The Estate of the Late Aline Miner c/o Dale Miner v. The Queen

The Estate of the Late Aline Miner c/o Dale Miner v. The Queen Court (s) Database Tax Court of Canada Judgments Date 2003-10-03 Neutral citation 2003 TCC 599 File numbers 2003-698(IT)I Judges and Taxing Officers Judith Woods Subjects Income Tax Act Decision Content Docket: 2003-698(IT)I BETWEEN: THE ESTATE OF THE LATE ALINE MINER, Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ Appeal heard on August 25, 2003 at Timmins, Ontario By: The Honourable Justice J. M. Woods Appearances: Agent for the Appellant: Dale Miner Counsel for the Respondent: Jennifer Neill ____________________________________________________________________ JUDGMENT The appeal in respect of the assessment made under the Income Tax Act for the 2001 taxation year is dismissed. Signed at Ottawa, Canada this 3rd day of October, 2003. "J.M. Woods" J.M. Woods J. Citation: 2003TCC599 Date: 20031003 Docket: 2003-698(IT)I BETWEEN: THE ESTATE OF THE LATE ALINE MINER, Appellant, and HER MAJESTY THE QUEEN, Respondent. REASONS FOR JUDGMENT Woods J. [1] This is an appeal by The Estate of Aline Miner in respect of an income tax assessment for the 2001 taxation year of Mrs. Miner. The assessment concerns Part 1.2 tax, a special tax that effects a claw back[1] of old age security benefits. The estate was represented by Mr. Dale Miner, the executor of the estate and the son of Mrs. Miner. [2] The appeal was heard under the Court's Informal Procedure. Facts [3] Dale Miner's father was a miner from Timmins, Ontario who died in 1992. Prior to his death, the senior Mr. Miner received benefits from the Workplace Safety and Insurance Board of Ontario because he suffered from silicosis, a lung disease common to gold miners. Dale Miner's mother, Aline Miner, applied for survivor benefits after her husband's death on the basis that her husband's death was caused by the silicosis. Claims were made in 1992 and 1996 and denied. Eventually Mrs. Miner's claim was allowed by the Workplace Safety and Insurance Appeals Tribunal. [4] In 2001, the claim was satisfied by the payment of an award to Mrs. Miner that compensated for benefits retroactive to her husband's death in 1992. The amount of the award that was included in computing Mrs. Miner's income for tax purposes was $135,232 but the actual award was higher than that. Also in 2001, Mrs. Miner received an amount of $5,232 on account of old age security benefits. [5] In a reassessment of tax for the 2001 taxation year, the Minister of National Revenue (the "Minister") included tax of $5,232 under Part 1.2 of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 (the "Act"). The Part 1.2 tax has the effect of clawing back old age security benefits if a taxpayer's income exceeds a certain level. The reassessment clawed back the entire old age security benefits paid to Mrs. Miner in 2001, $5,232, on the basis that her income for that year exceeded the maximum level of $55,309. [6] Mrs. Miner died a few days after the reassessment was issued and her estate has appealed. Issue [7] The issue is whether Part 1.2 tax is applicable where an amount is received in a year as a result of a retroactive award of a tribunal.[2] Statutory Provisions [8] Paragraph 56(1)(v) of Part I of the Act provides: 56(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; Subsection 180.2(2) of Part 1.2 of the Act provides: 180.2(2) Tax payable. Every individual shall pay a tax under this Part for each taxation year equal to the amount determined by the formula A(1 - B) where A is the lesser of (a) the amount, if any, by which (i) the total of all amounts each of which is the amount of any pension, supplement or spouse's or common-law partner's allowance under the Old Age Security Act included in computing the individual's income under Part I for the year exceeds (ii) the amount of any deduction allowed under subparagraph 60(n)(i) in computing the individual's income under Part I for the year, and (b) 15% of the amount, if any, by which the individual's adjusted income for the year exceeds $50,000; and B is the rate of tax payable by the individual under Part XIII on amounts described in paragraph (a) of the description of A. Submissions of Parties [9] The essence of Mr. Miner's submission is that the application of the claw back in these circumstances is unfair. If the death of Mr. Miner's father was attributable to the silicosis, Mrs. Miner was entitled to survivor benefits of $1,200 per month since 1992. If these amounts had been paid on a monthly basis as required by the legislation, there would be no claw back of old age security benefits under subsection 180.2(2) because Mrs. Miner's income for 2001 would not have exceeded the maximum. [10] Counsel for the Crown is sympathetic to Mr. Miner's argument but submits that the claw back is clearly provided for in the legislation. Counsel referred to two decisions of the Tax Court that support this position, Poulin v. The Queen [3] and Bongiovanni v. R.[4] [11] Counsel also submitted that the doctrine of estoppel should not apply and in support referred to the principles set out by the Supreme Court of Canada in Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co.[5] and by Bowman J.(as he then was) in Goldstein v. The Queen.[6] Analysis [12] There have been several cases on similar facts before the Tax Court, the most recent being Franklin v. The Queen.[7] In essence, what is sought is relief from what appears to be a harsh result. The findings in the cases have been consistent in requiring that the retroactive award be included in computing income in the year of receipt and that the old age security benefits be clawed back under Part 1.2. I agree with the reasoning in these cases. The legislation is clear that old age security benefits are clawed back under Part 1.2 even though the event that led to the income level exceeding the maximum was the receipt of a retroactive award of a tribunal. [13] As for the doctrine of estoppel, Martland J. set out the factors giving rise to estoppel in Canadian Superior Oil as follows: (a) A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made. (b) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made. (c) Detriment to such a person as a consequence of the act or omission. [14] I agree with the submission of counsel for the Crown that these factors are not applicable here. It appears that the denial of Mrs. Miner's claim by the Ontario Workplace Safety and Insurance Board was in error. If the error had not been made, the tax under Part 1.2 would not have been applicable. However, the error did not induce Mrs. Miner to take action to her detriment. Accordingly, the circumstances do not justify relief based on estoppel. [15] Notwithstanding that the result seems harsh, the appeal must be dismissed. Signed at Ottawa, Canada this 3rd day of October, 2003. "J. M. Woods" J.M. Woods J. CITATION: 2003TCC599 COURT FILE NO.: 2003-698(IT)I STYLE OF CAUSE: The Estate of the Late Aline Miner v. Her Majesty the Queen PLACE OF HEARING: Timmins, Ontario DATE OF HEARING: August 25, 2003 REASONS FOR JUDGMENT BY: The Honourable Justice J. M. Woods DATE OF JUDGMENT: October 3, 2003 APPEARANCES: Agent for the Appellant: Dale Miner Counsel for the Respondent: Jennifer Neill COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada [1] "Claw back" is a term that has evolved to describe the legislative scheme that effectively denies old age security benefits where a taxpayer's income exceeds a stated maximum amount. The claw back is effected by the imposition of a special tax equal to the old age security benefits received. [2] The award itself is not taxed under Part I of the Act. Although the amount of the award is included in computing income under paragraph 56(1)(v), an equivalent amount is deductible pursuant to subparagraph 110(1)(f)(ii). [3] [1998] 3 C.T.C. 2820 (T.C.C.). [4] [2001] 1 C.T.C. 2186 (T.C.C.). [5] [1970] S.C.R. 932. [6] 96 DTC 1029 (T.C.C.). [7] 2003 TCC 598.