Dickson,
J:—The
question
is
whether
the
sum
of
$300
received
by
Elizabeth
Joan
Savage
from
her
employer,
Excelsior
Life
Insurance
Company
(“Excelsior”),
for
successful
completion
of
the
Life
Office
Management
Association
series
of
examinations,
is
subject
to
income
tax.
I
Background
Mrs
Savage
was
employed
by
Excelsior
as
a
research
assistant.
During
1976,
she
took
three
Life
Office
Management
Association
courses:
Life
Insurance
Law,
Economics
and
Investment,
and
Life
Insurance
Actuary
Mathematics.
The
courses
are
designed
to
provide
a
broad
understanding
of
modern
life
insurance
and
life
insurance
company
operations,
including
management
practices
and
personnel
needs.
The
courses
were
voluntarily
taken
by
Mrs
Savage
to
improve
her
knowledge
in
the
life
insurance
field.
She
received
from
Excelsior
$300
($100
per
course)
as
a
result
of
passing
the
examinations.
Such
payment
per
course
was
available
to
all
employees
of
Excelsior
in
accordance
with
company
policy,
designed
to
encourage
self-upgrading
of
staff
members.
The
courses,
in
both
study
time
required
and
complexity
of
material,
were
comparable
to
university
courses.
Approximately
61
per
cent
of
those
taking
the
examinations
in
1976
in
the
United
States
and
Canada
passed.
One
hundred
or
so
Excelsior
employees
wrote
the
examinations
in
the
spring
and
fall
of
1976;
the
percentage
passing
slightly
exceeded
the
overall
United
States
and
Canadian
average
results.
Excelsior
reported
the
amount
of
$300
on
a
T4A
Supplementary
under
“Other
Income”,
indicating
it
was
a
“Prize
for
passing
LOMA
examinations”,
and
claimed
it
as
an
expense
of
doing
business.
Receipt
of
a
prize
comes
under
paragraph
56(1
)(n)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63
which
reads:
56.
(1)
Without
restricting
the
generality
of
section
3,
there
shall
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year,
SCHOLARSHIPS,
BURSARIES,
ETC
—
(n)
the
amount,
if
any,
by
which
(i)
the
aggregate
of
all
amounts
received
by
the
taxpayer
in
the
year,
each
of
which
is
an
amount
received
by
him
as
or
on
account
of
a
scholarship,
fellowship
or
bursary,
or
a
prize
for
achievement
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer,
exceeds
(ii)
$500;
and
(emphasis
added)
Mrs
Savage
did
not
include
the
payment
to
her
of
$300
in
the
computation
of
her
income
for
the
1976
taxation
year.
The
Minister,
by
notice
of
reassessment,
assessed
the
amount
in
the
computation
of
her
income
on
the
basis
that
it
constituted
income
of
the
taxpayer
from
an
office
or
employment.
By
notice
of
objection
Mrs
Savage
took
issue
with
the
assessment
on
the
basis
that
the
amount
was
a
prize
for
achievement,
and
as
it
was
less
than
$500
it
did
not
have
to
be
included
in
income.
The
Minister
confirmed
the
assessment
by
notification
“on
the
ground
that
the
prize
in
the
amount
of
$300
paid
to
you
by
your
employer,
the
Excelsior
Life
Insurance
Company,
had
been
properly
included
in
the
computation
of
your
income
for
the
year
in
accordance
with
the
provisions
of
sections
3
and
5
of
the
Act”.
Paragraph
3(a),
subsection
5(1),
and
another
section
to
which
reference
will
be
made,
paragraph
6(1
)(a),
read:
3.
The
income
of
a
taxpayer
for
a
taxation
year
for
the
purposes
of
this
Part
is
his
income
for
the
year
determined
by
the
following
rules:
(a)
determine
the
aggregate
of
amounts
each
of
which
is
the
taxpayer’s
income
for
the
year
(other
than
a
taxable
capital
gain
from
the
disposition
of
a
property)
from
a
source
inside
or
outside
Canada,
including,
without
restricting
the
generality
of
the
foregoing,
his
income
for
the
year
from
each
office,
employment,
business
and
property;
INCOME
FROM
OFFICE
OR
EMPLOYMENT
5.
