Date: 20000919
Docket: 2000-469-IT-I
BETWEEN:
BERNARD A. HODSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Campbell, J.T.C.C.
[1] By Notice of Assessment dated August 16, 1999, the Minister of National Revenue assessed the Appellant's income tax return for the 1998 taxation year.
[2] The Appellant filed a Notice of Objection dated October 31, 1999.
[3] By letter dated November 18, 1999, the Minister advised the Appellant that the Notice of Objection and the Notice of Assessment would be nullified by a Notice of Reassessment dated November 22, 1999, which was not related to the matter under appeal.
[4] The Appellant then filed a Notice of Appeal on January 27, 2000 for the 1998 taxation year.
[5] By Notice of Reassessment dated February 16, 2000, the Minister reassessed the Appellant's tax return for the 1998 taxation year with respect to an issue not related to the matter under appeal.
[6] The Appellant requested that the Court provide the following relief:
1) cancel instalment payments due for 1998 and 1999,
2) deduct interest charged on instalments from the arrears amount,
3) cancel interest on arrears for 1998, 1999 and 2000,
4) apply monies deducted from pension income including Old Age Pension firstly to the arrears,
5) cancel "claw back" of Old Age Pension benefits for 1998, 1999 and 2000.
6) RRSP withdrawals not be considered in assessing instalment payments,
7) remove tax deducted from superannuation so it can be applied directly to arrears,
8) accept cheques totalling $60,000 postdated over a period of time for payment of arrears.
[7] The ninth ground of relief relating to arrears reduction in compensation for stress and anxiety was withdrawn by the Appellant.
[8] The Appellant requested that I look at some of these issues not only for 1998 but also 1999 and 2000. He pointed out that what happened in 1998 had an impact on future years. However, I can deal only with the 1998 taxation year which is before me.
[9] Before presenting his case, the Appellant read from a prepared statement to the effect that his case would be better served if certain Revenue Canada officials, whose names he did not have, were present. The Appellant had agreed to have two Revenue Canada officials, Mary Sue Drynan and David Seally, present instead of David Miller as it was these individuals who were most knowledgeable concerning the facts of this case. The Appellant now felt that David Miller and other officials might have knowledge of his case. He was prepared to proceed in their absence but asked that I take this into consideration at this hearing. The Appellant was denied an earlier adjournment which he had requested and was advised that he should be prepared to proceed. After hearing the evidence, I conclude that the two Revenue Canada witnesses called by the Appellant were sufficiently knowledgeable to provide detailed information on the Appellant's assessment.
[10] The Appellant gave evidence on a number of hardships, which occurred in his life in 1998. There were unexpected medical bills and the family's home was burglarized. Insurance coverage was inadequate. Consequently, the Appellant used credit cards and RRSP withdrawals to cover these expenses. In 1999, an arsonist set fire to the Appellant's car and premises. The Appellant moved his family and incurred moving expenses. Although this happened in 1999, the Appellant wanted the Court to know that it affected his ability to pay instalments and interest charges assessed for 1998. There is no doubt that the Appellant has survived a number of tragic events in a very short period of time.
[11] The Appellant felt that this appeal was primarily concerned with unjustified demands by Revenue Canada officials for instalment payments and interest charges for the 1998 taxation year. He felt that Revenue Canada officials did not understand or ignored the fact that the additional instalments were due to the extraordinary events that arose in 1998. These unexpected events in 1998 which prompted the Appellant to withdraw cash from his RRSPs had an impact on his future taxation years. He was not expecting the additional income, which resulted in additional tax in 1998.
[12] The Appellant also submitted that even if the instalment payments were justified; the interest payments should be cancelled due to the unexpected events.
[13] Revenue Canada official, David Seally, set out in detail how the Appellant's 1998 return was assessed. He explained fully the pension source deductions, calculation of instalments, instalment interest and interest on arrears.
