97-1235(IT)I
BETWEEN:
JAMES YOUNG,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on August 21, 1998 at Sudbury, Ontario, by
the Honourable Judge Gordon Teskey
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Roger Leclaire
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1994 taxation year is dismissed, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 10th day of September, 1998.
|
"Gordon Teskey" |
J.T.C.C.
Date: 19980910
Docket: 97-1235(IT)I
BETWEEN:
JAMES YOUNG,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Teskey, J.T.C.C.
[1] The Appellant in his Notice of Appeal herein, appealed his reassessment of income tax for the year 1994 and elected the Informal Procedure.
Issues
[2] The three issues herein are:
(a) whether the Appellant is entitled to a non-refundable tax credit for mental or physical impairment pursuant to subsection 118.3(1) of the Income Tax Act (the "Act"), in the computation of his tax payable for the 1994 taxation year;
(b) whether the amount of $25,548.00 received by the Appellant is to be included in computing his income from an office or employment pursuant to subsection 5(1) of the Act for the 1994 taxation year; and
(c) whether the amount of $11,293.00 received by the Appellant during the 1994 taxation year was payment with respect to a pension benefit and was properly included in computing the Appellant's income for the 1994 taxation year pursuant to paragraph 56(1)(a) of the Act.
Facts
[3] The Appellant gave evidence at his trial. From his testimony, I am satisfied that all of the facts assumed by the Minister of National Revenue (the "Minister") when he confirmed the reassessment, which were reproduced in the Reply to the Notice of Appeal, were true. These are:
(a) the Appellant suffers from cerebral palsy;
(b) the Appellant was not suffering from a severe and prolonged mental or physical impairment, which markedly restricted his ability to perform a basic activity of daily living during the 1994 taxation year;
(c) the Appellant is not entitled to a credit for a mental or physical impairment in the computation of his non-refundable tax credits and tax payable for the 1994 taxation year;
(d) pursuant to a Memorandum of Settlement signed by the Appellant on February 21, 1993, the Appellant's employer, namely Revenue Canada Taxation (the "Employer"), authorized leave with pay in respect of the Appellant, at the Appellant's annual salary of $33,547.00 subject to the statutory source deductions, for the period of April 22, 1993 to July 22, 1994;
(e) the Appellant received from the Employer the amount of $25,548.00 during the 1994 taxation year;
(f) the amount of $25,548.00 referred to in subparagraph 9(e) above was in respect of wages for the period of January 1, 1994 to July 22, 1994 as well as for payment of vacation leave credits of 275.25 hours accumulated by the Appellant up to July 22, 1994;
(g) the amount of $25,548.00 referred to in subparagraph 9(e) above was income from an office or employment of the Appellant with respect to the 1994 taxation year and was properly included by the Appellant in computing his income for the 1994 taxation year;
(h) pursuant to the said Memorandum of Settlement referred to in subparagraph 9(d) above, the Appellant's employment with the Employer was terminated on July 22, 1994;
(i) during the 1994 taxation year, the Appellant received a lump sum payment with respect to a refund of premiums paid into the Employer's registered pension plan in the amount of $11,293.00 and subsequently, the Employer issued to the Appellant the form T4A Supplementary - Statement of Pension, Retirement, Annuity and Other Income for the said amount;
(j) the said amount of $11,293.00 was received by the Appellant in the 1994 taxation year on account or in lieu of payment of, or in satisfaction of pension benefit and was determined to be a taxable benefit pursuant to paragraph 56(1)(a) of the Act;
(k) in computing his income for the 1994 taxation year, the Appellant did not include the amount of $11,293.00 received by the Employer, and
(l) the Appellant's income for the 1994 taxation year was understated by the amount of $11,293.00 which represents the amount paid by the Employer to the Appellant for a refund of pension benefit and not reported by the Appellant in computing his income for the 1994 taxation year.
