Hale v. The Queen, 90 DTC 6481, [1990] 2 CTC 247 (FCTD), aff'd 92 DTC 6473 (FCA)

The taxpayer, while a non-resident of Canada, received $25,000 for the performance of his duties as director of a Canadian company. Although the taxpayer maintained that, given that he spent only 57 days in Canada in the year in question in connection with his duties as director, only 57/366 of this sum was taxable in Canada, Rouleau J. upheld the Minister's reassessment that 1/2 of the amount was taxable under s. 115(2)(e) in the absence of any convincing evidence that the taxpayer had devoted a significant amount of time outside Canada to the Canadian company.

While resident in Canada, the taxpayer was granted rights under the employee stock option plan of his Canadian employer (Alcan) and further "share appreciation rights" to be paid amounts based on the appreciation in the Alcan shares over the strike price in lieu of exercising his stock option rights. Amounts paid to the taxpayer pursuant to his exercise (at a time that he had become a resident of the United Kingdom and had ceased to be an Alcan employee) of the share appreciation rights constituted a benefit received by virtue of his employment as described in s. 7(1)(b) (although they were not "remuneration" for purposes of the Canada-UK Income Tax Convention) given that s. 7(4) deemed him to continue to be an employee at the time of exercise.

While resident in Canada, the taxpayer was granted rights under the employee stock option plan of his Canadian employer and further rights (the "share appreciation rights") to be paid amounts based on the appreciation in the shares of his employer over the strike price in lieu of exercising his stock option rights. Amounts paid to the taxpayer while he was a non-resident of Canada pursuant to the share appreciation rights were not exempted by Article 15 of the U.K.-Canada Convention. The presumption in s. 7(4) of the Act that the employment in issue was exercised in Canada was not incompatible with Article 15.