Guay v. Canada (Attorney General), 2006 DTC 6391, 2005 FCA 97

Date: 20050314

Docket: A-86-03

Citation: 2005 FCA 97

CORAM:        DÉCARY J.A.

LÉTOURNEAU J.A.

NADON J.A.

BETWEEN:

                                                                  LOUIS GUAY

                                                                                                                                            Applicant

                                                                           and

                                             ATTORNEY GENERAL OF CANADA

                                                                                                                                        Respondent

                                    Hearing held at Montréal, Quebec, on March 14, 2005.

                               Judgment delivered at Montréal, Quebec, on March 14, 2005.

REASONS FOR JUDGMENT OF THE COURT BY:                                        LÉTOURNEAU J.A.

Date: 20050314

Docket: A-86-03

Citation: 2005 FCA 97

CORAM:        DÉCARY J.A.

LÉTOURNEAU J.A.

NADON J.A.

BETWEEN:

                                                                  LOUIS GUAY

                                                                                                                                            Applicant

                                                                           and

                                             ATTORNEY GENERAL OF CANADA

                                                                                                                                        Respondent

                                     REASONS FOR JUDGMENT OF THE COURT

                     (Delivered from the bench at Montréal, Quebec, on March 14, 2005)

LÉTOURNEAU J.A.

[1]                Is reimbursement by the employer of expenses incurred by the plaintiff to send his children to the Lycée français in Santo Domingo, Dominican Republic a taxable benefit under paragraph 6(1)(a) of the Income Tax Act ? Mr. Justice Archambault of the Tax Court of Canada ruled that it is, and we are of the opinion that his finding was well founded in fact and in law.

[2]                Tuition is a regular or current employee expense or a personal expense: Leduc, succession v. Canada, [1995] A.C.I. no. 1514 (C.C.I.); Detchon v. Canada, [1995] A.C.I. no. 1342 (C.C.I.). Generally speaking, reimbursement of such expenses is a taxable benefit under paragraph 6(1)(a).

[3]                In Blanchard v. Canada, [1995] F.C.J. No. 1045, paragraphs 3 to 5, Linden J. of this Court describes the purpose and scope of paragraph 6(1)(a) in the following terms:

Paragraph 6(1)(a) is an all-embracing provision. It provides that all "benefits of any kind whatever" are to be included as employment income if they were received "in respect of, in the course of, or by virtue of an office or employment." The section casts a wide net, incorporating two broadly worded phrases. The first is "benefits of any kind whatever." The scope contemplated by this phrase is plain and unambiguous: all types of benefits imaginable are to be included. Speaking for the majority in The Queen v. Savage, Dickson J. (as he then was) stated that paragraph 6(1)(a) was "quite broad" and covered any "material acquisition which confers an economic benefit."

The second phrase is a group of three phrases: "in respect of," "in the course of," and "by virtue of " . . . . Parliament has added the phrases "in the course of" and "by virtue of" to the phrase "in respect of" in order to emphasize that only the smallest connection to employment is required to trigger the operation of the section.

Paragraph 6(1)(a) leaves little room for exceptions, but a few have surfaced in the jurisprudence.

[4]                The applicant relies on the Guay exception, originated by the same plaintiff in Guay v. Canada, [1997] F.C.J. No. 470. In that case and in a judgment penned by our brother Décary J., this Court found that reimbursement of tuition was not a taxable benefit in the exceptional case where the expense was imposed by the very nature of the employment.

[5]                Mr. Guay, who is also the applicant in the case at bar, was then employed by the Department of Foreign Affairs (the Department). By definition and by necessity, his work in the Department required that he be posted in various countries, such that because of the rotational nature and requirements of his employment, he was forced to bear the costs of private schooling. However, the situation is quite different in the case before us for the years 1996, 1997 and 1998.

[6]                Although his employment relationship with the Department had not been broken off, Mr. Guay was, in fact, on unpaid leave from the Department and held a contract position in the private sector. This employment did not involve the rotational aspect that characterized his employment in the Department. Archambault J. therefore ruled with good reason that the criteria for the exception recognized previously by this Court had not been met.

[7]                For these reasons, the appeal will be dismissed with costs.

                                                                                                                          "Gilles Létourneau"     

                                                                                                                                                      J.A.

Certified true translation

Michael Palles

                                                  FEDERAL COURT OF APPEAL

                                                      SOLICITORS OF RECORD

DOCKET:                                                A-86-03

STYLE OF CAUSE:                                LOUIS GUAY v. ATTORNEY GENERAL OF CANADA

PLACE OF HEARING:                          Montréal, Quebec

DATE OF HEARING:                            March 14, 2005

CORAM:                                                 DÉCARY J.A.

LÉTOURNEAU J.A.

NADON J.A.

REASONS FOR JUDGMENT

OF THE COURT BY:                             LÉTOURNEAU J.A.

APPEARANCES:

SOLICITORS OF RECORD:                                                                                                          

Date: 20050314

Docket: A-86-03

Montréal, Quebec, March 14, 2005

CORAM:                                           DÉCARY J.A.

LÉTOURNEAU J.A.

NADON J.A.

BETWEEN:

                                                                  LOUIS GUAY

                                                                                                                                            Applicant

                                                                           and

                                             ATTORNEY GENERAL OF CANADA

                                                                                                                                        Respondent

                                                                   JUDGMENT

The appeal is dismissed with costs.

                                                                                                                               "Robert Décary"          

     J.A.

Certified true translation

Michael Palles