Gill v The Queen, 2012 TCC 302

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Is a Lump-sum Payment From a Retirement Plan to a Taxpayer as a Result of the Death of the Plan Holder Included in Income of the Recipient?

Gill v The Queen, 2012 TCC 302

In addition to the issue of whether a lump sum payment bequeathed to a taxpayer, resulting from the payment of his deceased sister’s individual retirement income from the USA, ought to be included in the taxpayer’s income under clause 56(1)(a)(i)(C.1), there was also a secondary issue of whether there is a difference between the MNR the basis of an assessment and the arguments in support to of the assessment.

The Court held that there is no meaningful difference between the basis of the assessment and the argument in support of the assessment when considering subsection 152(9), and that the lump sum payment was included in the income of the recipient so long as it is paid out a certain fund identified in clause 56(1)(a)(i)(C.1).


The taxpayer’s sister was a US citizen who dies on Nov 14, 2004.  She held an IRA with a US trust company.  The taxpayer received a lump sum payment from this trust company in 2005, but did not include this in his income for 2005.

The amount was agreed to not be an allowance or pension, or consideration for past services, or what is ordinarily called “pension benefit”.

The parties agreed that the IRA is a “foreign retirement arrangement” as defined in subsection 248(1) of the ITA, and s 6803 of the regulations, and that if the taxpayer were a US resident, the amount would have been subject to tax.

The MNR reassessed and included the lump sum payment as “US pension” income under clause 56(1)(a)(i)(C.1).


The Court first dealt with the procedural issue of whether the MNR could argue the reassessment on the basis of clause 56(1)(a)(i)(C.1), when it the notice of assessment the MNR reassessed on the basis of the amount being US pension income.

The court stated that section 152(9) is relevant, which reads:

The Minister may advance an alternative argument in support of an assessment at any time after the normal reassessment period unless, on an appeal under this Act

(a)               there is relevant evidence that the taxpayer is no longer able to adduce without the leave of the court; and

(b)               it is not appropriate in the circumstances for the court to order that the evidence be adduced.

The taxpayer raised an argument differentiating between the basis of an assessment and an argument supporting an assessment, by stating that the basis of an assessment is the determination of the nature of the amount in question.  He relied on the decision in Canada v. Loewen, 2004 FCA 146,where it was said:

The basis of any assessment is a matter of historical fact, and does not change. The basis of a reassessment normally includes the facts relating to the increased taxable income, as the Minister perceived those facts when the reassessment was made. It also includes the manner in which the Minister applied the facts to the relevant law when making the reassessment, and any conclusions of law that guided the application of the facts to the law. . . .

But, the Court noted that in The Queen v. Anchor Pointe Energy Ltd, 2003 FCA 294, the FCA rejected any meaningful difference between the basis of an assessment and an argument in support of the assessment for purposes of subsection 152(9) – see also Gould v. The Queen, 2005 TCC 556. The FCA in Walsh et al v. The Queen, 2007 FCA 222,  identified the ground under which the Crown could use subsection 152(9) to advance an alternative argument as being:

1) the Minister cannot include transactions which did not form the basis of the taxpayer’s reassessment;


2) the right of the Minister to present an alternative argument in support of an assessment is subject to paragraphs 152(9)(a) and (b), which speak to the prejudice to the taxpayer; and


3) the Minister cannot use subsection 152(9) to reassess outside the time limitations in subsection 152(4) of the Act, or to collect tax exceeding the amount in the assessment under appeal

The Court then dealt with the proper interpretation of clause 56(1)9a)(i)(C.1), which reads:

56. (1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,

(a) any amount received by the taxpayer in the year as, on account or in lieu of payment of, or in satisfaction of,

(i) a superannuation or pension benefit including, without limiting the generality of the foregoing,

. . .

(C.1) the amount of any payment out of or under a foreign retirement arrangement established under the laws of a country, except to the extent that the amount would not, if the taxpayer were resident in the country, be subject to income taxation in the country,

. . .  [Emphasis added.]

The taxpayer argued that the words “without limiting the generality of the foregoing” is intended to limit the list that follows to those items that would constitute superannuation or pension benefits as the terms are generally understood, and relied on the decision in Re Law Society of Upper Canada and Attorney General of Ontario (1995), 21 O.R. (3d) 666, where it was stated that:

… it would appear that the use of the words “without limiting the generality of the foregoing” are [sic] intended to mean that the reference to the particular subjects is not intended to modify the meaning of the wider general language. . .

The taxpayer then relied on the decision in Abrahamson v. M.N.R., 91 DTC 213, where it was said that lump sum payments from IRAs are not superannuation or pension income.  The court, however, noted that Abrahamson was decided before the enactment of the clause under consideration.

The MNR relied on the decision in Kaiser v. The Queen, 95 DTC 13, where in similar fact circumstances the Court interpreted the same words in the same clause, and concluded that the provision was broad (included the amount of ANY payment out of or under a foreign retirement arrangement), and was meant to capture amounts paid out of certain types of funds without concern as to the identity of the person they are paid to.

The Court held that the clause in question provides for the inclusion of the amount received by the taxpayer, as the words of the provision are very broad and don’t suggest that the payment must meet the common law definition of superannuation or pension benefit.  The Court also noted that the provision uses the word “including” which enlarges the ordinary meaning of a term by including things that would normally fall outside of it.  The Court also said that the word “without limiting the generality of the foregoing” is only meant to guard against a narrowing of interpretation of what precedes and not an enlargement.