Date: 20000608
Docket: 1999-3807-IT-I
BETWEEN:
JEAN-ROCK SAUCIER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Lamarre Proulx, J.T.C.C.
[1] This is an appeal under the informal procedure for the 1998 taxation year.
[2] The issue is whether the appellant is entitled to a pension tax credit under subsection 118(3) of the Income Tax Act ("the Act").
[3] The facts on which the Minister of National Revenue ("the Minister") relied in making his assessment are set out as follows in paragraph 3 of the Reply to the Notice of Appeal ("the Reply"):
[TRANSLATION]
(a) in the return he initially filed for the 1998 taxation year, the appellant reported the following income:
- Taxable QPP benefits 10,809
- Interest and other investment income 437
- RRSP income 2,240
- Taxable income 13,486
(b) in the return he initially filed for the 1998 taxation year, the appellant claimed a $1,000 deduction as a pension income amount in calculating his non-refundable tax credits;
(c) on the T4RSP prepared by the Natcan Trust Company, the amount entered in box 22, which is entitled "Withdrawal and commutation payments", is $2,240;
(d) the appellant was born on November 1, 1934, and had not attained the age of 65 years before the end of the year at issue; and moreover,
(e) the tax return filed by the appellant for the year at issue states that, on December 31, 1998, the appellant was married and his spouse's first name was Monique;
(f) accordingly, the Minister refused to allow the appellant the $170 ($1,000 x 17%) non-refundable pension income tax credit for the 1998 taxation year because:
(i) the $2,240 received from the Natcan Trust Company was not pension income for the purposes of the credit;
(ii) the appellant was not 65 years old at the end of the year at issue, and the amount was not:
(a) a payment in respect of a life annuity out of a registered pension plan of the appellant;
(b) a payment received by the appellant as a consequence of the death of his spouse.
[4] I will quote the three paragraphs from the appellant's Notice of Appeal that were cited by him at the hearing:
[TRANSLATION]
Out of ignorance, as explained in my letter of May 25, 1999, I withdrew an amount from my RRSP without specifying that it was pension income.
Since I am 64 years old, that amount was contributed and withdrawn as retirement income. I am asking you to grant me the credit on line 314 of the tax return for the 1998 taxation year.
I am not a tax expert, and I do not know all the tax rules, especially since the tax guide provided for the purposes of the return does not say how to redeem such RRSPs.
[5] The appellant was the only person who testified. He admitted subparagraphs 3(a), (b), (d) and (e) of the Reply.
[6] With regard to subparagraph 3(c) of the Reply, the appellant filed as Exhibit A-1 a letter dated May 30, 2000. It states the following:
[TRANSLATION]
. . .
This is to inform you that the above-mentioned client redeemed a $2,240.32 RRSP on March 24, 1998. That amount was entered in box 22 rather than box 16; it represents an annuity payment given that Mr. Saucier is an annuitant.
[7] The appellant's 1998 tax return was filed as Exhibit I-1. The T4RSP form is included therein. Box 22 is entitled "Withdrawal and commutation payments". Box 16 is entitled "Annuity payments". Counsel for the respondent agreed that the amount in question could be included in box 16.
[8] The appellant agreed that the pension plan from which he benefited was not a life annuity. He understood perfectly well what a life annuity was and had opted against such an annuity.
[9] The appellant's position was that the General Income Tax and Benefit Guide issued by Revenue Canada for taxpayers to use in preparing their 1998 tax returns did not state that being 65 years old was one of the conditions for obtaining the credit. I checked the Guide, and the calculation of the pension income amount on page 32 does indicate that the person must be 65 years old. The information is correct. But in any event, the Act is what takes precedence.
[10] Counsel for the respondent referred to subsection 118(3) and the definitions of "qualified pension income" and "pension income" in subsection 118(7) of the Act:
118(3) Pension credit — For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula
A × B
where
A is the appropriate percentage for the year; and
B is the lesser of $1,000 and
(a) where the individual has attained the age of 65 years before the end of the year, the pension income received by the individual in the year, and
(b) where the individual has not attained the age of 65 years before the end of the year, the qualified pension income received by the individual in the year.
118(7) . . .
"qualified pension income" received by an individual in a taxation year means the total of all amounts each of which is an amount included in computing the individual's income for the year and described in
(a) subparagraph (a)(i) of the definition "pension income" in this subsection, or
(b) any of subparagraphs (a)(ii) to (vi) or paragraph (b) of the definition "pension income" in this subsection received by the individual as a consequence of the death of a spouse of the individual.
"pension income" received by an individual in a taxation year means the total of
(a) the total of all amounts each of which is an amount included in computing the individual's income for the year that is
(i) a payment in respect of a life annuity out of or under a superannuation or pension plan,
. . .
[11] The relevant portion of the definition of "revenu de pension" in the French version reads as follows:
118(7) . . .
« revenu de pension » S'agissant du revenu de pension qu'un particulier a reçu au cours d'une année d'imposition, le total des montants suivants :
a) les montants que le particulier inclut dans le calcul de son revenu pour l'année :
(i) à titre de versement de rente viagère prévue par un régime de retraite ou d'autres pensions, ou en provenant,
. . .
(Emphasis added.)
Conclusion
[12] To be entitled to the pension credit provided for in subsection 118(3) of the Act, an individual must have attained the age of 65 years before the end of the year. An individual who is not 65 years old may be entitled to the pension credit if he or she receives qualified pension income, which is defined in subsection 118(7) of the Act. Such income includes either a payment in respect of a life annuity out of a superannuation or pension plan or other annuity payments received by the individual as a consequence of the death of his or her spouse.
[13] Since the appellant had not attained the age of 65 years before the end of 1998, since the pension payment was not a payment in respect of a life annuity and since the pension amounts were not received as a consequence of his spouse's death, the Minister rightly disallowed the tax credit provided for in subsection 118(3) of the Act.
[14] The appeal is dismissed.
Signed at Ottawa, Canada, this 8th day of June 2000.
"Louise Lamarre Proulx"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]