Date: 19980605
Dockets: 97-2315-IT-I; 97-2316-IT-I
BETWEEN:
LARRY B. BAUMAN, LAUREN M. BAUMAN,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent,
REASONS FOR ORDER
Beaubier, J.T.C.C.
[1] These appeals pursuant to the Informal Procedure were heard together on common evidence by consent of the parties at London, Ontario on May 21, 1998. Larry Bauman was the only witness.
[2] The Appellants have appealed assessments for their 1995 taxation year pursuant to section 118.7 of the Income Tax Act and sections 10 and 11 of the Canada Pension Plan. In 1995 they filed elections not to pay CPP premiums in respect to their self-employed earnings. The elections were denied on the basis that they were not members of a religious sect or a division of a religious sect certified by the Minister pursuant to subsection 11(6) of the Canada Pension Plan. Sections 10 and 11 of the Canada Pension Plan read:
10. Every individual who is resident in Canada for the purposes of the Income Tax Act during a year and who has contributory self-employed earnings for the year shall make a contribution for the year of an amount equal to the product obtained when the contribution rate for self-employed persons for the year is multiplied by the lesser of
(a) the individual's contributory self-employed earnings for the year, minus the amount by which the individual's basic exemption for the year exceeds the aggregate of
(i) all amounts deducted as prescribed on account of the individual's basic exemption for the year whether by one or more employers pursuant to section 8, and
(ii) all amounts deducted as prescribed by or under a provincial pension plan on account of any like exemption for the year whether by one or more employers pursuant to that plan, and
(b) the individual's maximum contributory earnings for the year, minus the individual's salary and wages, if any, on which a contribution has been made for the year and such amount, if any, as is determined in prescribed manner to be the individual's salary and wages on which a contribution has been made for the year by the individual under a provincial pension plan.
11. (1) Subject to subsections (2) and (5), section 10 does not apply with respect to any year in respect of any individual who, being a member of a religious sect or a division of a religious sect certified by the Minister pursuant to subsection (6), elects not to make a contribution with respect to that year.
(2) An election referred to in subsection (1) shall
(a) be made in such manner and form as may be prescribed;
(b) commence to have effect, if approved by the Minister, on and from January 1 of the year in which the election is filed with the Minister; and
(c) cease to have effect on January 1 of the year next following the day on which a revocation of the election made in prescribed manner is received by the Minister.
(3) The Minister shall approve an election referred to in subsection (1) where he is satisfied that
(a) the person making the election
(i) is a member of a religious sect or a division of a religious sect that has been certified pursuant to subsection (6), and
(ii) has been certified as such a member by a spokesman for that sect or division; and
(b) the spokesman
(i) has been authorized by the sect or division to certify persons as being members of the sect or division, and
(ii) has certified that the sect or division maintains tenets, teachings and practices of kinds referred to in subparagraphs (6)(a)(i) and (ii).
(4) Any contribution made by a contributor with respect to a year for which he elects under this section not to make a contribution shall, on application, be returned to him.
(5) Where an individual who has elected not to make a contribution with respect to any year revokes the election, he may not make an election under this section with respect to any subsequent year.
(6) The Minister shall certify a religious sect or a division of a religious sect for the purposes of this section where
(a) he is satisfied that the religious sect
(i) is a religious organization that has established tenets and teachings that oppose the acceptance of benefits from any private or public insurance that provides for payments in the event of death, disability, old age or retirement,
(ii) does, as a practice, make provisions for the support of dependent members that are reasonable in view of their general level of living, and
(iii) was in existence in Canada on January 1, 1966 and has been maintaining the tenets, teachings and practices referred to in subparagraphs (i) and (ii) since that date; and
(b) the religious sect or division thereof has applied to him in prescribed form for certification.
[3] At the opening of the hearing the Respondent's counsel moved to dismiss the appeal on the basis that the Minister had not made a determination pursuant to section 118.7 of the Income Tax Act and section 27 of the Canada Pension Plan.
[4] The Appellants' response was that the Canada Pension Plan is a tax, not a pension. There is no prerequisite respecting section 27 of the Canada Pension Plan described in section 118.7 of the Income Tax Act. Section 118.7 deals with deductions of CPP contributions by self-employed persons such as the Appellants.
[5] Section 27 of the Canada Pension Plan reads:
27.(1) Where any question arises under this Act as to whether a person is required to make a contribution as an employee for a year, or as an employer with respect to an employee for a year, or as to the amount of any such contribution,
(a) the employee, the employer or the representative of the employee or employer may, on or before April 30 in the immediately following year, apply to the Minister to determine the question; or
(b) the Minister on his own initiative may at any time determine the question.
