Category Archives: Tax Treaties

Superannuation or Pension Benefits From Other Countries

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 Superannuation or Pension Benefits From Other Countries

Schaub v The Queen, 2014 TCC 212

The taxpayer made voluntary contributions to a Swiss pension plan after he immigrated to Canada. He was not allowed deductions for these contributions. Once he started receiving benefits, the CRA assessed the taxpayer to include the amounts in income, with not consideration for the capital contributed.

The TCC stated that subparagraph 56(1)(a)(i) of the ITA required the inclusion in income for a taxpayer for a taxation year any amount received by the taxpayer in the year “on account or in lieu of payment of, or in satisfaction of” “a superannuation or pension benefit”.  Although “superannuation or pension benefit” is defined in section 248 of the ITA, it only includes any payments made to a beneficiary under a pension fund or plan.

The TCC referred to the decision of Woods v R., 2010 TCC 106, paragraph 22, citing the Supreme Court of Canada in Crown Trust Co. (McArdle Estate) v Minister of National Revenue (1965), 65 DTC 5176 (SCC), where it was said that “one of the characteristics of a superannuation or pension fund or plan is that it entails a person to a pension upon retirement” (para 11).  

The Federal Court Trial Division in R. v Herman (1978), 78 DTC 6311 (FCTD) rejected the argument that an amount was not a superannuation or pension benefit because they had not been allowed a deduction on the contribution, and noted that the ITA makes no distinction as to the origin of the funds. 

The TCC in Ruparel v Canada, 2012 TCC 268, held that there is no provision of the ITA that provides for a deduction of the capital element of pension payments.

Relief, if any is to be found, has to be in the income tax convention between Canada and the relevant country, limiting or preventing the taxation of the amounts by Canada. In this case, the tax treaty did not limit Canada’s entitlement to tax the amounts received, but limited Switzerland’s jurisdiction to tax to 15% of the amounts.

The TCC held that the amounts were properly included in income, with no deduction for the capital element of the amounts.

– Sas Ansari, JD LLM PhD (exp)

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Aboriginal Taxation, Treaty 8 and others

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Aboriginal Taxation – Effect of Treaty 8, Royal Proclamation on 1763, and the United Nations Declaration on the Rights of Indigenous Peoples

Laboucan v The Queen, 2013 TCC 357

The taxpayer, like others argued that income of aboriginal persons, whether on or off reserve, is exempt from taxation. Reliance was placed on Treaty 8, The Royal Proclamation of 1763, the Charter of Rights and Freedoms, the United Nations Declaration on the Rights of Indigenous Peoples and the Supreme Court of Canada mandated duty to consult on issues relating to the rights of native peoples.

The Crown brought a motion to strike on the basis of a lack of reasonable grounds of appeal and, in part, the remedy being outside of the TCC’s jurisdiction. The court granted the motion.

The Court held:

    • Treaty 8 was fund not to contain a tax exemption: see Canada v. Benoît, 2003 FCA 236; Dumont v. The Queen, 2005 TCC 790; Tuccaro v. The Queen, 2013 TCC 300; NOTE the FCA in Tuccaro v The Queen, 2014 FCA 184, determined that the FCA decision in Benoit has no presidential value as it was a based on a finding of fact and not of law.
    • The Royal Proclamation of 1763 does not contain any income tax exemption other than those granted in treaties;
    • The duty to consult is not something that the TCC has jurisdiction over; see Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73; Acadia Band v. M.N.R., 2007 FC 259;
    • The duty to consult in relation to Income Tax assessments in accordance with the ITA does not require more than the CRA audit review and proposed reassessment procedure: see Sackaney v. The Queen, 2013 TCC 303; Hester v. The Queen et al, 2007 CanLII 52015, aff’d: Hester v. Canada, 2008 ONCA 634;
    • The United Nations Declaration on the Rights of Indigenous Peoples has been signed by Canada but has not been ratified by the Canadian Parliament

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