http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/229179/index.do
Freitas v. The Queen (March 23, 2017 – 2017 TCC 46, Campbell J.).
Précis: Mr. Freitas retired from Deloitte & Touche LLP on May 31, 2007. He received a distribution from Deloitte in 2008 which he thought was a retiring allowance and therefore not subject to CPP contributions. He was reassessed by CRA in respect of CPP contributions on the amount and appealed to the Tax Court. The Tax Court held that the disputed amount was not a retiring allowance and therefore was subject to CPP contributions. Mr. Freitas was also unsuccessful in an attempt to introduce new evidence after the conclusion of the hearing. Accordingly his appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
Decision: The Court rejected Mr. Freitas’ argument as lacking in merit:
[12] Since this definition specifically references retirement from an office or employment, the Appellant’s income cannot be a retiring allowance. He was a partner at Deloitte & Touche LLP earning business or partnership income. He retired in 2007 as a partner of that firm. His income was not from an office or employment as referenced in the definition of retiring allowance. After his retirement, he continued to receive a portion of the partnership income pursuant to his partnership agreement. Since this income falls into the category of business or professional income pursuant to subsection 96(1.1) of the ITA, the Minister was correct in including it in the calculation of his self-employed earnings for the purposes of sections 13 and 14 of the CPP.
[13] The Appellant relied on three documents to support his argument. The first document was the January 17, 1996 CRA View document titled 9527946, Retired Partner, Canada Pension Plan. The Appellant relied specifically on the following paragraph:
Income allocated pursuant to subsection 96(1.1) of the Act is business income but for the purposes of the CPP provision is not considered to be from a business carried on by the retired partner and consequently such a partner is not required to contribute to CPP solely as result of receiving such income.
[14] Canada Revenue Agency (“CRA”) advance rulings, such as this, are given in response to specific questions from a taxpayer. Without the background and the specific questions, there is no context provided in which CRA made this particular ruling. But apart from this problem, administrative documents produced or advice given by CRA do not bind this Court. There is an abundance of caselaw to support that conclusion. They are not determinative because the issue, being the validity of the assessment, is to be resolved in accordance with the law. [see Main Rehabilitation Co. v The Queen, 2004 FCA 403, 2004 DTC 6762; Butler v The Queen, 2016 FCA 65, 2016 DTC 5034; Hahn v The Queen, 2011 FCA 282, 2011 DTC 5166; Brousseau Succession v The Queen, 2012 TCC 390, 2013 DTC 1038; Klassen v The Queen, 2007 FCA 339, 2007 DTC 5612]. While such documents may be helpful to the Court, they will never be dispositive of the issue before the Court. In some instances, they will not assist the Court at all where the relevant legislation does not support a conclusion that CRA has advanced. Put another way, while the CRA view may be the most reasonable view to take, it is not justified when the relevant legislation is applied.
[15] The Appellant also relied on the Statement of Partnership Income, Form T5013. Although he referenced the membership code listed in the form, there was nothing further, either in that form or in his evidence, that converted his earnings into non-pensionable earnings. In fact, this form characterizes his earnings as a retired partner as professional income which is to be included in the calculation of contributory earnings pursuant to sections 13 and 14 of the CPP.
[16] Lastly, the Appellant relied on an opinion of Deloitte & Touche LLP, contained in a letter dated June 7, 2013, that his income was exempt from Canada Pension Plan contributions as it was a retiring allowance under subsection 96(1.1) of the ITA. Following my preceding analysis this interpretation of the relevant legislation is simply not correct.
The Court also rejected Mr. Freitas’ effort to introduce new material after the conclusion of the hearing before the Tax Court:
[19] Subsequent to the conclusion of the hearing, the Appellant submitted several documents which he intended to produce at the hearing for the Court’s consideration but had neglected to do so. These included a T1 adjustment request for the Appellant’s 2009 taxation year regarding a refund of excess Canada Pension Plan contributions and a letter dated February 3, 2014 from CRA advising that Canada Pension Plan contributions for 2009 had been deleted.
[20] These documents are in respect to an entirely different taxation year than the 2008 taxation year which is before me. Aside from this, the documents are not properly before me. The Appellant has not requested me to reopen the hearing but has asked that I give consideration to these documents.
[21] In the absence of a provision in the Informal Procedure Rules governing the admission of new evidence, I refer to subsection 138(1) of the Tax Court of Canada Rules (General Procedure) which provides:
138 (1) The judge may reopen a hearing before judgment has been pronounced for such purposes and upon such terms as are just.
[22] In 671122 Ontario Ltd. v Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 SCR 983, the Supreme Court of Canada set out a two part test to assist courts in determining whether the discretion to reopen a hearing to admit new evidence should be exercised. This Court confirmed that test in Benaroch v The Queen, 2015 TCC 91. The first part of the test is whether the new evidence would have changed the result. I have already concluded that, since the new evidence relates to an adjustment in respect to the Appellant’s 2009 taxation year, it is not relevant to my determination of the issue for the 2008 taxation year nor would it have changed my analysis in respect to the relevant legislative provisions. The second prong of the test is whether the new evidence could have been obtained prior to the hearing by the exercise of reasonable diligence. The Appellant, in his letter to the Court subsequent to the hearing, indicated that he was in possession of the documents at the time of the hearing. Consequently, the Appellant will not be permitted to reopen the hearing to introduce these documents and in light of my comments I am not giving further consideration to these documents in my reasons.
As a result the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.