per cent of his income for the year is negligible, say $100, and he fails to pay instalments of tax, he could be paying interest at a high rate on thousands of dollars. The amount of $100 could, for the sake of argument, be reduced to 2¢ as was done in Ramsay v MNR, [1984] CTC 2341; 84 DTC 1284.

The submission smacks of an argument in terrorem and I do not find it helpful in the determination of this appeal. Very fine lines must often be drawn in legislation and this is particularly so regarding enactments in relation to the taxation of incomes. An individual may be on one side of the line or the other by a narrow margin. This can enure to his benefit as well as operate to his detriment. Applying the ordinary rules of statutory interpretation, the pattern which emerges from the statutory provisions referred to is clear. It follows that it must be applied. This Court has no jurisdiction to rewrite legislation: MacDonell et al v MNR, [1984] CTC 2279 at 2281; 84 DTC 1258 at 1260. If the Act is to be amended, that is a matter for Parliament.

In this case the material filed with the Court indicates that the respondent founded his calculation of interest owing by the appellant on the latter’s estimated taxable income for 1982. In his notice of appeal the appellant said he should have paid instalments of tax under the Act. At the hearing he expressly agreed with paragraphs 6(a) to (d) of the reply to the notice of appeal. They read:

6. In reassessing the Appellant’s 1982 taxation year, the Respondent relied inter alia on the following facts:

(a) that during the 1982 taxation year, the Appellant had a total income of

$91,669.95 from which income tax amounting to $15,240.90 was deducted at source;

(b) that the Appellant’s remuneration from which tax has been deducted is less than /4 of his net income for the year;

(c) that at all material times, the Appellant was neither a farmer nor a fisherman;

(d) that the Appellant failed to remit instalment payments in respect of tax payable for 1982.

The appellant’s contention is that he is only liable to pay interest on tax payable on instalments based on the difference between undeducted at source payments he received and 25 per cent of his income for 1982. This is not what the Act stipulates. It follows that the appeal cannot succeed.

The' appeal is dismissed.

Appeal dismissed.