https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/345130/index.do
Hunt v. The Queen (September 25, 2018 – 2018 TCC 193, Pizzitelli J.).
Précis: The Income Tax Act (Act) contains in section 207.05 (and related provisions) a somewhat complex set of rules governing the use of Tax Free Saving Accounts (TFSAs). Mr. Hunt was assessed taxes of $24,833, $14,973, $35,441 and $49,158 on the basis that he had infringed those rules in 2010, 2011, 2012 and 2013, respectively, and he appealed to the Tax Court. This is the report of a motion pursuant to subsection 58(1) of the Tax Court of Canada Rules (General Procedure) to determine two constitutional questions:
(a) Is section 207.05 of the Income Tax Act (Canada) unconstitutional for impermissibly infringing on the right to make laws respecting “Property and Civil Rights” which is granted exclusively to the provinces under subsection 92(13) of the Constitution Act, 1867?; or
(b) Is section 207.05 of the Income Tax Act (Canada) unconstitutional as a consequence of Parliament having improperly delegated the rate-setting element of the charge imposed thereunder to the Minister of National Revenue in contravention of section 53 of the Constitution Act, 1867?
Pizzatelli J. held that section 207.5 was not unconstitutional under either argument and answered both questions No. The Appellant was ordered to pay the Repondent’s costs in any event of the cause.
Decision: The Appellant’s arguments, although highly inventive, met a brick wall of resistance from Justice Pizzatelli based on his understanding of constitutional jurisprudence.
On the unconstitutional delegation argument (section 53 of the Consitution Act, 1867) the Court ruled:
[53] The fact that Parliament has decided different tax rates apply to different transactions or plans, or that criteria in waiver provisions differ, or even that some of these anti-avoidance provisions give the taxpayer opportunity to correct an error before year-end while others like 207.06 do not, (although it would no doubt be a circumstance to take into consideration in exercising ministerial relief thereunder), do not form the bases of constitutional invalidity. Parliament has decided that for different benefits, it will have a different set of terms and conditions and it is not for this Court to second guess the will or reasoning of Parliament solely based on these differences.
[54] Finally, while I agree that the provisions are unambiguous and thus there is no need to undertake an analysis of the purpose or intent of the legislation in question, I should like to address the Appellant’s contention that there is only limited guidance as to the intent of the legislation being impugned in paragraph 81 of its submissions where he states “The opaque purpose behind the advantage rules further supports the Appellant’s position that taxing authority has been delegated to the Minister.”
[55] The Appellant’s above position is best explained by referencing its submissions found in paragraphs 64 and 65:
64. Without a clear and defined purpose behind the advantage rules, there is even less involvement from Parliament in determining the appropriate tax consequences. There is greater discretion given to the Minister, and a less robust statutory framework to guide the Minister’s hand. She is left entirely free to set the rate at whatever she (or her CRA delegates) sees fit, without constraint and with only limited guidance.
65. In other words, the Minister is not merely implementing Parliament’s will or intent in setting the tax rate in any given situation. Without an explicit elucidation of the purpose underlying the advantage rules, the Minister is acting on her own accord without regard to Parliament’s specific objectives (if any).
[56] In fact, the Appellant suggested in argument that the first real public announcement of the purpose of the provisions was not until a June 2011 Action Plan.
[57] Frankly, I find the Appellant’s position totally unsupportable by both the evidence of public statements throughout the legislative process including amendments to the provisions and their extension to other registered plans, as well as the fact the purpose of the legislation screams out at the reader from the provisions alone.
On the Appellant’s Property and Civil Rights argument the Court was equally direct:
[94] I agree with the Respondent that the legal effects, practical effects and purpose of section 207.05 all point to taxation as its pith and substance. Accordingly, having found that the provision is in pith and substance taxation, and that, as the Appellant has admitted above, falls within both a valid TFSA scheme of taxation within a valid Income Tax Act, that such provision is intra vires in accordance with the principles of Canadian Western Bank at paragraph 25 and General Motors at page 667 earlier referred to, and there is no need for me to consider the Appellant’s arguments on the ancillary doctrine principle which would only have applied if I had found the provisions were in pith and substance within provincial jurisdiction.
Thus Justice Pizzatelli held that section 207.5 was not unconstitutional under either argument and answered both questions No. The Appellant was ordered to pay the Repondent’s costs in any event of the cause.