https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/407127/index.do
Rasmussen v. The Queen (May 28, 2019 – 2019 TCC 124, Favreau J.).
Précis: The taxpayer immigrated to Canada from Australia. He received pension payments from his former Australian employer and sought to deduct the capital element contributed by him (for which he was never entitled to a deduction under Australian tax law). The Tax Court dismissed the appeal holding that on the basis of established precedent Canadian tax law did not permit a carve out of the capital element of pensions. There was no order as to costs since this was an informal procedure appeal.
Decision: Unfortunately for the taxpayer his appeal was dismissed since the law in this area was clearly against his position:
[24] In R v. Herman, 1978 CarswellNat 210, the Federal Court wrote at paragraph 13:
In taxing superannuation or pension income the Act appears to make no distinction as to the origin of it. It merely taxes all of it when received by a taxpayer resident in Canada and liable to Canadian income tax. In this case, it differs from the taxation of annuities in which only the interest element is taxable as income and part of each annuity payment received would represent a return of the annuitant’s capital and be treated as such.
[25] In Ruparel v. Canada, 2012 TCC 268, Justice Webb (as he then was) stated that there were no provisions in the Act which provided for the deduction of the capital elements of pension payments. In Ruparel, benefits received by the taxpayer were included in income under section 56 of the Act.
[26] The Convention between Canada and Australia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (the “Treaty”) does not prohibit the taxation of the pension benefits by Canada. Article 18 of the Treaty allows Australia to tax pensions and annuities at a rate of 15% of the pension or annuity received in the year. The Appellant has stated that no taxes were charged in Australia. If taxes had been charged in Australia, he could have claimed a foreign tax credit in Canada.
[27] Based on all of the foregoing, I have concluded that the amounts received by the Appellant from the QSuper were superannuation or pension benefits and that they had to be included in his income in accordance with subparagraph 56(1)(a)(i) of the Act regardless that he was unable to deduct the contributions to the QSuper when he made them.
[28] It is an unfortunate situation that the Appellant is required to include in his income amounts that could be viewed as a return of contributions made by him from after-tax dollars but the Appellant’s appeal must be determined based on the Act as it is written.
There was no order as to costs since this was an informal procedure appeal.