Hotte v. Ontario (Finance), 2009 HRTO 458

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Denis Hotte

Applicant

-and-

Her Majesty the Queen in Right of Ontario as represented by the Minister of Finance and the Minister of Revenue

Respondent

DECISION

Adjudicator: Michelle Flaherty

Date: April 20, 2009

Citation: 2009 HRTO 458

Indexed as: Hotte v. Ontario (Finance)

APPEARANCES

Denis Hotte, Applicant ) On His Own Behalf

Her Majesty the Queen in Right )

of Ontario, Respondent ) Alexandre Kaufman,

) Counsel, and Martine Bathurst

1This is an Application filed on August 6, 2008 under section 34 of Part IV of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”).

2In the Response, the respondent asks that the Application be dismissed because the Tribunal does not have jurisdiction to set aside or amend a valid legislative enactment, because the application of the provincial Income Tax Act, R.S.O. 1990, c. I.2, as amended (“Provincial Act”) is not a “service” within the meaning of the Code, and because section 15 of the Code allows for distinctions on the basis of age which grant preferential treatment to persons who are 65 years of age or older.

3The Tribunal directed that that the parties be given an opportunity to provide oral submissions on the preliminary issue of whether the Application should be dismissed because of section 15 of the Code [see 2008 HRTO 375]. The Tribunal also issued directions to the parties on the filing of any supporting material they intended to rely on during the hearing of the preliminary issue. Oral submissions were heard on April 7, 2009.

BACKGROUND

4The federal Income Tax Act, 1985, c. 1 (5th Supp.) (the “Federal Act”) allows pension income splitting in particular circumstances. (See subsections 56(1)(a.2), 60(c) and 118(7) to (8.1) of the Federal Act.) These provisions mean that Canadian residents who receive specific types of pension income may allocate up to one half of that income to their resident spouse or common law partner for tax purposes. This allocation may be advantageous to the couple in that a portion of one spouse’s income may ultimately be taxed at a lower rate.

5The Provincial Act incorporates by reference the provisions in the Federal Act regarding the computation of taxable income and the determination of what types of income are eligible for income splitting. Subsection 1(1) of the Provincial Act states:

“taxable income” means taxable income as determined in accordance with and for the purposes of the Federal Act....

6The Federal Act’s provisions regarding taxable income and pension income splitting distinguish between individuals aged 65 years and older and those aged less than 65 years. The distinction relates to the types of income that may be allocated as eligible pension income to a spouse.

7According to the respondent, for individuals aged 65 and older, income eligible for income splitting includes lifetime annuity payments under a registered pension plan, a retirement savings plan (“RRSP”), a deferred profit sharing plan and payments out of or under a registered retirement income fund (“RRIF”). (See subsections 60.03, 118(3), 118(7) and 118(8).)

8The respondent submits that, for individuals aged less than 65 years, income eligible for income splitting is more restricted and includes lifetime annuity payments under a registered pension plan and certain other payments received as a result of the death of an individual’s spouse or common law partner. (See subsections 60.03, 118(3), 118(7) and 118(8).)

9These distinctions are incorporated into the Provincial Act by way of subsection 1(1) of that Act. The result is that individuals aged 65 and over receive a preferential treatment under both statutory schemes.

10In this case, the applicant is under 65 years of age and is seeking to split income from annuity payments which arise from the proceeds of an RRSP. The current federal and provincial statutory schemes prevent him from doing so. The parties agree that, were the applicant aged 65 or older, this type of income would be eligible for income splitting and the applicant and his spouse would likely have realized a tax savings.

Section 15 of the Code

11Section 15 of the Code states:

A right under Part I to non-discrimination because of age is not infringed where an age of sixty-five years or over is a requirement, qualification or consideration for preferential treatment.

12The respondent argues that section 15 explicitly allows for distinctions on the basis of age in cases such as this, where the effect is to grant preferential treatment to persons who are 65 years of age or older. The respondent states that the purpose of the income splitting provisions is to provide tax relief to retired individuals, a socially and economically vulnerable group. While counsel for the respondent acknowledges that basing eligibility for the preferred treatment on age rather than on retirement status may imperfectly capture the targeted group, he states that the legislative intent is largely realized and that, in any event, the legislative approach is sanctioned by section 15 of the Code.

13The applicant sees this case differently and argues that, rather than conferring a benefit upon persons aged 65 years or older, the effect of both income tax statutes is to deny a benefit to persons aged less than 65. He urges the Tribunal to consider this case as a denial of benefits for individuals aged less than 65 and argues that section 15 of the Code does not shield the respondent in these circumstances. The applicant questions the stated rationale for the income splitting provisions and argues that such legislative goals could be better met by basing eligibility for income splitting on retirement status rather than on age.

DECISION

14In my view, section 15 codifies the principle that, in some circumstances, in order for there to be true or substantive equality, members of vulnerable or otherwise disadvantaged groups may be treated preferentially. The language of section 15 of the Code specifically contemplates circumstances such as these where preferential treatment is afforded to individuals aged 65 and over.

15The applicant argues that section 15 cannot be applied to deny benefits to individuals aged less than 65. In my view, this is incorrect. The necessary implication of section 15 and the ability to treat persons aged 65 or more preferentially is that persons aged less than 65 may be denied the same benefits.

16I note that the respondent to this Application is the Queen in Right of Ontario. Although the issues raised in the Application required that I review of the provisions of Federal Act (as they were incorporated into the Provincial Act), this Decision relates only to the Queen in Right of Ontario’s obligations under the Code.

ORDER

17I find that based on the application of section 15 of the Code, the applicant’s right to be free of discrimination has not been infringed. Accordingly, the Application is dismissed.