Words and Phrases - "constructive receipt"

Contributions were paid by the employer of a Canadian resident of French nationality to the Caisse de retraite pour la France et l’Extérieur (CRE) and to the Institution de Retraite des Cadres et Assimilés de France et de l’Extérieur (IRCAFEX). The employer initially had been a French corporation but after the individual’s move to Quebec, it was a Canadian subsidiary. Membership in such Funds was on a voluntary basis. Although contributions to the Funds were the responsibility of the member (the individual), the rules governing the Funds never required the employer to contribute to them. The employer could agree to contribute on the member’s behalf. Funds represented voluntary insurance that allow citizens to maintain benefits comparable to those enjoyed while a resident of France. The French employee is the adherent to the contract and is responsible for payments.

The Directorate stated:

From all of the jurisprudence, it can be concluded that where an amount is applied or paid for or on behalf of a taxpayer but has not been received physically, there is a constructive payment. …

Given that the employer acted on behalf of the employee by paying an invoice that otherwise would be borne by the employee, we are of the view that the amounts were constructively received by the employee.

Where an employer so undertakes, under a contract to fulfill obligations that would otherwise be borne by the employee, the amount should be added to the employee's employment income under subsection 5(1).