(1)
Subject
to
this
Part,
a
taxpayer’s
income
for
a
taxation
year
from
an
office
or
employment
is
the
salary,
wages
and
other
remuneration,
including
gratuities,
received
by
him
in
the
year.
AMOUNTS
TO
BE
INCLUDED
AS
INCOME
FROM
OFFICE
OR
EMPLOYMENT
6.
(1
)
There
shall
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
as
income
from
an
office
or
employment
such
of
the
following
amounts
as
are
applicable:
(a)
the
value
of
board,
lodging
and
other
benefits
of
any
kind
whatever
(except
the
benefit
he
derives
from
his
employer’s
contributions
to
or
under
a
registered
pension
fund
or
plan,
group
sickness
or
accident
insurance
plan,
private
health
services
plan,
supplementary
unemployment
benefit
plan,
deferred
profit
sharing
plan
or
group
term
life
insurance
policy)
received
or
enjoyed
by
him
in
the
year
in
respect
of,
in
the
course
of,
or
by
virtue
of
an
office
or
employment;
The
key
words,
for
the
purpose
of
the
present
appeal
are
underlined.
II
The
Tax
Review
Board
Mrs
Savage
appealed
the
Minister’s
reassessment
to
the
Tax
Review
Board.
A
hearing
was
held
before
Delmer
E
Taylor,
CA,
a
member
of
the
Board.
The
gist
of
the
Board’s
judgment
is
found
in
the
following
two
sentences:
It
has
often
been
said
by
the
Courts
that
where
no
particular
meaning
has
been
attributed
to
a
word
or
phrase
in
a
taxing
statute,
it
(the
word
or
phrase)
should
be
given
its
ordinary
meaning,
and
Courts
have
shown
a
great
reluctance
to
distort
that
ordinary
meaning.
I
can
think
of
no
more
appropriate
definition
for
the
$300.00
amount
in
issue
here
than
“a
prize
for
achievement
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer”.
The
Board
allowed
Mrs
Savage’s
appeal
and
referred
the
matter
back
to
the
Minister
for
reassessment.
III
The
Federal
Court,
Trial
Division
The
Crown
appealed
the
Tax
Review
Board’s
decision
to
the
Federal
Court.
Grant,
DJ
allowed
the
appeal.
After
referring
to
two
dictionary
definitions
of
the
word
“prize”
he
held:
In
the
present
case
each
course
was
available
to
all
employees
of
the
Insurance
Company
and
each
one
who
successfully
passed
the
examination
was
entitled
to
the
same
amount
of
$100.00
for
each
course
in
which
he
was
successful.
There
was
therefore
no
contest
or
competition
among
the
employees
and
superiority
in
the
examination
played
no
part
in
the
receipt
of
such
money.
The
crucial
fact,
in
the
view
of
Grant,
DJ,
was
that
there
was
no
competition
to
determine
the
winner
of
the
prize.
The
judge
went
on
to
consider,
and
reject,
the
taxpayer’s
contention
that
the
$300
payment
did
not
fall
within
the
language
of
either
section
5
or
section
6
of
the
Act,
taxability
being
governed
entirely
by
paragraph
56(1
)(n).
He
held:
The
purpose
of
the
company
in
offering
such
education
or
training
in
respect
of
insurance
business
and
the
payment
of
$100.00
for
each
course
in
which
the
employee
was
successful,
was
that
their
services
would
thereby
become
more
learned
and
valuable
in
their
work
with
it.
The
employee
took
such
course
to
improve
his
knowledge
and
efficiency
in
the
company
business
and
for
better
opportunity
of
promotion.
The
employee
therefore
received
such
payment
“in
respect
of,
in
the
course
of,
or
by
virtue
of
his
employment”.
and:
Section
56(1
)(n)
is
not
an
exclusionary
provision.
It
only
provides
for
inclusion
of
that
portion
of
the
amount
described
therein
which
exceeds
$500.00.
S
8
of
the
Act
sets
out
the
various
deductions
which
may
be
made
in
computing
a
taxpayer’s
income
from
an
office
or
employment.
No
such
deduction
as
of
$300.00
which
is
the
subject
of
this
appeal
is
therein
contained.
S
8(a)
provides
that
except
as
per-
mitted
by
the
section
no
deduction
shall
be
made
in
computing
a
taxpayer’s
income
from
an
office
or
employment
in
any
taxation
year.
The
effect
of
accepting
the
taxpayer’s
interpretation
of
s
56(1
)(n)
would
be
to
provide
an
employer
with
an
opportunity
of
increasing
the
statutory
exemption
of
each
of
his
employees
by
the
sum
of
$500.00
in
any
year.
With
respect,
I
have
considerable
doubt
that
the
sweep
of
the
taxpayer’s
interpretation
of
paragraph
56(1
)(n)
is
as
broad
as
the
final
sentence
of
the
foregoing
passage
would
suggest.
Be
that
as
it
may,
if
the
taxpayer’s
interpretation,
based
on
the
legislation
and
the
circumstances
of
this
particular
case,
is
correct,
the
fact
that
it
may
open
doors,
hitherto
regarded
as
closed,
should
not
dictate
rejection
of
that
interpretation.
IV
The
Federal
Court,
Appeal
Division
Mrs
Savage
appealed
to
the
Federal
Court
of
Appeal.
She
contended
in
that
Court,
as
she
has
contended
here,
that
the
sum
of
$100
received
by
her
from
her
employer
for
the
successful
completion
of
each
of
the
three
Life
Office
Management
Association
courses
was
“a
prize
for
achievement
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer”,
within
the
meaning
of
paragraph
56(1
)(n)
of
the
Income
Tax
Act.
The
total
of
such
payments
did
not,
therefore,
have
to
be
included
as
income
for
1976
since
it
was
less
than
the
$500
excluded
by
paragraph
56(1
)(n).
The
Crown
contended
in
this
Court,
as
in
the
Federal
Court
of
Appeal,
that
the
sum
of
$300
received
by
Mrs
Savage
was
not
a
prize
within
the
meaning
of
paragraph
56(1
)(n);
even
if
it
were,
it
was
required
to
be
included
in
the
computation
of
her
income
because
it
was
income
from
an
employment
or
otherwise
income
from
a
source,
within
the
meaning
of
section
3,
subsection
5(1)
and
paragraph
6(1
)(a)
of
the
Act.
Mrs
Savage
says
in
response
that
even
if
the
sum
received
by
her
is
not
a
prize
within
the
meaning
of
paragraph
56(1
)(n)
it
is
not
taxable
as
income
from
an
employment
or
otherwise
from
a
source.
LeDain,
J
of
the
Federal
Court
of
Appeal
held
that
the
sum
received
was
not
a
prize
within
the
meaning
of
paragraph
56(1
)(n).
In
his
view,
“prize”
connoted
a
reward
for
superiority
in
a
contest
or
competition
with
others:
The
sum
that
was
paid
in
this
case
was
obviously
intended
to
encourage
employees
to
take
a
course
and
successfully
complete
it
but
was
not
intended
to
reward
relative
merit
in
the
course.
Mr
Justice
LeDain,
however,
found
in
favour
of
Mrs
Savage
on
the
ground
that
the
sum
received
by
her
from
her
employer
was
not
income
from
her
employment
within
the
meaning
of
subsection
5(1);
more
particularly,
it
was
not
a
benefit
received
by
her
“in
respect
of,
in
the
course
of,
or
by
virtue
of”
employment
within
the
meaning
of
paragraph
6(1)(a).
Mr
Justice
LeDain
said:
“To
be
income
from
an
employment
within
the
meaning
of
subsection
5(1)
and
paragraph
6(1
)(a)
the
payment
must
in
my
opinion
be
for
services
as
an
employee”.
Mr
Justice
Kelly,
with
whom
Mr
Justice
McKay
concurred,
agreed
the
awards
aggregating
$300
did
not
constitute
income
made
subject
to
tax
by
sections
3,
5
and
6
of
the
Act,
adding:
I
do
not
find
it
necessary
to
decide
and
refrain
from
deciding
whether
any
or
all
of
the
aforesaid
awards
is
a
“prize
for
achievement
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer”.
Whether
or
not
all
or
any
one
of
the
awards
were
such
prizes,
the
aggregate
of
the
awards
received
by
the
taxpayer
in
the
taxation
year
in
question
did
not
exceed
$500.00
and
would
not
be
income
within
the
meaning
of
s
56(1)(n).
Thus
the
$300
minnow
has
escaped
the
taxman’s
net
in
two
of
the
three
tribunals
which
have,
to
date,
given
thought
to
the
matter.
Two
main
questions
arise
(i)
were
the
payments
“salary,
wages
and
other
remuneration”
within
subsection
5(1)
or
a
benefit
“in
respect
of,
in
the
course
of,
or
by
virtue
of
an
office
or
employment”,
within
paragraph
6(1
)(a);
(ii)
were
the
payments
a
“prize
for
achievement
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer”,
within
paragraph
56(1
)(n).
V
A
Benefit
in
Respect
of
Employment
As
I
noted,
all
members
of
the
Federal
Court
of
Appeal
concluded
the
payments
aggregating
$300
were
not
within
subsection
5(1)
or
paragraph
6(1
)(a)
because
they
were
not
payments
“for
services
as
an
employee”.
Le-
Dain,
J
said:
The
sum
of
$100
paid
to
the
appellant
for
successful
completion
of
a
course
was
not
a
payment
for
services
rendered
as
an
employee.
It
was
not
related
in
any
way
to
her
services
as
an
employee.
The
courses
were
taken
voluntarily,
on
her
own
time.
There
was
no
obligation
as
an
employee
to
take
them.
The
interest
of
the
employer
was
that
the
courses
would
make
her
a
more
valuable
employee.
The
payment
was
in
the
nature
of
a
gift
to
encourage
employees
to
take
the
courses
and
successfully
complete
them.
The
employment
was
certainly
a
condition
of
being
able
to
receive
the
payment,
but
the
payment
was
not
received
by
reason
of
the
employment
but
by
reason
of
the
successful
completion
of
the
course.
LeDain,
J
relied
on
Estate
of
Phaneuf
v
The
Queen,
[1978]
2
FC
564
(TD)
and
Bell
(H
M
Inspector
of
Taxes)
v
Johnson
(1971),47
Tax
Cas
155
(Ch
D).
The
Ball
case
was
much
like
the
one
at
bar.
The
Midland
Bank
expected
its
staff,
among
whom
was
Mr
Johnson,
to
study
and
sit
for
examinations
of
the
Institute
of
Banks,
to
qualify
themselves
better
as
bankers.
The
bank
paid
cash
awards
to
those
who
passed,
including
Johnson.
It
was
held
the
reason
for
the
payments
was
Johnson’s
personal
success
in
passing
the
examinations
and
they
were
not
remuneration
for
his
services
with
the
bank.
The
case
is
of
little
relevance,
however,
because
of
the
language
of
Rule
1
of
Schedule
E
of
the
Income
Tax
Act
1952
(Eng).
The
tax,
if
any,
arose
under
section
156
of
that
Act,
as
amended
by
section
10
of
the
Finance
Act
1956
(Eng).
The
relevant
parts
of
section
156
were
as
follows:
The
Schedule
referred
to
in
this
Act
as
Schedule
E
is
as
follows
—
1.
Tax
under
this
Schedule
shall
be
charged
in
respect
of
any
office
or
employment
on
emoluments
therefrom
.
.
.
The
result
reached
by
the
Court
was
unexceptional
having
regard
to
the
language
being
construed
and
in
particular
“emoluments
therefrom”.