[14] The Appellant's 1998 income tax return showed five sources of income i.e. employment, Old Age Security Pension, Canada Pension, other pension/superannuation and RRSP income. I accept that portion of Exhibit R-4 entitled Statement of Account referring to the 1998 taxation year as accurately reflecting the calculation of instalment payments for 1998 together with interest. The Appellant failed to pay the required instalments during 1998. Interest at the prescribed rate was applied on the instalments not received in 1998 in accordance with subsection 161(2) of the Income Tax Act. This was correctly calculated at $868.25 and arrears interest was also correctly calculated at $183.12.
[15] The Minister established that instalment payments were required for the 1998 taxation year, in accordance with subsection 156(1) and paragraph 156.1(2)(b) of the Act. The Appellant expressed dissatisfaction with the way in which instalment reminders were sent. The evidence suggested that these reminders were properly forwarded in accordance with prescribed procedure.
[16] The Appellant also had some disagreement with the handling of his Old Age Pension benefits by Revenue Canada. The Appellant properly included the total of his Old Age Pension benefits as income in his 1998 tax return. Due to the amount of income in 1998 he had to repay all of the Old Age Pension benefits. The Appellant mistakenly believed that the deductions at source in respect to his Old Age benefits were instalments. They were not. They would, however, reduce the amount of instalment interest otherwise owing.
[17] The Appellant presented an argument for more equitable treatment of his assessment in respect to instalments, and interest payments due to the unfortunate mishaps that had occurred. The issue was whether the Tax Court of Canada has jurisdiction to cancel or otherwise give some type of equitable relief to the taxpayer when the amounts have been otherwise correctly calculated. I believe that the case law is clear. As stated by Sobier, T.C.J. Sunil Lighting Products v. Canada, [1993] T.C.J. No. 666:
The jurisprudence clearly affirms that the Tax Court of Canada is not a court of equity and its jurisdiction is based within its enabling statute ... In addition, the Court cannot grant declaratory relief given that such relief is beyond the jurisdiction of the Court ... In an income tax appeal, the Court's powers are spelled out in subsection 171(1) of the Income Tax Act. Consequently, these powers essentially entail the determination of whether the assessment was made in accordance with the provisions of the Income Tax Act ...
[18] It is clear from the evidence that under the Act, the Appellant was liable for instalment payments for 1998 taxation year. Paragraph 56(1)(h) of the Act states that RRSP withdrawals are to be included in income for that year. There is no jurisdiction in this Court to cancel instalment payments that have been correctly assessed.
[19] I fully appreciate that the only reason the RRSPs were cashed was because of the unfortunate circumstances which arose in 1998. This argument however is not one which this Court can consider. The instalments were correctly calculated by the Minister and the Appellant did not show otherwise.
[20] The Appellant also argued that the interest on instalment payments in the amount of $868.25 and interest on arrears in the amount of $183.12 should be cancelled due to the mishaps in his life. No matter what the reasons are I have no jurisdiction to interfere if the interest is properly calculated. On the evidence the amounts were correctly calculated and this Court has no jurisdiction to cancel interest payments in the name of fairness.
[21] The Appellant agreed he made RRSP withdrawals which he included in income. All documentation clearly sets out the instalments and interest rates and the amounts owing. There is nothing before me on these issues that would indicate they are incorrect. They appear to be properly calculated and I therefore have no jurisdiction to grant the relief requested by the Appellant.
[22] The Tax Court has no jurisdiction in collection issues either. Therefore, I cannot address the Appellant's request that cheques deposited with Revenue Canada be accepted as payment of arrears.
[23] Although the Appellant advised the Court he was withdrawing his claim for relief for stress, I can not award damages or compensatory relief to him in any event as there is no jurisdiction to do so.
[24] I understand that the Appellant has survived a number of traumatic events. He believes that he has received unfair treatment, but I have no jurisdiction to provide the relief he is requesting. I accordingly dismiss the appeal.
Signed at Ottawa, Canada, this 19th day of September 2000.
"Diane Campbell"
J.T.C.C.