Collins v. R., [1997] 1 CTC 2386 (Informal Procedure)

Dubienski D.J.T.C.C. (orally): - There has been considerable law in this case, in cases such as these. The three cases that the Counsel for the Minister has presented are just examples of what has been the case for some time. It’s a matter that has caused me some concern, and I say this knowing that it really doesn’t have much affect on what the outcome is. But, I’ve had some concern for quite a while with regard to these sections in the Act, because there are many, many instances where these lump sum settlements are made. And unless there is way of wording them in such a way to bring them within the effect of Section 16(B) and (C), there’s just no way you can get around it, as the decided cases have set out.

The Sections are quite clear with regard to the emphasis on this requirement of the payments being on a periodic basis. And there have been some law that have said that if there if it’s within the year and the taxpayer pays up in multiples of a payment of two or three months, if it’s a monthly payment, that that would be acceptable. But, if it’s a lump sum payment that is not related to the payments, but is purely an amount that has been agreed by the parties irrespective of what the actual deficiency is and has no relationship to the payments, that that as a lump sum settlement will not be allowed.

And that’s seems to be what the situation is here, unfortunately. It’s not equitable, obviously, but of course, as I’ve said before, if anybody looks for equity in the Income Tax Act, they’re not going to find it. Because it’s a revenue enactment and when you’re a member of parliament that’s passing these Acts, they’re not particularly concerned about how it’s going to affect taxpayers and in some cases but more with regard to the money that might be obtained.

I think that it’s very unfortunate, Mr. Collins, but I can’t see anyway I can find in your favour. It’s quite clear that what you wanted to do was to do the right thing and you did. But at the same time you did not, you were not able obtain any benefit, as far as income tax is concerned.

MR. COLLINS: Well, I guess not gain, not being subjected to put myself, like I wanted my wife to have the house and I wanted me to be able to just not be indebt to the taxation people. That was my only -

HIS HONOUR: Well, you see if you had been paying regularly, all those amounts would have been deducted from your income tax.

MR. COLLINS: But then I would have had to sell the house and she would have been without a house, which she bought with my mother’s money.

HIS HONOUR: I see all that, but the only way that you could have got around it is sell the house and then pay it off to her so much a month.

MR. COLLINS: But you see, that’s not a good thing to do, to move my wife and children around.

HIS HONOUR: And this is why I say it’s not equitable, you did the right thing for your wife and children, but the way the Act is drawn, it doesn’t show any way that you can be rewarded for what you did insofar as income tax is concerned. That’s the way it’s drawn and I don’t think there’s anything we can do about it, but certainly I can’t do anything for you. It might be well that you and other taxpayers who have found themselves in exactly the same position could see your member of parliament and tell them that this is a very bad thing and something should be done about it, but that’s another matter.

So, I’m sorry, I have to tell you that I have to dismiss the appeal.

Appeal dismissed.