(2) Where the Minister has assessed an employer for an amount payable by him under this Act, the employer or his representative may appeal to the Minister for a reconsideration of the assessment, either as to whether any amount should be assessed as payable or as to the amount so assessed, within ninety days of the day of mailing of the notice of assessment.
(3) Where a question specified in subsection (1) is to be determined by the Minister
(a) pursuant to an application by an employee or his representative, the Minister shall notify his employer, or the representative of his employer,
(b) pursuant to an application by an employer or his representative, the Minister shall notify the employee specified in the application or his representative,
(c) on his own initiative, the Minister shall notify the employer or his representative and any employee who may be affected by the determination or his representative, or
(d) pursuant to an appeal under subsection (2), the Minister shall notify any employee who may be affected by the determination or his representative,
of his intention to determine the question and shall afford to the employer and employee affected or either of them or the representatives of both or either of them, as the circumstances require, an opportunity to furnish information and to make representations to protect their interests.
(4) An application for the determination of a question or an appeal for reconsideration of an assessment by the Minister shall be addressed to the Chief of Appeals in a District Office of the Department of National Revenue and delivered or mailed to that office.
(5) On an application or an appeal under this section, the Minister shall, with all due dispatch, determine the question raised by the application or vacate, confirm or vary the assessment, or re-assess, and he shall thereupon notify any employee affected or his representative and the employer or his representative.
(6) Unless an application has been made by an employee or employer or the representative of an employee or employer in accordance with subsection (1) with respect to any year, where an amount has been deducted from the remuneration of the employee for the year or has been paid by the employer as a contribution with respect to an employee for the year, or where no amount has been so deducted or paid, after April 30 in the following year, the amount so deducted or paid shall be deemed to have been deducted or paid in accordance with this Act, or it shall be deemed that no amount was required to be deducted or paid in accordance with this Act, as the case may be, but nothing in this subsection restricts the authority of the Minister to determine any question on his own initiative under subsection (1) or to make any assessment under this Act after that date.
(7) Where the Minister is required to notify an employee who may be or is affected by a determination under this section, he may cause the employee or his representative to be notified, in such manner as he deems adequate, of his intention to make the determination or of the determination, as the case may be.
(emphasis added)
[6] The only portions of section 27 that could apply to the Appellants have been emphasized in the above quote. The Appellants are self-employed. There is no requirement under paragraphs 27(1)(a) that a self-employed contributor must apply to the Minister to determine a question. The Minister may on his own initiative determine a question under paragraph 27(1)(b) respecting the Appellants. The Minister assessed the Appellants for contributions. Any right to appeal which they have appears to follow upon that assessment.
[7] Section 28 of the Canada Pension Plan describes the right of appeal. It reads:
28. (1) An employee or employer affected by a determination by or a decision on an appeal to the Minister under section 27, or the representative of either of them, may, within ninety days after the determination or decision is communicated to that employee or employer, or within such longer time as the Tax Court of Canada on application made to it within those ninety days may allow, appeal from the determination or decision to that Court by sending a notice of appeal in prescribed form by registered mail to the Registry of that Court.
(1.1) For the purpose of subsection (1), the determination of the time at which a decision on an appeal to, or a determination by, the Minister under section 27 is communicated to an employee or employer shall be made in accordance with the rule, if any, made under paragraph 20(1.1)(h.1) of the Tax Court of Canada Act.
(2) On an appeal under this section, the Tax Court of Canada may reverse, affirm or vary the determination, may vacate, confirm or vary the assessment, or may refer the matter back to the Minister for reconsideration and reassessment and shall thereupon in writing notify the parties to the appeal of its decision and of its reasons therefor.
[8] Section 28 does not provide contributors who are not employers or employees with a right of appeal to the Tax Court of Canada. The Canada Pension Plan does not grant the Tax Court of Canada jurisdiction for their appeals, and this Court has no inherent jurisdiction to hear them.
[9] They have raised a number of questions before the Court which include:
1. Is the Canada Pension Plan a tax?
(wherein contributions fall into the general revenues of Canada and are not a separate fund)
2. If it is a tax, is it constitutional?
3. If it is not a tax can the federal government levy it, or is it only within provincial powers as a pension constituting a property or a civil right?
4. In any event are the uses of the contributions by the federal government constitutional?
5. Is section 11 and in particular subsection 11(6) or any part of it constitutional?
6. Are sections 27 and 28 of the Canada Pension Plan, which appear to restrict various rights of self-contributors constitutional?
Other questions also arise.
[10] Because section 28 does not give these Appellants a right of appeal to the Tax Court of Canada, the Appellants must have their rights determined by bringing an action in a superior court with jurisdiction respecting theCanada Pension Plan.
[11] For these reasons, the purported appeals are quashed.
Signed at Victoria, British Columbia this 5th day of June 1998.
"D.W. Beaubier"
J.T.C.C.