Trsic v. R., [1998] 3 CTC 2852

Tremblay T.C.J.:

This appeal was heard at Montréal, Quebec, on November 10, 1997, pursuant to the informal procedure.

Point at issue

According to the Notice of Appeal and the Reply to the Notice of Appeal, the issue is whether as a non-resident the appellant should pay taxes of $3,473.69, $3,386.03, $3,055.91, $3,154.57 and $4,212 respectively for the 1991, 1992, 1993, 1994 and 1995 taxation years pursuant to s. 212(1) of the Income Tax Act (hereinafter “the Act”) and articles XI and XVIII of the Tax Convention between Canada and the United States (hereinafter “the Convention”).

According to the respondent, the appellant lived in the United States of America throughout all those years. He received a pension from HydroQuebec and received interest from the Royal Bank of Canada. No 15 percent deduction has been made since 1984 from the amounts received as provided for in the Convention.

Burden of proof

The appellant has the burden of showing that the respondent’s assessments are incorrect. This burden of proof results from several judicial decisions, including a judgment by the Supreme Court of Canada in Johnston v. Minister of National Revenue) [1]

In the same judgment the Court held that the facts assumed by the respondent in support of the assessments or reassessments are also deemed to be true until the contrary is shown. In the instant case the facts assumed by the respondent are set out in subparagraphs (a) to (j) of paragraph 4 of the Reply to the Notice of Appeal. That paragraph reads as follows:

[TRANSLATION]

4. In arriving at the assessments dated December 22, 1995 for the 1991 and 1992 taxation years, and January 10, 1997 for the 1995 taxation year, and the reassessments dated December 22, 1995 for the 1993 and 1994 taxation years, the Minister assumed inter alia the following facts:

(a) since 1980 the appellant has been retired from the Société Hydro-Québec;

(b) Société Hydro-Québec is a resident of Canada;

(c) during the taxation years at issue the appellant received from the Société Hydro-Québec a retirement pension the amounts of which are set out in paragraph 2 above;

(d) the appellant was a non-resident of Canada during the taxation years at issue;

(e) the appellant lived in the U.S.A. during the taxation years at issue;

(f) during the taxation years at issue no deductions were made by Société Hydro-Québec from the pension income paid to the appellant;

(g) during the taxation years at issue the appellant received interest income from the Royal Bank, the amounts of which are set out in paragraph 2 above, and from which no deductions were made;

(h) during the taxation years at issue the said Royal Bank was a resident of Canada;

(i) during the taxation years at issue the Tax Convention between Canada and the U.S. provided for a taxation rate of 15 percent;

(j) during the taxation years at issue the appellant paid no taxes in Canada on the income set out in paragraph 2 above.

Facts in evidence

The appellant admitted all the facts alleged above by the respondent in paragraph 4 of the Reply to the Notice of Appeal.

The appellant left Canada to live in the U.S. in 1980.

At this point no taxes had to be paid on pensions and interest from Canada under the Convention between Canada and the U.S. No tax return had to be filed in Canada either. These facts were explained to him in a letter dated June 18, 1991 signed by J.P. Lapointe of Revenue Canada, Taxation (Exhibit A-1).

In 1984 the Convention between the two countries was amended, stipulating in articles XI, “Interest” and XVIII, “Pensions and Annuities”, that the tax charged should not exceed 15 percent of the gross amount of interest and gross amount of pensions and annuities.

The appellant raised the question of whether non-residents should be informed of the tax rate in the event of a change, that is, if the rate changed from 15 to 20 percent or 0 percent, as he put it in his Notice of Appeal

Further, in his Notice of Appeal the appellant also referred to the many letters and even attachment of his bank account by the respondent’s representatives, which in his opinion demonstrated [TRANSLATION] “a sort of mental cruelty”, and he argued that [TRANSLATION] “the uncertainty of this unending proceeding is affecting his state of health”. He accordingly asked for compensation.

Analysis

There is nothing in the Act which requires the Department to inform all U.S. residents receiving interest and pensions from Canada of the tax payable. In fact, the well-known rule must be applied: “Ignorance of law excuses no one”.

Moreover, according to the admission of counsel for the respondent, neither Hydro-Québec nor the Royal Bank of Canada, which failed to make the 15 percent source deductions on pension and interest paid, had in their computers the information that the deductions were to be made.

As regards the compensation claimed, the Court does sympathize with the appellant’s problem but it cannot award damages.

The appellant should appreciate the fact that he has only been taxed since 1991, not since 1984, that is the date the 15 percent taxation rate came into effect, nor on the accumulated interest.

Conclusion

The appeal is dismissed.

Appeal dismissed.