Richard Zingel v. Minister of National Revenue, [1980] CTC 2466, 80 DTC 1424

D E Taylor:—This is an appeal heard on March 17,1980, at the City of Edmonton, Alberta, against an income tax assessment for the year 1976 in which the Minister of National Revenue limited the claim of the appellant for registered retirement savings plan contributions to a maximum of $3,500. In so assessing, the respondent relied, inter alia, upon paragraphs 8(1 )(m), 60(j) and 146(5)(a) of the Income Tax Act, SC 1970-71-72, c 63, as amended.

History

As portrayed by the appellant in his notice of appeal, the salient points are:

— From 1973 to 1976 I was in the employment of Manitoba Hydro and—as a condition of employment—I was also member of the MANITOBA CIVIL SERVICE SUPERANNUATION FUND. I was hired for the duration of a specific construction project and consequently employment and membership in the superannuation fund came to an end at the completion of the project in September 1976. My relationship with the superannuation fund is documented in T4-76 Box F $1,202.42 and T4A-76 Box D $3,938.06 and Box I $293.81. The lump sum return from the superannuation fund was transferred to an existing registered retirement savings plan.

— REVENUE CANADA has maintained so far that I was entitled to a retirement savings plan deduction of $3,500 plus the sum roll-over of $3,938.06; they have explained that the amount of $3,500 was applicable in view of my membership in a superannuation fund for part of 1976 and they have rejected my argument that the allowable deduction should be $5,500 plus the lump sum roll-over.

Contentions

For the appellant:

— REVENUE CANADA would unfairly discriminate against employees on construction projects if it would insist on the lower deduction limit. Construction workers by the nature of their vocation have to move from project to project and by doing so may have to change employment and consequently superannuation plans frequently; because of their mobility these employees may never reap the benefits of a superannuation plan. I do not believe that Parliament intended to penalize employees who had to terminate superannuation plans with the application of lower deduction limits.

—The contribution of $1,202.42 (T4-76 Box F) has been cancelled by the lump sum return of $3,938.06 (T4A-76 Box D). Hence, I was not a member of a superannuation plan at the end of the taxation year.

I believe that the proper interpretation of subsections 146(5)(6) would yield the following solution to the problem:

Lump sum roll-over	$3,938.06
MINUS 1976 contribution to cancelled superannuation plan	$1,202.42
Lump sum roll-over ADJUSTED To 75 12 31	$2,735.64
Maximum annual deduction for taxpayers not covered by
pension plan	$5,500.00
TOTAL ALLOWABLE DEDUCTION	$8,235.64
For the respondent:

—The Appellant was a person described in paragraph 146(5)(a) and subject to the restrictions of that paragraph.

Evidence and Argument

Although little was added at the hearing to the already available information, it was clear to the Board that the appellant understood the limitation provision but at the same time, he put forward for serious consideration the plight of many employees working under similar “temporary” conditions or under circumstances wherein they might work for several different employers in a relatively short period of time.

Findings

The relevant section of the Act is subsection 146(5) which reads as follows:

Amount of premium deductible. There may be deducted in computing the income for a taxation year of a taxpayer who is an annuitant under a registered retirement savings plan or becomes, within 60 days after the end of the taxation year, an annuitant thereunder, the aggregate of all amounts each of which is the amount of any premium paid by the taxpayer under the plan during the taxation year or within 60 days after the end of the taxation year (to the extent that it was not deducted in computing his income for a previous taxation year), not exceeding however the amount, if any, by which

(a) where the taxpayer was employed in the year and as a consequence thereof was a person who is or may become entitled to benefits under a pension fund or plan that provides for payment of a pension to him payable in whole or in part out of contributions made or to be made to the fund or plan or out of or in respect of amounts credited or to be credited in lieu of such contributions by a person other than the taxpayer in respect of the taxpayer’s employment in that year, an amount that, when added to the amount, if any, deductible under paragraph 8(1)(m) in computing the income of the taxpayer for that year, does not exceed the lesser of $3,500 and 20% of his earned income for that taxation year, or

(b) in any other case, the lesser of $5,500 and 20% of this earned income for that taxation year

exceeds the amount, if any, deductible under subsection (6) incomputing his income for that taxation year.

In my view, it is evident that “in the year’’ in question the appellant “was a person’’ who “may’’ become entitled to benefits under a pension fund or plan. It is just as evident, because of the nature of his work, that the prospect of such benefit was remote indeed, but it did exist, and the Minister is therefore correct in his assessment.

Decision

The appeal is dismissed.

Appeal dismissed.