T-3452-76
The Queen (Plaintiff)
v.
John M. Cruickshank (Defendant)
Trial Division, Gibson J.—Vancouver, June 9,
1977.
Income tax — Canada-France Tax Convention — Pensions
— Lump sum paid to defendant to commute pension —
Assessed 15% non-resident tax pursuant to s. 212(1)(h) of
Income Tax Act — Whether lump sum payment a pension
within meaning of Canada-France Tax Agreement and hence
exempt from tax — Income Tax Act, R.S.C. 1952, c. 148, ss.
56(1)(a)(î), 212(1)(h), 248(1) — Canada-France Tax Conven
tion (signed March 16, 1951), Article 11 — The Canada-
France Income Tax Convention Act, 1951, S.C. 1951, c. 40, s.
3.
The defendant, a resident of Paris, France, received a lump
sum payment to commute a pension otherwise receivable under
a private pension plan. This sum was assessed a 15% non-resi
dent tax, pursuant to section 212(1)(h) of the Income Tax Act.
The issue is whether or not the lump sum payment was exempt
from tax because it was a "pension" paid to the defendant
within the meaning of Article 11 of The Canada-France
Income Tax Convention Act, 1951.
Held, the appeal is dismissed. The word "pension" as used in
Article II of The Canada-France Income Tax Convention Act,
1951 in reference to a private pension plan paid "to persons
having their fiscal domicile in the other [contracting] State"
should be given a wider meaning than its lexicon meaning and
such wide meaning includes a payment which may be catego
rized as a "superannuation or pension benefit" as used in the
Income Tax Act.
INCOME tax appeal.
COUNSEL:
W. Mah for plaintiff.
L. M. Little for defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Thorsteinsson, Mitchell, Little, O'Keefe &
Davidson, Vancouver, for defendant.
The following are the reasons for judgment
rendered in English by
GIBSON J.: The defendant John Melrose
Cruickshank, a resident of Paris, France and
having a "fiscal domicile" there in 1974 (see
Article 2 paragraph VII of Canada-France Income
Tax Convention of 1951) received from a private
pension plan of Industrial Hose and Belting Ltd.,
which was administered by Investors Trust Com
pany, as trustee the lump sum of $213,258.88 as a
former employee on the termination of this pension
plan. This lump sum was paid to him to commute
a pension he otherwise would have received under
the pension plan.
The Minister of National Revenue assessed the
defendant 15 per cent non-resident tax purportedly
pursuant to the provisions of section 212(1)(h) of
the Income Tax Act, R.S.C. 1952, c. 148, as it
read in 1974, namely $31,988.83.
The issue on this appeal is whether or not the
amount of $213,258.88 was exempt from tax
because it was a "pension" paid to the defendant
within the meaning of that word in Article 11 of
the said Canada-France Tax Convention.
Article 11I reads as follows:
I.—Private pensions and term or life annuities derived from
one of the two contracting States and paid to persons having
their fiscal domicile in the other State are taxable only in the
latter State.
Section 3 of The Canada-France Income Tax
Convention Act, 1951, S.C. 1951, c. 40, reads as
follows:
3. In the event of any inconsistency between the provisions of
this Act or of the said Convention and the operation of any
other law, the provisions of this Act and the Convention shall,
to the extent of such inconsistency, prevail.
There is no definition of "pension" in the Cana-
da-France Act or Convention.
Article 2 XI of Convention Agreement reads as
follows:
XI.—Any expression which is not defined in this Agreement
shall have for each contracting State, unless the context other
wise requires, the same meaning which it has under the laws of
that State with respect to the taxes referred to in the said
Agreement.
There is no definition of "pension" in the
Income Tax Act as it read in 1974.
The submission is therefore that the lexicon
meaning of "pension" should be applied and such
does not include a lump sum payment as was made
in this case.
The Income Tax Act in sections 56(1)(a)(î),
212(1)(h) and 248(1) does prescribe that any
amounts received from a pension plan which could
be categorized as "superannuation or pension
benefit" shall be taxed, and these latter words
include pension payments. In addition, the plaintiff
pleads that the Minister of National Revenue in
assessing the defendant as he did, acted inter alia,
upon this assumption, viz:
(a) that the amount of $213,258.88 was received by the
defendant as a superannuation or pension benefit in accord
ance with the provisions of paragraph 212(1)(h) of the
Income Tax Act.
Also Parliament as a lexicographer of the word
"pension" in the Convention adopted in the Cana-
da-France Income Tax Convention Act, 1976,
S.C. 1974-75-76, c. 104, at Article XVIII pre
scribes that pensions may be "periodic or
non-periodic".
In my view the word "pension" as used in
Article 11 of The Canada-France Income Tax
Convention Act, 1951 in reference to a private
pension paid "to persons having their fiscal domi
cile in the other [contracting] State" should be
given a wider meaning than its lexicon meaning
and such wide meaning includes a payment which
may be categorized as a "superannuation or pen
sion benefit" as used in the Income Tax Act.
Accordingly the appeal is dismissed with costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.