Date: 20021121
Docket: 2000-4296-IT-I
BETWEEN:
ESTATE OF FRANCES GELTMAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Agent for the Appellant: Harold Geltman
Counsel for the Respondent: Susan Shaughnessy
____________________________________________________________________
Reasons for Judgment
(Delivered orally from the Bench at
Montréal, Québec, on September 3, 2002)
McArthur J.
[1] The issue raised by the Appellant is whether Canada Customs and Revenue Agency has the right to apply subsection 70(5) of the Income Tax Act in calculating the tax payable by his mother's estate. Subsection 70(5) creates a fiction deeming a disposition to occur immediately prior to death.
[2] In applying this subsection to the Appellant, the Minister of National Revenue deemed Frances Geltman to have disposed of her registered retirement income fund prior to death and thereby adding $65,567.39 to her income. The Appellant set out the issues to be decided in his Answer to the Reply to the Notice of Appeal as follows:
a) Does the Department of Canada Customs and Revenue Agency have the right to decide the status of the being of Frances Meltzer Geltman to be one of: LIFE OR DEATH?
b) Does the Department of Canada Customs and Revenue Agency have the right to overrule: the following three documents from a STATE OF DEATH TO A STATE OF LIFE?
a) ATTESTATION DE DECES PAR LE MEDECIN D'URGENCES-SANTE January 5/99
b) Declaration of Death January 5, 1999
c) copy of an act of death March 18, 1999
c) Does the Department of Canada Customs and Revenue Agency have the right to overrule the URGENCES SANTE STATEMENT OF THE MEDICAL CAUSE OF DEATH? February 9, 1999
d) Does the Department of Canada Customs and Revenue Agency have the right to decide in this statement:
"If the payments do not continue to the spouse, we consider the deceased to have received, immediately before death, and amount equal to the fair market value of the plan at the time of death".
"page 10 Canada Customs and Revenue Agency "Preparing Returns for deceased persons ... 1999"
"Subject to further questioning: "inter alia sections 3, 70 and subsection 146.3(6) of the Income Tax Act R.C.S. 1985 c.1 (5th Supp.) as amended and applicable for the taxation year in litigation."
Respondent reply to the notice of appeal #13 page 4.
The Appellant claims that the Respondent has NO RIGHT to do what he states:
"TO EQUATE IMMEDIATELY BEFORE DEATH WITH AT THE TIME OF DEATH"
If every Government agency and department is given the same right, we could have legal chaos.
If the same rule of law is applied to genetic patents and present and future genetic research in the public and private market areas, it shall be CHAOS EXEMPTIONS, EXCEPTIONS, AND PROCEDURES FOR MAKING DEATH EQUAL LIFE is not some kind of game to be played with for tax points, profit AND OTHER KINDS OF EXPLOITIVE GAINS.
[3] Frances Geltman died in Montréal on January 5, 1999. An income tax return for her was prepared by a chartered accounting firm who calculated that $14,876.54 in tax was payable. Her son, Harold Geltman, was the sole heir and liquidator of her estate and he disagrees with the accountant's conclusion, although he signed the income tax return. At the end of the hearing, I gave oral judgment after acknowledging that Mr. Geltman's position may have been equitable under the circumstances. I cannot change the law as it is written in subsection 70(5). I added that for the reasons given by counsel for the Respondent and set out by Gibson J. of the Federal Court of Appeal in The Queen v. Mastronardi, 77 DTC 5217, the appeal was dismissed.
[4] I will now expand on those reasons.
[5] Subsection 70(5) of the Act reads in part as follows:
70(5) Where in a taxation year a taxpayer dies,
(a) the taxpayer shall be deemed to have, immediately before the taxpayer's death, disposed of each capital property of the taxpayer and received proceeds of disposition therefor equal to the fair market value of the property immediately before the death;
In the Appellant's instance, there was a deemed disposition of one share of La Maison Oscar resulting in a capital gain of $2,215.91 and the larger amount of $65,567.39 referred to as pensions or superannuation. There was a slight adjustment to these amounts.
[6] Pursuant to subsection 146.3(6) of the Act, the amount payable and received after the deregistration of the registered retirement income fund was included in the Appellant's income.
[7] In RMM Canadian Enterprises Inc. v. The Queen, 97 DTC 302, Judge Bowman commented as follows:
Even if Parliament which, subject to constitutional limitations, is supreme and has the power to deem cows to be chickens, cannot turn a question of law into a question of fact.
No actual disposition was made by Mrs. Geltman or her estate but by law, the assets are deemed to have been disposed of.
[8] In Mastronardi, the Federal Court dealt with subsection 70(5) and held that the plain meaning of a statute in the context of a given set of facts should not be ignored to prevent an apprehended injustice in the future on an entirely different set of facts.
[9] I find that the Minister of National Revenue correctly reassessed the Estate of Frances Geltman for the 1999 taxation year in accordance with the plain meaning of subsections 70(5) and 146.3(6) of the Act. The appeal is dismissed.
Signed at Ottawa, Canada, this 21st day of November, 2002.
|
"C.H. McArthur" |
J.T.C.C.
COURT FILE NO.: 2000-4296(IT)I
STYLE OF CAUSE: Estate of Frances Geltman and
Her Majesty the Queen
PLACE OF HEARING: Montréal, Québec
DATE OF HEARING: September 3, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge C.H. McArthur
DATE OF JUDGMENT: September 10, 2002
APPEARANCES:
Agent for the Appellant: Harold Geltman
Counsel for the Respondent: Susan Shaughnessy
COUNSEL OF RECORD:
For the Appellant:
Name: N/A
Firm: N/A
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada