Thore v. R., [1998] 1 CTC 2728

Beaubier T.C.J. .

This appeal pursuant to the Informal Procedure was heard at Cranbrook, British Columbia, on August 7, 1997. The Appellant was the only witness.

The appeal is in respect of the Appellant’s 1994 taxation year.

The Minister’s assumptions in the Reply to the Notice of Appeal describe the facts at issue succinctly. They read:

5. In so assessing the Minister relied on the following assumptions of fact:

(a) the Appellant had an Registered Retirement Savings Plan (the “Plan”) with the Toronto Dominion Bank;

(b) the Appellant owed a debt to a third party (the “Party’’) and the Party received a judgement allowing for the payment of that debt out of proceeds of the Plan;

(c) an amount was paid out of the Plan to the Party during the Appellant’s 1994 taxation year;

(d) the Toronto Dominion Bank issued the Appellant with T4 RSP supplementary slips totalling $58,335.05, of which $27.46 was attributable to the Appellant’s spouse; and

(e) as a result of the payment out of the Plan to the Party to satisfy the Appellant’s debt, the Appellant received a benefit out of or under the Plan.

The Appellant’s Registered Retirement Savings Plan was paid out when it was attached as a result of the judgment against the Appellant. The Appellant’s Notice of Appeal states that he never received a benefit from the Registered Retirement Savings Plan. In fact, he did receive a benefit when that portion of the judgment against him was satisfied by the payment out from his Registered Retirement Savings Plan. In the course of the hearing the Appellant acknowledged this. However, he pointed out that his difficulties were enlarged when he had to pay more income taxes when the holdback from the collapsed Registered Retirement Savings Plan was not enough to pay all the income tax levied as a result of that collapse.

In these circumstances, the question became whether the Toronto Dominion Bank (the “Bank”) withheld and remitted to Revenue Canada the correct amount from the Appellant’s Registered Retirement Savings Plan.

Crown counsel then made written submissions respecting this aspect of the occurrences in question. The Appellant filed a rebuttal to these submissions. In summary, the submission by the Respondent’s counsel outlined the provisions of the Income Tax Act and the Income Tax Regulations which relate to the matter before the Court.

Subsection 153(1) of the Income Tax Act states:

Every person paying at any time in a taxation year

(/) a payment out of or under a registered retirement savings plan...

shall deduct or withhold therefrom such amount as is determined in accordance with prescribed rules...

The following provisions of the Federal Income Tax Regulations state:

100 “employee” means any person receiving remuneration;

“employer” means any person paying remuneration;

“remuneration” includes any payment that is

	(/) a payment made during the lifetime of an annuitant referred to in
	subparagraph 146( 1 )(a)(i) of the Act out of or under a registered
	retirement savings plan of that annuitant...
	(4)	For the purposes of this Part, where an employee is not required
		to report for work at any establishment of the employer, he
		shall be deemed to report for work
		(a)	in respect of remuneration that is salary, wages or
			commissions, at the establishment of the employer
			from which the remuneration is paid;
		Or
		(b)	in respect of remuneration other than salary, wages or
			commissions, at the establishment of the employer in
			the province where the employee resides at the time the
			remuneration is paid but, if the employer does not have
			an establishment in that province at that time, he shall,
			for the purposes of this paragraph, be deemed to have
			an establishment in that province.
101]	Every person who makes a payment described in subsection 153(1) of
	the Act in a taxation year shall deduct or withhold therefrom, and remit
	to the Receiver General, such amount, if any, as is determined in
	accordance with rules prescribed in this Part.

The payment at issue constitutes a lump sum payment. The following regulations refer to lump sum payments:

103 (4) Subject to subsection (5), where a lump sum payment is made by an employer to an employee who is a resident of Canada

(c) if the payment exceeds $15,000, the employer shall deduct or withhold therefrom, in the case of an employee who reports for work at an establishment of the employer

(x) in British Columbia, 206/311 of 30 per cent,

of such payment in lieu of the amount determined under section 102.

(6) For the purposes of subsection (4), a “lump sum payment” means a payment that is

(c) a payment made during the lifetime of an annuitant referred to in subparagraph 146( 1 )(a)(i) of the Act out of or under a registered retirement savings plan of that annuitant...

The Bank deducted $16,286.25 from the payment of $54,287.51. This constitutes $190.46 more than should have been deducted according to Regulation 103(4). However, the Appellant is not concerned about this excess deduction. His problems arose because there was not more deducted by the Bank when the payment out occurred.

On the evidence before the Court the Bank’s deductions were slightly in excess of the amount referred to in the Regulations. However, the Bank had no right in law to deduct the excess amount which the Appellant wishes had been deducted. In Court, he stated that it would have been more appropriate had the Bank contacted him so that a greater deduction could have occurred. But the Bank could not have deducted more or it would have been liable to the judgment creditor.

On the evidence before the Court, the Appellant was put in a very difficult position. He had to pay extra tax at the end of the year. But the Tax Court of Canada has no power to remedy the situation. The Income Tax Act and the Regulations are designed to apply to people across Canada in many circumstances. In the Appellant’s situation, a withholding of 50% would have been more appropriate and given the present rate of income tax, such a withholding might be appropriate in many circumstances. On the other hand, if a taxpayer should voluntarily withdraw lump sums from a Registered Retirement Savings Plan and suffer withholding of 50%, that person’s upset might very well be as great as the Appellant’s in this case.

In the circumstances before the Court, the question of the amount to be withheld is one of policy and for the statutory authorities. On the material before the Court it is without jurisdiction to remedy the Appellant’s concerns.

The appeal is dismissed.

Appeal dismissed.