Regina v. Kern’s Motor Town Sales Ltd., [1968] CTC 221, 68 DTC 5141

Davey, C.J.B.C. (oral) (all concur) :—This is an appeal by the Crown against the acquittal of Kern’s Motor Town Sales Limited on a charge made under the Income Tax Act and the Regulations that it failed to comply with subsection (1) of Section 47 of the Income Tax Act by not remitting $345.57 to the Receiver General of Canada which it had deducted from the salary, wages or other remuneration paid to its employees during the month of September 1 to September 30, 1966, as required by subsection (1) of Section 108 of the Income Tax Regulations.

The charge was a summary conviction offence and came before his honour Judge Swencisky upon a trial de novo from the learned magistrate before whom in the first instance the charge had been laid. No evidence was called, counsel for the Crown and counsel for the Kern’s Motor Town Sales Limited agreeing to the facts.

The ground taken before the learned judge below, which the learned judge upheld, was this : Section 47(1) of the Income Tax Act, omitting the immaterial parts, requires that

“Every person paying salary, etc., shall deduct or withhold therefrom such amount as may be prescribed and shall, at such time as may be prescribed, remit that amount to the Receiver General of Canada on account of the payee’s tax for the year under this Part.”

The important part of that section for the purpose of this appeal is the words ‘ and shall, at such time as may be prescribed, remit that amount.’’

Section 108(1), of the Regulations refers expressly to Section 47, and provides:

“Amounts deducted or withheld under the provisions of subsection

(1) of section 47 of the Act shall be paid to the Receiver General of Canada on or before the fifteenth day of the month next succeeding the month in which the employer paid the remuneration.”

The neat point taken by the respondent’s counsel is that “pay” is not exactly synonymous with ‘‘remit’’, the word used in Section 47. He says ‘‘remit’’ is effected as soon as the employer mails, if that is the method of communication he chooses, that amount to the Receiver General, and it is immaterial whether it reaches the Receiver General at all or whether its receipt by the Receiver General is long delayed. He says that “paid” as used in Section 108(1) means that the employer has not discharged his obligation under Section 47(1) until the money is actually received by the Receiver General; so that in effect the regulation has imposed upon the employer an obligation which is not prescribed by Section 47 of the Act, and in that respect the regulation is ultra vires of the Governor General in Council. The words “remit” and “pay” are not technical words and they have no precise significance; their meaning varies with the context and the circumstances. I think ‘‘remit’’ means in this case that the money be sent to the Receiver General, and I agree with counsel for the respondent that that obligation is met as soon as the money is started on the course of transmission by the employer. “Pay” may mean many things. Usually money is not paid until the debtor seeks out his creditor and puts it in the hands of the creditor, but it does not necessarily mean that; under some circumstances and some contracts, or in the course of practise adopted by the debtor and the creditor, the money may be paid as soon as it is mailed by post, properly addressed to the creditor. In that case the responsibility for its loss or delay lies not upon the shoulders of the debtor but upon the shoulders of the creditor. That being so, I do not think it is possible to dispose of this case by taking the widest meanings of ‘‘remit’’ and pay ’ ’ ; they must be determined by the meaning of those words in the context.

Now Section 108(1) refers specifically to the provisions of subsection (1) of Section 47 of the Act and purports to state when the amounts deducted or withheld under the provisions of subsection (1) of Section 47 of the Act shall be paid to the Receiver General. It seems to be clear that Section 108 as drafted is intended to be a regulation prescribed by Section 47(1). Since that is obviously the intention of the framers of the regulation, I think it is also clear that ‘‘pay’’ in Section 108(1) is used in exactly the same sense as ‘‘remit’’ in Section 47, and means no more. In my opinion, the obligation under Section 108(1) is performed as soon as the employer remits the money in the sense in which I have said it is used in Section 47. That being so, it seems to me with respect to the learned judge below that his decision on the point of law was wrong. Counsel agree that in this event the matter should be remitted to the learned county court judge to dispose of the other defences raised by the respondent, which in his opinion he did not need to decide.

I may add, if I haven’t said it before, that the Crown appeal before this court from the decision of the learned county court judge is restricted to a point of law.

I would allow the appeal accordingly.