Somers
D.J.T.C.:
This
appeal
was
heard
in
Toronto,
Ontario,
on
November
27,
1996,
pursuant
to
the
Informal
Procedure.
The
Minister
of
National
Revenue
(the
“Minister”)
notified
the
Appellant
that
he
had
made
excess
contributions
to
the
Registered
Education
Saving
Plans
(the
“Plans”)
and
was
subject
to
tax
pursuant
to
section
204.9
of
the
Income
Tax
Act
(the
“Act’).
The
Minister
assessed
the
Appellant
on
April
4,
1995
the
following
taxes,
penalties
and
interest
for
the
1990,
1991,
1992,
1993
and
1994
taxation
years:
In
so
reassessing
the
Appellant,
the
Minister
made
the
following
assumptions
of
fact
which
were
admitted
or
denied
by
the
Appellant:
(a)
in
the
1990
taxation
year,
the
Appellant
opened
four
Plans
with
the
Heritage
Scholarship
Trust
Plan
(the
“Promoter”)
for
the
purposes
of
funding
the
education
of
three
of
his
nephews
in
post-secondary
educational
institution;
(partially
admitted)
(b)
the
Promoter
was
registered
by
the
Minister
in
accordance
with
the
provision
of
section
146.1
of
the
Act;
(partially
admitted)
(c)
the
Appellant
is
entitled
to
make
maximum
annual
contributions
to
each
of
the
Plan
in
the
amount
of
$1,500;
(admitted)
(d)
at
all
material
times,
the
Appellant
made
contributions
to
each
of
the
Plan
in
excess
of
$1,500;
(admitted)
(e)
the
Appellant
is
liable
to
pay
tax
pursuant
to
section
204.9
of
the
Act
as
set
out
in
paragraph
4
above
on
contributions
made
to
the
Plan
in
excess
of
$1,500
per
year;
(denied)
(f)
the
Appellant
did
not
withdraw
the
excess
contributions
from
the
plans
in
compliance
with
section
146.1
of
the
Act,
(denied)
(g)
as
a
result,
the
Appellant
was
liable
to
penalties
in
the
1990,
1991,
1992,
1993
and
1994
taxation
years
of
not
less
than
$6.92,
$49.17,
$57.33,
$101.19,
$37.08,
respectively;
(denied)
(h)
prescribed
interest
on
the
excess
contributions
from
April
30,
1991,
April
30,
1992,
April
30,
1993,
April
30,
1994
and
April
30,
1995,
respectively,
to
the
date
of
assessment
amounts
to
$21.42,
$97.90,
$69.20,
$94.63,
$28.98,
(denied)
The
issues
are
whether:
(a)
the
Minister
properly
assessed
the
tax
payable
in
the
1990,
1991,
1992,
1993
and
1994
taxation
years
in
accordance
with
section
146.1
of
the
Act;
(b)
the
Appellant
is
liable
to
pay
interest
for
the
1990,
1991,
1992,
1993,
1994
taxation
years
pursuant
to
subsection
161(1)
of
the
Act;
and;
(c)
the
penalty
was
properly
assessed
in
accordance
with
section
162
of
the
Act.
The
Minister
relied
on
sections
146.1,
161,
162,
204.9
and
248
of
the
Act
as
amended
for
1990,
1991,
1992,
1993
and
1994
taxation
years.
The
Appellant
has
admitted
that
in
the
1990
taxation
year
he
opened
four
plans
with
the
Heritage
Scholarship
Trust
Plan
for
the
purposes
of
funding
the
education
of
three
of
his
nephews
in
post-secondary
educational
institution.
The
Promoter
was
registered
by
the
Minister
in
accordance
with
the
provision
of
section
146.1
of
the
Act.
The
Appellant
is
entitled
to
make
maximum
annual
contributions
to
each
Plan
in
the
amount
of
$1,500.00,
by
virtue
of
section
204.9
of
the
Act.
The
Appellant
applied
to
the
Heritage
Scholarship
Trust
Plan
for
three
of
his
nephews,
contributing
each
$4,395.20,
$2,611.60
and
$2,569.20.
In
these
applications
it
is
mentioned
that
the
Appellant
received
a
copy
of
the
Prospectus.
Paragraph
6
of
the
application
reads
as
such
“requests
that
the
registered
educational
savings
plan
agreement
resulting
from
this
application
be
registered
under
section
146.1
of
the
Income
Tax
Act”,
On
page
2
of
the
application,
it
is
indicated
that
“The
1990
Federal
Budget
has
proposed
restrictions
on
the
amount
of
annual
contributions
made
on
RESP’s
per
nominee.
The
Foundation
intends
to
administer
the
Heritage
Scholarship
Trust
Plan
in
accordance
with
these
restrictions
(or,
if
varied
by
legislation
subsequently
proposed
or
adopted,
with
any
subsequent
legislation).”
The
Appellant
suggests
that
he
was
not
aware
of
the
limitations
imposed
by
the
legislation
because
they
were
not
conveyed
to
him
either
by
the
department
or
by
the
Promoter.
However,
in
his
application
for
the
Heritage
Scholarship
Trust
Plan,
which
he
signed,
it
is
mentioned
that
there
were
restrictions
on
the
amount
of
annual
contributions
made
on
RESP’s
per
nominee.
The
restrictions
could
vary
in
subsequent
legislation.
The
Appellant,
by
signing
the
application,
was
sufficiently
informed
of
the
restrictions.
It
was
the
responsibility
of
the
Appellant
to
inform
himself
and
then
act
accordingly.
The
plans
were
registered
with
the
Department
of
National
Revenue
with
the
amount
in
excess
of
$1,500.00.
The
Appellant
in
making
contributions
during
the
1990,
1991,
1992,
1993
and
1994
taxation
years
to
the
Plans
exceeded
the
maximum
contribution
of
$1,500.00
allowed
under
section
146.1
of
the
Act
and,
accordingly,
became
liable
to
pay
tax
under
section
204.9
of
the
Act.
Furthermore,
the
Minister
properly
charged
the
Appellant
interest
on
the
excess
contributions
pursuant
to
subsection
161(1)
of
the
Act.
The
appeal
for
the
1990,
1991,
1992,
1993
and
1994
taxation
years
is
hereby
dismissed.
Appeal
dismissed.
Email this Content