[4] The Appellant was requested on several occasions to obtain and submit the required medical certificate concerning the year 1994, which he refused to obtain. Besides not producing a certificate, his evidence of his impairment and his attendance at the trial demonstrate that he is not entitled to the disability tax credit.
[5] Exhibit A-1 is the written Memorandum of Settlement between the Appellant and Revenue Canada, his former employer. Paragraph 1(a) reads:
1. The employer will:
a) authorize leave with pay for the period April 22, 1993 to July 22, 1994, at Mr. Young's current salary rate ($33,547.00) subject to the statutory source deductions. The salary of $33,547.00 and all benefits entitlements will be paid to Mr. Young on the regularly scheduled pay periods as determined by the employer. On April 22, 1993, Mr. Young's sick leave credits will total 77.25 hours and his vacation leave credits 134.625 hours or 18 days. The employee will continue to earn sick leave and vacation leave credits at the rate of one and one-quarter (1 1/4) days for each calendar month so that by July 22, 1994, he will have accumulated a total of 217.875 hours sick leave or 29 days and 275.25 hours or 37 days vacation leave. The sick leave credits will be taken before July 22, 1994. Vacation leave credits will be paid to the employee on July 22, 1994;
[6] Exhibit R-2 is the Public Works and Government Services cheque stub for the $11,293.00, which states that $10,636.66 was return of premiums paid by the Appellant to his employee's pension fund and $657.29 being interest thereon.
[7] The Appellant's position on issues (b) and (c) are as follows.
[8] First, the Appellant claims he entered into the agreement under "duress" by his union.
[9] He claims that the union negotiated for him the settlement (Exhibit A-1) and advised him if he did not accept it, he was on his own. The union was his agent not his employer's agent. I am sure many agents have advised their client to accept a monetary deal or they would no longer act. The client either accepts the advice or retains another agent. This would never void the contract once signed. Duress has to come from the other party to a contract to render it void or voidable.
[10] Secondly, the Appellant argues that on February 12, 1993, Ruby J. McCuish, an Assistant Deputy Minister for Revenue Canada did not have the authority to re-instate him from his suspension and therefore not withstanding he received the money since he was still suspended the money was not taxable but was a gift. His argument being that an employee of the Government of Canada cannot be paid wages while under suspension.
[11] Thirdly, the Appellant further argues that because the obligations on him were illegal, the agreement was void and therefore, again the money is not taxable.
[12] Whether the lifting of the suspension was proper or not is immaterial and whether certain obligations on him are contrary to the law is also immaterial.
[13] The Appellant and Revenue Canada entered into an agreement (Exhibit A-1). Revenue Canada lived up to its obligation thereunder in full in regards to all payments required of it. The Appellant received all the payment thereto and has used the funds to his benefit.
[14] No action has been taken by the Appellant to set aside the agreement nor has he tendered the return of the monies.
[15] Whether the memorandum of agreement is void or voidable is just not an issue. The money was paid and received and is taxable. I believe that the Supreme Court of Canada decision of Continental Bank Leasing Corporation v. The Queen, released September 3, 1998, is authority for this. Paraphrasing, and inserting the government of Canada into Madam Justice McLachlin words, she in essence said: "I find that public policy requires that breaching of Federal Statutes should not lead to invalidation of contracts and other transactions. There is good reason for this; to unravel commercial transactions on the basis the Government of Canada breached a statute is to introduce uncertainty into the affairs of individuals and the Government."
[16] The appeal is dismissed.
Signed at Ottawa, Canada, this 10th day of September, 1998.
|
"Gordon Teskey" |
J.T.C.C.
COURT FILE NO.: 97-1235(IT)I
STYLE OF CAUSE: James Young and Her Majesty the Queen
PLACE OF HEARING: Sudbury, Ontario
DATE OF HEARING: August 21, 1998
REASONS FOR JUDGMENT BY: The Honourable Judge Gordon Teskey
DATE OF JUDGMENT: September 10, 1998
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Roger Leclaire
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada