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14 Tax A.B.C. 389; 56
D.T.C. 132 (1956); 1956 CarswellNat 51 WILLIAM B. APGAR,
Appellant, and MINISTER OF NATIONAL REVENUE, Respondent Tax Appeal Board R. S. W. Fordham, Q.C. Judgment: February 27,
1956 COUNSEL: The Appellant appeared on his own behalf. T. E. Jackson , for the Respondent. SUBJECT: Income Tax (Federal) Income tax — Foreign income — Foreign retirement
arrangements. Income tax — Foreign income — Tax treaties. Income Tax Act (1952) — Section 6(a)(iii), (iv) and (v) —
Canada-U.S. Tax Convention — Article VI A — Retired U.S.
citizen residing in Canada — Proceeds from government annuity —
Whether taxable. Facts: The appellant, a retired U.S. citizen who had taken up permanent
residence in Canada, received retirement pay of $195 per month, the proceeds of
an annuity to which he had contributed $4,645.91. The Minister assessed the
appellant on this annuity, and the appellant appealed against this assessment
on the grounds that if he had still been residing in the U.S. he would not have
been taxed until the sum which he had contributed had been used up. Held: Since the sum of $4,645.91 had been paid to the U.S. government,
no benefit was received by the Canadian government. Article VI A of the Tax
Convention provides for exemption from the taxation of such annuities in the
U.S., but not in Canada, and the payments received by the appellant constituted
taxable income. The appeal was dismissed. R. S. W. Fordham: 1
Although this appeal was disposed of at the conclusion of the hearing,
it is still necessary to set out the reasons underlying the decision then reached.
The taxation year 1954 and Section 6(a)(iii), (iv) and (v) of the Income Tax
Act are involved. 2
Appellant retired on or about July 1, 1954, from the United States
Forest Service, came to Canada in the same month and took up permanent residence
at Victoria, B.C., where he had a house built. On retiring from the service
mentioned, the appellant became entitled to retirement pay of $195 per month,
which he has since been receiving regularly. Documentary evidence produced by
the appellant at the hearing disclosed that what he was receiving constituted
the proceeds of an annuity. It also appears that the appellant had contributed
a total of $4,645.91 toward the creation of this annuity during the time that
he was employed as aforesaid. 3
In respect of the year 1954, the Minister assessed the appellant on the
annuity so received from the United States Government. The taxpayer objected to
this and contended that, under the terms governing the granting of his annuity,
if he had still been residing in American territory he would not be taxed on
the annuity until the said sum of $4,645.91 had been used up. The said terms
not having been observed and followed in Canada, he submitted that he was
experiencing double taxation as regards payments received by him while residing
in Canada. This appeal ensued in due course. 4
There is no dispute about the facts of the case and these may be taken
as settled accordingly. What the appellant seems to have overlooked is, I
think, that the sum of $4,645.91 having been paid to the United States
Government and not to the Government of Canada, no benefit was received by the
latter in respect of the said sum. 5
Article VI A of the Tax Convention between Canada and the United States
of America reads: Pensions (including Government pensions) and life annuities
derived from within one of the contracting States by a resident of the other
contracting State shall be exempt from taxation in the former State. It will be observed that as regards a case such as the instant
one, this article provides for exemption from the taxation of such annuities in
the United States of America, but not in Canada. I have been unable to find any
other article in the Convention that could assist the appellant in any way, and
having regard to the relevant parts of Section 6(a) of the Income Tax Act ,
which read: 6. Without restricting the generality of
section 3, there shall be included in computing the income of a taxpayer for a
taxation year (a) amounts received in the year as, on account
or in lieu of payments of, or in satisfaction of (iii) annuity payments, (iv) superannuation or pension benefits, (v) retiring allowances, I must hold that the payments received by the appellant from the
United States Government during the taxation year 1954 are taxable income in
his hands. 6
The appeal will have to be dismissed and the assessment affirmed as
made, much as one may appreciate the appellant's viewpoint in the matter. Appeal dismissed. |