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Docket: 2003-382(IT)I |
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BETWEEN: |
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EDWARD FRANKLIN, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
____________________________________________________________________
Appeal heard on August 20, 2003 at Kamloops, British Columbia
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Before: The Honourable Justice D.W. Beaubier |
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Appearances: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Bruce Senkpiel |
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JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 2001 taxation year is dismissed.
Signed at Saskatoon, Saskatchewan, this 2nd day of September 2003.
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"D.W. Beaubier" |
Beaubier, J.
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Citation: 2003TCC598 |
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Date: 20030902 |
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Docket: 2003-382(IT)I |
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BETWEEN: |
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EDWARD FRANKLIN, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
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REASONS FOR JUDGMENT
Beaubier, J.
[1] This appeal pursuant to the Informal Procedure was heard at Kamloops, British Columbia on August 19, 2003. The Appellant was the only witness.
[2] The substance of the appeal is set forth clearly in the Reply to the Notice of Appeal. Paragraphs 1, 2, 9 and 10 of the Reply read:
1. With respect to the Appellant's allegations of fact in the Notice of Appeal, he admits that the Minister of National Revenue (the "Minister") issued the Appellant a Notification of Confirmation dated January 21, 2003. He states that the Notification was issued in respect of the Appellant's 2001 taxation year respecting Workers' Compensation payments of $78,973.00 to be included in the Appellant's income under paragraph 56(l)(v) of the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.) (the "Act"), resulting in the Appellant having to repay Old Age Security Benefits of $5,232.27.
2. He does not agree with the Appellant's submission in the Notice of Appeal that Workers' Compensation payments of only $8,774.78 should be used in determining his net income for the 2001 taxation year for the purpose of calculating the "clawback" of his Old Age Security benefits.
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9. In so assessing the Appellant, the Minister relied on the following assumptions:
a) the Workers' Compensation Board issued the Appellant a T5007 Information slip advising him that it paid him Workers' Compensation benefits of $78,973.40 in the 2001 taxation year; and
b) the Appellant received Workers' Compensation benefits of $78,973.40 in the 2001 taxation year.
B. ISSUE TO BE DECIDED
10. The issue is whether the Minister properly included Workers' Compensation benefits of $78,973.40 in the computation of the Appellant's net income for the 2001 taxation year for the purpose of calculating the "clawback" of Old Age Security benefits.
[3] None of the assumptions in paragraph 9 were refuted by the evidence.
[4] The law in this matter was set forth clearly by Lamarre-Proulx, J. in Poulin v. The Queen, 97-927(IT)I, [1998] T.C.J. No. 36, when she said at paragraphs 12 to 17 inclusive:
12 For 1995, the $50,000 threshold referred to in paragraph 180.2(1)(b) of the Act (cited above) was indexed to $53,215. According to that paragraph, the individual's income which is taken into account is his "income", not his "taxable income". Under the Act, income and taxable income are different concepts and are governed by specific legislative provisions. "Income" is computed under Division B of Part I of the Act, while "taxable income" is computed under Division C of the Act, entitled "Computation of Taxable Income". Paragraph 110(1)(f) is in Division C of Part I of the Act. Although the Act does not say why workers' compensation paid is not included in computing taxable income, one may think that this is partly so in order to take account of the fact that an income replacement indemnity is normally computed on the basis of the employee's income after source deductions.
13 The same reasons would therefore not exist for excluding workers' compensation in computing income for the purposes of old age security benefits, since such benefits are based on need, determined on the basis of an income threshold, and since such compensation really is part of the appellant's income.
14 In any event, it is the statute as written that must be interpreted. Paragraph 56(1)(v) of the Act reads as follows:
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56: Amounts to be included in income for year - (1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
(v) Worker's compensation - compensation received under an employees' or workers' compensation law of Canada or a province in respect of an injury, a disability or death;
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15 The concept of the receipt of an amount and the relevant taxation year has already been considered by the courts; I am referring, inter alia, to Vegso v. M.N.R., 56 D.T.C. 173, M.N.R. v. Claude Rousseau, 60 D.T.C. 1236, and the decision cited by the agent for the respondent, Archambault v. M.N.R., 88 D.T.C. 1722. The courts have been consistent on this point. When the legislation provides that an amount received must be included in computing income for the year, the amount must be included in the year it is received, not the years for which it was paid.
16 In conclusion, the Minister correctly computed the appellant's 1995 income by including the $101,415 therein and correctly assessed the appellant under Part I.2 of the Act when he determined that the appellant should pay a tax equal to the benefits received in 1995 under the Old Age Security Act.
17 Accordingly, the appeal is dismissed.
[5] The Appellant pointed out that if the amount of $78,973 consisting of arrears due in Workers' Compensation, which he received in 2001, had been paid to him during tax years when it was due, he would not have exceeded the $50,000 limit so as to incur the "clawback". Nor would he have been taxed since Workers' Compensation is not subject to income tax.
[6] But the Income Tax Act words deal with the amount in the year of receipt.
[7] The law has not changed since Poulin v. The Queen.
[8] Therefore the appeal is dismissed.
Signed at Saskatoon, Saskatchewan, this 2nd day of September 2003.
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"D.W. Beaubier" |
Beaubier, J.
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CITATION: |
2003TCC598 |
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COURT FILE NO.: |
2003-382(IT)I |
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STYLE OF CAUSE: |
Edward Franklin v. The Queen |
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PLACE OF HEARING: |
Kamloops, British Columbia |
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DATE OF HEARING: |
August 19, 2003 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice D.W. Beaubier |
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DATE OF JUDGMENT: |
September 2, 2003 |
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APPEARANCES: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Bruce Senkpiel |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |