Date: 20000515
Docket: 1999-2049-IT-I
BETWEEN:
LANA FORTIER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Watson, D.J.T.C.C.
[1] This appeal was heard under the Informal Procedure in Toronto, Ontario, on April 17, 2000.
[2] In computing income for the 1996 taxation year, the Appellant reported income in the amount of $7,667.00 in respect of a Registered Retirement Saving Plan ("RRSP") withdrawal of funds and deducted the equivalent amount of $7,667.00 as "other deductions" (the "Deduction") in respect of RRSP excess contributions made by her during the 1992, 1993 and 1994 taxation years as follows:
1992 1993 1994 TOTAL
Date of Assessment 28/04/93 05/05/94 01/05/95
Total Premiums Paid $4,544 $1,944 $1,944
RRSP Contribution Limit 44 0 0
RRSP Excess Contribution $4,500 $1,944 $1,944 $8,388
Withdrawal in 1996 $7,667
[3] The Minister of National Revenue (the "Minister") assessed the Appellant for the 1996 taxation year, Notice thereof was mailed on June 9, 1997; in reassessing the Appellant for the 1996 taxation year, Notice thereof mailed on October 27, 1997, the Minister disallowed the Deduction.
[4] In so reassessing the Appellant, the Minister made the following assumptions of fact:
"(b) Since 1990, the Appellant had made several contributions into her RRSP.
(c) In 1996, the Appellant withdrew from her RRSP the amount of $7,667.11 which the Appellant claimed to be in respect of her excess RRSP contributions during 1992, 1993 and 1994.
(d) A T4RSP information slip was issued by the financial institution Sun Life of Canada for the 1996 taxation year, reflecting the RRSP withdrawal of $7,667.11 (the "Withdrawal") and the tax withheld at source in the amount of $1,533.42.
(e) The Withdrawal was income of the Appellant for the 1996 taxation year.
(f) The Withdrawal was not a lumpsum paid by way of a direct transfer into a RRSP or designated as qualifying withdrawal in respect of past service pension adjustment as described in subparagraph 146(8.2)(b) of the Income Tax Act (the "Act").
(g) The funds from the Withdrawal in respect of excess contributions made during the 1992 taxation year, were not received by the Appellant within the time limit described in subparagraph 146(8.2)(c) of the Act.
(h) The Appellant's contributions into her RRSP during the 1993 and 1994 taxation years were nil.
(i) The Appellant did not file with the Minister a properly completed authorized form T3012A in respect of the 1993 and 1994 RRSP excess contributions as required by subsection 146(8.2) of the Act.
(j) The Withdrawal was not a refund of excess RRSP contributions."
[5] The Agent acting on behalf of the Appellant admitted paragraphs (b) to (f) and denied paragraphs (g) to (j).
[6] The Appellant has the onus of establishing on a balance of probabilities that the Minister's reassessment was ill-founded in fact and in law.
[7] The issue in this Appeal is whether the Appellant is entitled to deduct for the 1996 taxation year the amount of $7,667.00 in respect to the withdrawal.
[8] Subsection 146(8.2) of the Act reads as follows:
"(8.2) Amount deductible - Where
(a) all or any portion of the premiums paid in a taxation year by a taxpayer to one or more registered retirement savings plans under which the taxpayer or the taxpayer's spouse was the annuitant was not deducted in computing the taxpayer's income for any taxation year,
(b) the taxpayer or the taxpayer's spouse can reasonably be regarded as having received a payment from a registered retirement savings plan or a registered retirement income fund in respect of such portion of the undeducted premiums as
(i) was not paid by way of a transfer of an amount from a registered pension plan to a registered retirement savings plan,
(ii) was not paid by way of a transfer of an amount from a deferred profit sharing plan to a registered retirement savings plan in accordance with subsection 147(19), and
(iii) was not paid by way of a transfer of an amount from a provincial pension plan prescribed for the purpose of paragraph 60(v) to a registered retirements savings plan in circumstances to which subsection (21) applied,
(c) the payment is received by the taxpayer or the taxpayer's spouse in a particular taxation year that is
(i) the year in which the premiums were paid by the taxpayer,
(ii) the year in which a notice of assessment for the taxation year referred to in subparagraph (i) was sent to the taxpayer, or
(iii) the year immediately following the year referred to in subparagraph (i) or (ii), and
(d) the payment is included in computing the taxpayer's income for the particular year,
the payment (except to the extent that it is a prescribed withdrawal) may be deducted in computing the taxpayer's income for the particular year unless it is reasonable to consider that
(e) the taxpayer did not reasonably expect that the full amount of the premiums would be deductible in the taxation year in which the premiums were paid or in the immediately preceding taxation year, and
(f) the taxpayer paid all or any portion of the premiums with the intent of receiving a payment that, but for this paragraph and paragraph (e), would be deductible under this subsection."
[9] If contributions made by the taxpayer after 1990 to RRSP's under which the taxpayer or the taxpayer's spouse is the annuitant have not been deducted in computing the taxpayer's income, the taxpayer may withdraw the contributions not deducted out of the plan on a tax-free basis; however, paragraph 146(8.2)(c) of the Act allows the taxpayer to recover the excess contribution tax-free provided that the refund amount from the relevant fund is received in the year in which the premium was paid, the year in which the taxpayer was assessed for the relevant taxation year or the following year.
[10] In the facts of this appeal, only contributions made during the 1994 taxation year could be withdrawn tax-free since the assessment regarding that taxation year occurred in 1995 and would satisfy the requirements of subparagraph 146(8.2)(c)(iii), i.e. the year following the year of assessment.
[11] At the hearing, Counsel for the Respondent conceded that the Appellant had made an RRSP contribution of $1,000 to the Sun Life Superflex Policy on February 23, 1994.
[12] The Agent acting on behalf of the Appellant submitted that the Appellant had made a further contribution in 1994 to Manulife in the amount of $944 as reflected in the summary attached to his Notice of Appeal; however, no evidence was adduced at the hearing to support any contribution in 1994 other than the $1,000 to the Sun Life RRSP mentioned above.
[13] Having regard to all the circumstances, including the testimony of the witnesses, the admissions and the documentary evidence, I am satisfied that the Appellant has failed in her onus of establishing on a balance of probabilities that she was entitled to deduct no more than the $1,000 contribution in 1994 conceded by counsel for the Respondent in computing her income during the 1996 taxation year.
[14] Accordingly, the appeal is allowed and the matter is referred back to the Minister for reconsideration and reassessment on the basis that the Appellant was entitled to a deduction in the amount of $1,000 in the 1996 taxation year for the contribution made in February 1994.
Signed at Ottawa, Canada, this 15th day of May 2000.
"D.R. Watson"
D.J.T.C.C.