Date: 19980414
Docket: 97-2235-IT-I
BETWEEN:
SLOBODAN TRSIC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
P.R. Dussault J.T.C.C.
[1] The appellant is challenging an assessment, notice of which was dated April 29, 1997, for tax on income from Canada of non-resident persons (Part XIII) for the 1996 taxation year.
[2] The appellant also disagreed with the amounts claimed by the Minister of National Revenue ("the Minister") pursuant to a judgment of this Court on December 3, 1997 dismissing his appeals from assessments made for the 1991 to 1995 taxation years inclusive, in connection with the seizure by the Minister of a total amount of $26,638.02 from a bank account on May 23 and June 4, 1997.
[3] This second point is essentially one of collection of money owed pursuant to a judgment, not an appeal from an assessment. Section 12(1) of the Tax Court of Canada Act gives this Court no jurisdiction to hear this type of case unless the dispute arose from the making of a reassessment, which is not the case here.
[4] For the benefit of the appellant, who appeared to be disputing the validity of the interest claimed, I would simply note that s. 227(8.3)(b) of the Income Tax Act ("the Act") provides that a person who fails to deduct or withhold any amount as required by s. 215 of the Act in paying money to a non-resident person shall pay to the Receiver General interest calculated at the prescribed rate for the period beginning on the day on which the amount was required to be deducted or withheld and ending on the day of payment of the amount to the Receiver General. Additionally, s. 227(8.1) of the Act makes a non-resident person and the person who has failed to deduct or withhold an amount as required under s. 215 of the Act jointly and severally liable to pay any interest calculated in accordance with s. 227(8.3)(b) of the Act.
[5] On the appeal from the assessment for the 1996 taxation year, the parties agreed on the fact that the appellant was a resident of the U.S. As well, there was agreement on the fact that the appellant received the following amounts in 1996:
ORGANIZATION NATURE OF AMOUNT AMOUNT
Government of Canada pension $ 4,764.42
Régie des Rentes du Québec survivor's pension $ 6,345.24
Régie des Rentes du Québec pension $ 1,019.76
Hydro-Québec pension $22,379.00
Royal Bank interest $ 170.13
Royal Bank interest $ 3,503.36
[6] No source deductions were made when these amounts were paid to the appellant.
[7] The assessment totalling $6,756.55 was made on the basis that the applicable rates and resulting tax were as follows, for the various amounts received:
AMOUNT RATE TAX
Interest $ 3,673.49 10% $ 367.35
Hydro-Québec pension $22,379.00 15% $3,356.85
Government of Canada pension
and pensions from Régime des $12,129.42 25% $3,032.35
Rentes du Québec
TOTAL $6,756.55
[8] The 10 percent rate on interest results from the effect of Article XI of the 1980 Tax Convention between Canada and the United States ("the Convention") as applicable from January 1, 1996.
[9] The 15 percent rate on the pension received from Hydro-Québec results from the effect of paragraphs 2(a) and 3 of Article XVIII of the Convention, as applicable from January 1, 1996, according to the third Protocol to that agreement effective on November 9, 1995.
[10] The 25 percent rate on benefits paid under social security legislation (Government of Canada and Régime des Rentes du Québec) results from the operation of s. 212(1)(h) of the Act, as applicable from January 1, 1996, and the exclusion set out in paragraphs 3 and 5 of Article XVIII of the Convention, as amended by the third Protocol.
[11] Counsel for the respondent admitted that the coming into effect of the fourth Protocol to the Convention on December 16, 1997 amended Article XVIII of the Convention so that benefits under social security legislation would only be taxed in the recipient's country of residence, not in the country in which the source of the benefits was located. As this amendment is applicable retroactively from January 1, 1996, the 25 percent tax assessed on pension payments received from the Government of Canada and under the Régime des Rentes du Québec must be quashed.
[12] The appeal is accordingly allowed and the assessment reduced by $3,032.35, to $3,724.20.
Signed at Ottawa, Canada, April 14, 1998.
P.R. Dussault
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 14th day of December 1998.
Kathryn Barnard, Revisor