Doyle v. The Queen, 83 DTC 5383, [1983] CTC 339 (FCTD)

Jerome, ACJ [ORALLY]—This case is an action by way of appeal under the Income Tax Act from a reassessment by the Minister or really from assessment, to be more technically correct, of the plaintiff’s 1977 income tax year and in more specific terms is related to a single issue, the sum of $15,500 received in 1977 from Butress Investments Limited of which the plaintiff was in that year a major shareholder and director.

The onus, of course, of establishing the contention that the $15,500 was correctly classified as a retirement allowance or a retiring allowance within the terms of the statute falls upon the taxpayer and in turn in this action falls upon the plaintiff so that in both respects the plaintiff must satisfy me that the sum of money in question, $15,500, comes within the terms of the statute specifically as retiring allowance as defined in subsection 248(1). The language of that section is as follows:

“retiring allowance” means an amount received upon or after retirement from an office or employment in recognition of long service or in respect of loss of office or employment.

There are other words, but they are not of any significance in respect to this dispute.

The facts here disclose without any question that the business of Butress Investments Limited was the management of real estate. All of the inventory of that company passed, upon its winding up, on to another corporation of which the plaintiff was a majority shareholder or major shareholder or director. I am not clear on the term “majority”, but a major shareholder and director in virtually the same manner and relationship that he enjoyed with Butress Investments.

The management of the property went on to dispose of the real estate. All of the evidence indicates that that responsibility rested in the hands of the plaintiff in the same way as it had with Butress Investments Limited. His own answer to cross-examination when the question of the voluntariness of his retirement was put to him, his answer was he was not certain about the voluntary nature of it, but that it was purely due to circumstances related to corporate reorganization. I asked him to clarify that answer and before leaving the witness stand he did. He expanded upon it to indicate the reasons why Butress Investments, some of the reasons why Butress Investments Limited was in fact wound up, but the reasons are not important here.

The fact is that the business of Butress Investments came to an end. It was not the employment of this plaintiff, but the business of Butress Investments came to an end and what was left of it was transferred to another company in which at least there was sufficient control in the hands of this plaintiff that the accountant, Mr Peter Petryna, confirmed in his testimony that he received his instructions in the affairs of the other companies that had anything to do with this real estate in the same way from Mr Doyle that he received them when the properties were managed by Butress Investments Limited.

All of these decisions about the winding up of Butress Investments, the transfer of the properties to the other corporation, Weram I believe is the name, as well as the decision about the allowance paid to the plaintiff were in fact, it appears to me, at all times under the control of the plaintiff. What I must, therefore, conclude is that there is nothing in the evidence to indicate to me that there has been in the true sense of the word any retirement of the plaintiff at all. What has happened is that the company in which the plaintiff occupied a certain office was, upon the decision of the plaintiff, wound up. The real estate which occupied some of his attention in the Butress company occupied his attention in a similar manner in the other company until it was disposed of.

The jurisprudence cited by the plaintiff in his argument refers in particular to the Speck decision of my brother Mr Justice Collier and to a number of other decisions from which immediately emerge the basic minimum that the court concerns itself with here: whether or not there is genuine retirement from an office. Several, of the cases concern themselves with difficult questions about employees continuing to work in a different capacity for different employers or earn different kind of incomes as consultants, but in every case in which there has been simply a continuation in the same capacity, the same responsibilities, but under a different company and especially where there is some relationship in the shareholdings of the companies the decisions uniformly and consistently reject the notion that there has been retirement and that, therefore, any sum paid falls within the terms of subsection 248(1).

So, to summarize the onus is on the plaintiff and taxpayer to satisfy me that the allowance is paid or was paid as a retiring allowance. The evidence, the facts do not indicate that. They indicate, rather, that this plaintiff continued to do the same things for a corporation under another name, but with substantially the same shareholdings in which he served also a director and it would, in my opinion, be directly contrary to the spirit of all of the jurisprudence which the plaintiff cited to me if I were to hold that that came within that situation, if I were to hold that situation comes within either the spirit or the letter of the law as retiring allowance as defined in subsection 248(1). Therefore, I am not satisfied that the facts fall within that section and I am clearly convinced that the existing jurisprudence runs against the plaintiff in this matter. Therefore, both on matters of fact and on matters of law nothing convinces me that this allowance has anything to do with a retiring allowance as that language is used in subsection 248(1) and the action is, therefore, dismissed with costs as demanded.