Morin v. The Queen, 92 DTC 1069, [1991] 2 CTC 2645 (TCC)

Bowman, T.CJ.: —This is an appeal from an assessment of the appellant for the 1989 taxation year. The appellant appeared on his own behalf. The appellant, in 1989, was granted permanent disability status. Although he testified that he continued to be employed by Consumers' Gas Company Limited he did not, after being granted permanent disability status, receive salary from that company. Rather, his income consisted of what he described as a permanent disability pension under a plan that had been described as “wage loss replacement benefit” under a policy of Sun Life of Canada. Mr. Morin stated that under the latter regime he had to establish eligibility every twelve months. He does not contest the taxability of the payments received under the Canada Pension Plan but he submits that the amounts received from Sun Life under the Consumers' Gas sickness, disability and rehabilitation plan should not be taxable. His main contention is that the payments received from Sun Life should not be taxable because other types of compensation benefits are not taxable and the taxation thereof under paragraph 6(1)(f) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") would constitute unequal treatment and would thereby contravene the Canadian Charter of Rights and Freedoms.

Before dealing with Mr. Morin's argument under the Charter, I shall briefly examine the basis upon which the Minister has treated the payments made under the Consumers' Gas sickness, disability and rehabilitation plan to employees who became disabled. The benefits were provided by Sun Life under a policy the premiums for which were paid by the employer, Consumers' Gas. When he became disabled, Mr. Morin received payments from Sun Life under the plan and the Minister has sought to tax them under paragraph 6(1)(f) of the Act. Paragraph 6(1)(f) provides that:

There shall be included in computing the income of a taxpayer for a taxation year as income from an office or employment. . .

(f) the aggregate of amounts received by him in the year that were payable to him on a periodic basis in respect of the loss of all or any part of his income from an office or employment, pursuant to

(i) a sickness or accident insurance plan;

(ii) a disability insurance plan, or

(iii) an income maintenance insurance plan

to or under which his employer has made a contribution . . .

Paragraph 6(1)(f) limits the amount taxable under this provision by a formula which essentially excludes from the amount taxable any amounts contributed by the taxpayer. At the risk of oversimplification, paragraph 6(1)(f) requires in the inclusion in an employee's income of all amounts received under the type of plans described therein that are not attributable to the employee's own contribution.

The expressions "sickness or accident insurance plan, disability insurance plan or income maintenance insurance plan” are not defined in the Act but I think that the ordinary meaning of such expressions would encompass the type of plan described in Exhibit A-1 as the Consumers' Gas sickness, disability and rehabilitation plan. Accordingly, I think that the Minister was correct in treating payments received from Sun Life as taxable under paragraph 6(1)(f).

Mr. Morin also contended that if the payments were taxable they should be treated as a pension. There appeared to be some confusion between the parties at trial whether the appellant was claiming that if the payments were pension payments they should be excluded from income altogether under subsection 81(1)(d) or whether he was entitled to a credit against tax pursuant to subsection 118(3) of the Act.

Paragraph 81(1)(d) provides that certain types of pension payments are excluded from income under paragraph 81(1)(d): Subsection 118(3) provides a credit against tax in respect of pension income, the amount of which credit is dependent in part upon the age that the taxpayer has attained in the year in question and the type of pension income received.

I have concluded that the taxpayer is not entitled to relief under either paragraph 81(1)(d) or subsection 118(3) because the payments received from Sun Life are not pension payments or pension benefits nor can the Consumers' Gas sickness, disability and rehabilitation plan be described as a pension plan. A pension is essentially a payment received on or after retirement on a periodic basis by an employee. The plan with which we are concerned here has a very different purpose. It is designed to supplement an employee's income at a time when he or she cannot work as a result of sickness or disability. It is essentially a form of insurance against loss of income and accordingly is taxable pursuant to paragraph 6(1)(f) but it is not a pension to which the somewhat complex rules under the Act relating to pensions are applicable. Indeed, even if they could be described as pension benefits they are not of the type that would qualify for exclusion under paragraph 81(1)(d) or for credit under subsection 118(3). The type of pension income that qualifies for a credit under subsection 118(3) is set out in subsection 118(7) and that subsection does not include the type of payments received by the appellant.

I should out of deference to the careful and reasoned argument presented by Mr. Morin deal briefly with two further contentions that he made. The first was that paragraph 6(1)(f) does not apply because in substance the employer did not contribute to the plan. Mr. Morin testified that, at the time that unionized employees were receiving substantial increases in pay, non- unionized employees such as himself received only a two per cent increase. He argued that in essence by accepting lower wage or salary increases non- unionized employees were making it possible for the employer to contribute on their behalf to the plan. Although there may be a certain rough and ready economic logic to this reasoning, I do not think that I can realistically draw this inference or make the causal connection that he suggests. The fact that one group of employees receives a lower percentage increase in salary or wages than another group does not justify the conclusion that the employees who receive the lower increase are in fact contributing to or subsidizing benefit plans that are in fact and in law contributed to by the employer.

Nor can I accept the argument that the appellant's rights have been somehow infringed under the Charter of Rights and Freedoms. The Act deals with a multiplicity of types of income and accords different types of treatment to them. The fact that the recipient of one type of income is treated differently from the recipient of another type of income that may bear some resemblance to the former does not in itself give rise to a remedy under the Charter. I do not imply that the Charter may not possibly have some application if, for example, a particular class of taxpayers were unfairly discriminated against. That is not however this case.

The appeal will therefore be dismissed.

Appeal dismissed.