Date: 20010727
Docket: 2000-2785-IT-I
BETWEEN:
PAULINE ANN KENNEDY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
For the Appellant: The Appellant herself
Counsel for the Respondent: Paul Plourde
___________________________________________________________________
Reasons for Judgment
(Delivered orally from the Bench on June 21, 2001, at Ottawa, Canada)
Bowie J.
[1] This appeal from an assessment under the Income Tax Act for the 1998 taxation year was heard pursuant to the informal procedure. The only point in issue is whether the Appellant is entitled to the tax credit under subsection 118(3) of the Income Tax Act, which establishes what is sometimes called the pension credit. That subsection reads:
118(3) 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 x 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.
"Pension income" and "qualified pension income" are both defined terms. I shall return presently to the meaning of those.
[2] I should, perhaps, point out that the appropriate percentage for the year in question was 17, with the result that the credit at issue in this case is $170, inasmuch as the Appellant's pension income exceeded $1,000.
[3] The facts of the case are not in dispute. Ms. Kennedy worked for some 16 years as a federal public servant. At the end of that time, she was one of a number of public servants whose employment terminated as part of a downsizing of the public service. These individuals were given the option of leaving their contributions in the Public Service Superannuation Fund and receiving a deferred benefit, or if they preferred, taking their then current entitlements and rolling them over into a Registered Retirement Savings Plan (RRSP).
[4] The Appellant chose the latter option and her funds were then subsequently transferred to two Registered Retirement Income Funds (RRIFs) from which she received annuity payments totalling $3,329, in 1998.
[5] This brings me back to the definitions of "pension income" and "qualified pension income". For present purposes, it is sufficient to understand that a payment under a life annuity "out of or under a superannuation or pension plan" would fall within the definition of "pension income", and also within the definition of "qualified pension income". Other types of pension income, including "a payment out of or under a registered retirement income fund" meet the definition of "qualified pension income" only if they are received as a consequence of the death of a spouse of the recipient.
[6] At the end of 1998, the Appellant had not attained 65 years of age. Nor did she receive her annuity payments as the result of the death of a spouse. In fact, she was not a widow. The Minister denied her the pension deductions, and it is from that decision that she now appeals.
[7] The Appellant argued first that her payments from the RRIFs qualify as being payments "out of or under a superannuation or pension plan" and are therefore "qualified pension income", because the original source of the funds which in 1998 comprised the RRIFs was from her entitlement under the Public Service Superannuation Fund. This argument cannot succeed. The language of subparagraph (a)(i) of the definition of pension income simply cannot bear the interpretation that payments from a RRIF funded with proceeds from a superannuation fund which are rolled over, first, to a RRSP and then to a RRIF are payments from the superannuation fund. This ground of appeal fails.
[8] Secondly, the Appellant argued that the two limitations placed on the right to the pension credit offend section 15 of the Charter of Right and Freedoms, and so, are inoperative. If the Appellant had attained the age of 65 before the end of the taxation year, she would have qualified under paragraph 118(3)(a), because she received more that $1,000 of income which it is not disputed was pension income in 1998. Also, if the Appellant had received her pension income as the result of the death of a spouse, then it would be "qualified pension income", and she would be entitled to the credit under paragraph 118(3)(b). She says, therefore, that she is discriminated against on the grounds of both age and marital status.
[9] The Supreme Court of Canada recently considered the operation of section 15 of the Charter, in the context of legislation providing a social benefit. Law v. Canada[1] concerned the age-based restriction on benefits payable to a surviving spouse with no children. The Appellant, in that case, received no benefits as she was under the age of 35. If she had been 45 years old, she would have received a full benefit. If between 35 and 45, she would have received a benefit of a reduced amount. Clearly, she was treated differently than a person over the age of 35 would have been, and to her disadvantage. There was, therefore, adverse differential treatment based on age.
[10] However, the Court held that in addition, to invalidate legislation under section 15 of the Charter, it must me shown that the differential treatment withholds the benefit from the claimant in a way that reflects the stereotypical application of presumed group or personal characteristics, or that it has the effect of perpetuating or promoting the view that the individual is less capable or worthy of recognition or value as a human being or as a member of Canadian society.
[11] In the present case, the group of persons to which the Appellant belongs that is treated differently is those under age 65, or alternatively, those whose annuity income derives not from the death of a spouse but from some other source.
[12] It is, I think obvious, that the object of the provisions in question is to ameliorate to some small degree the lot of persons over 65 years of age, and of those who have lost a spouse who contributed to the family income. As Iaccobucci J. points out at page 551 of his reasons for judgment in Law, it will be a rare case where such ameliorating legislation is found to violate the human dignity of more advantaged individuals.
[13] I have no evidence before me that tends to show that either persons of less than 65 years of age, or persons whose annuities derive from their own economic resources, rather than through the death of a spouse, are likely to suffer a violation of their human dignity or freedom because they are denied a pension credit of $170 ($1,000 x 17%) in computing their tax payable. Nor is there any factor that was referred to me in argument that would cause me to reach that conclusion without the benefit of evidence.
[14] Certainly, neither of the groups who are not eligible for the tax credit, as I have described them above, can by any stretch of the imagination qualify, as prior jurisprudence requires under section 15, as discrete and insular minorities.
[15] A similar argument with respect to the age credit available to taxpayers 65 years of age and older under subsection 118(2) was considered and rejected by Garon J. (as he then was) in Tiberio et al. v. M.N.R., 91 DTC 17. I am not aware of any subsequent decision that would cast doubt on the correctness of that judgment. Nor do I see any rational basis upon which one might distinguish between the age credit and the pension credit for purposes of section 15 of the Charter.
[16] Age of course is an enumerated ground under section 15 of the Charter. Marital status, and the source of one's annuities, are not enumerated grounds. Clearly, as the section 15 argument cannot succeed in respect of age, then it cannot succeed in respect of a non-enumerated ground. The Appellant's reliance on the Charter is misplaced. That ground of appeal must fail, as well.
[17] Finally, the Appellant advanced an argument to the effect that the annuity payments received by her are said by the guide to qualify her for the pension credit. It was not made clear to me whether the guide in question was one issued by the Minister of National Revenue or by some private service. Nor was it clear to me how that guide (which is in extract Exhibit A-4) would lead one to the conclusion that the Appellant suggested it had led her to. Putting this argument at its highest, I am prepared to assume that the Minister's officials in fact advised the Appellant through this document, that her pension income entitled her to the credit that she claims. Such advice, if given, would have been patently wrong, but erroneous advice whether it comes from officials of the Minister, the Minister himself, or some private source, simply cannot change the law as written by Parliament and raise an entitlement to tax credits which in reality is not found in the words of the Act: see: M.N.R. v. Inland Industries Limited.[2]
[18] The appeal is dismissed.
Signed at Ottawa, Canada, this 27th day of July, 2001.
"E.A. Bowie"
J.T.C.C.
COURT FILE NO.: 2000-2785(IT)I
STYLE OF CAUSE: Pauline Anne Kennedy
and Her Majesty the Queen
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: June 18, 2001
REASONS FOR JUDGMENT BY: The Honourable Judge E.A. Bowie
DATE OF JUDGMENT: June 21, 2001
APPEARANCES:
For the Appellant: The Appellant herself
Counsel for the Respondent: Paul Plourde
COUNSEL OF RECORD:
For the Appellant:
Name: --
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada