Citation: 2008 FCA
CORAM: DÉCARY J.A.
MAJESTY THE QUEEN
Heard at Winnipeg, Manitoba, on April 29, 2008.
Judgment delivered from the
Bench at Winnipeg,
Manitoba, on April 29, 2008.
REASONS FOR JUDGMENT OF THE COURT BY: SHARLOW
Citation: 2008 FCA 162
EUGENIE E. EATON
HER MAJESTY THE QUEEN
REASONS FOR JUDGMENT OF THE
(Delivered from the Bench at Winnipeg,
Manitoba, on April 29, 2008)
is an appeal by Ms. Eugenie E. Eaton from a judgment of Justice Hershfield of
the Tax Court of Canada (2007 TCC 555) dismissing her appeal from income tax
assessments for 2000, 2001 and 2002. We have concluded that her appeal cannot
Eaton is now retired but before her retirement she was a federal government
employee. She was employed in a position that was classified as “clerical and
regulatory” (CR). In 1984 the Public Service Alliance of Canada (PSAC) filed
with the Canadian Human Rights Tribunal a
complaint on behalf of employees in certain female dominated occupations,
including those classified as CR. The complaint alleged that employees in those
categories were not being paid at the same rate as employees in male dominated
categories doing work of equal value.
Tribunal found the complaint to be valid, and granted a remedy (see Public
Service Alliance of Canada v. Canada (Treasury
 C.H.R.D. No. 6 (QL); an application for leave to appeal was dismissed Canada
(Attorney General) v. Public Service Alliance of Canada (T.D.) (1999),
 1 F.C. 146). The remedy was an order of the Tribunal requiring the
federal government to pay each person on whose behalf the complaint had been
made an amount reflecting the shortfall in salary from March 8, 1985, plus
interest. The claim for compensation for hurt feelings was dismissed.
amounts payable as a result of the Tribunal’s order were determined on the
basis of agreements between the federal government and the PSAC. In Ms. Eaton’s
case, the remedy resulted in her receiving a number of payments. Some were
identified as retroactive salary, some as interest, and some as additional
superannuation benefits as a consequence of the retroactive salary increase.
Ms. Eaton argued in the Tax Court, and now argues in this Court, that the
amounts she received should be characterized as non-taxable damages.
Hershfield rejected Ms. Eaton’s argument. His conclusion follows another
decision of the Tax Court, Van Elslande v. Her Majesty the Queen, 2007
TCC 370, which in turned followed the decision of this Court in Morency v.
Canada, 2005 FCA 16.
Eaton argues that she should not be treated as having received retroactive
salary because the federal government has not made a retroactive adjustment for
the overtime and acting pay that she earned while she was a government
employee, and because the pension benefits to which she is entitled under the Canada
Pension Plan (CPP) have not been increased to reflect what the federal
government says is a higher retroactive salary.
the purposes of this appeal, we do not need to determine whether Ms. Eaton is
correct when she says that her share of the pay equity award was insufficient,
and that her CPP benefits have not been adjusted upward. Even if she is correct
on both points, it would not assist her in this appeal. The only question
properly before this Court is whether the payments in question are taxable. The
answer to that question is based on the legal character of the payments. It
does not depend on whether the federal government correctly determined the
amount of the compensation owed to Ms. Eaton, or the amount of consequential
benefits such as Ms. Eaton’s CPP entitlement.
on our review of the Tribunal’s decision and the subsequent agreements, the
only reasonable conclusion is that amounts received as a result of the award
are taxable. Amounts paid to compensate for the shortfall in salary are taxable
as income from employment. Amounts paid as interest on the underpaid salary are
taxable as interest. Amounts paid as additional superannuation benefits
resulting from the higher retroactive salary are taxable as pension income.
appeal will be dismissed, in the circumstances without costs.
COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
(APPEAL FROM A JUDGMENT OF THE TAX COURT
OF CANADA DATED
JULY 6, 2007, DOCKET NO. 2006-2531(IT)I)
STYLE OF CAUSE: Eugenie
E. Eaton v.
Her Majesty the Queen
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: April 29, 2008
REASONS FOR JUDGMENT OF THE COURT BY: (DÉCARY, SHARLOW,
DELIVERED FROM THE BENCH BY: SHARLOW J.A.
ON HER OWN BEHALF
FOR THE RESPONDENT
SOLICITORS OF RECORD:
ON HER OWN
John H. Sims,
Deputy Attorney General of Canada