The
significance
of
these
words,
not
found
in
our
Act,
was
touched
on
by
Lord
Reid
in
Laidler
v
Perry
(Inspector
of
Taxes),
[1965]
2
All
ER
121
(HL)
at
124:
Section
156
however,
applies
only
to
“emoluments
therefrom”,
ie
from
the
office
or
employment
of
the
recipient,
and
it
is
well
settled
that
not
every
sum
or
other
profit
received
by
an
employee
from
his
employer
in
the
course
of
his
employment
is
to
be
regarded
as
arising
from
the
employment.
So
the
question
in
this
case
is
whether
these
profits
or
emoluments
of
£10
did
or
did
not
arise
from
the
taxpayer’s
employment.
There
is
a
wealth
of
authority
on
this
matter
and
various
glosses
on
or
paraphrases
of
the
words
in
the
Act
of
1952
appear
in
judicial
opinions,
including
speeches
in
the
House.
No
doubt
they
were
helpful
in
the
circumstances
of
the
cases
in
which
they
were
used,
but
in
the
end
we
must
always
return
to
the
words
in
the
statute
and
answer
the
question
—
did
this
profit
arise
from
the
employment?
The
answer
will
be
no
if
it
arose
from
something
else.
And
in
Hochstrasser
(Inspector
of
Taxes)
v
Mayes,
[1960]
AC
376
(HC)
Viscount
Simmonds
adopted,
at
p
388,
the
language
of
Upjohn,
J,
before
whom
the
matter
first
came:
Indeed,
in
my
judgment,
the
authorities
show
that
to
be
a
profit
arising
from
the
employment
the
payment
must
be
made
in
reference
to
the
services
the
employee
renders
by
virtue
of
his
office,
and
it
must
be
something
in
the
nature
of
a
reward
for
services
past,
present
or
future.
In
this
passage
the
single
word
“past”
may
be
open
to
question,
but
apart
from
that
it
appears
to
me
to
be
entirely
accurate.
The
Hochstrasser
case
and
Ball
v
Johnson
are
of
little
assistance.
The
provisions
of
section
156
of
the
Income
Tax
Act
1952
of
England
are
not
unlike
subsection
5(1)
of
the
Canadian
Income
Tax
Act
but
our
Act
goes
further
in
paragraph
6(1
)(a).
In
addition
to
the
salary,
wages
and
other
remuneration
referred
to
in
subsection
5(1),
paragraph
6(1
)(a)
includes
in
income
the
value
of
benefits
“of
any
kind
whatever.
.
.
received
or
enjoyed
.
.
.
in
respect
of,
in
the
course
of,
or
by
virtue
of
an
office
or
employment”.
In
Phaneuf,
supra,
the
issue
was
whether
Mr
Phaneuf
was
liable
for
income
tax
in
respect
of
a
benefit
received
by
him
on
the
purchase
of
shares.
He
acquired
the
shares
in
Charles
Ogilvy
Limited,
his
employer,
pursuant
to
a
bequest
of
the
Company’s
principal
shareholder.
The
bequest
gave
the
right
to
the
Company’s
employees
to
acquire
a
number
of
shares
at
par
value.
The
Company’s
Board
of
Directors
revised
the
list
of
employees
entitled
to
purchase
shares
and
approved
a
formula
for
distribution
based
on
service
to
some
extent.
Mr
Phaneuf
bought
shares
of
a
par
value
of
$2
although
they
had
a
market
value
at
the
time
of
$17.25.
In
the
Federal
Court,
Mr
Justice
Thurlow,
then
ACJ
of
the
Trial
Division,
held
that
the
benefit
was
conferred
on
Mr
Phaneuf
as
a
person
and
not
as
an
employee
and
as
a
personal
gift
rather
than
as
remuneration,
and
hence
not
a
taxable
benefit.
Thurlow,
ACJ
followed
Ransom
v
MNR,
[1968]
1
Ex
CR
293.
In
Ransom
Noel,
J
referred
to
the
difference
between
Rule
1
of
Schedule
E
of
the
English
statute
and
the
provisions
of
our
Income
Tax
Act
and
then
observed,
at
307:
I
now
come
to
section
5(1
)(a)
and
(b)
of
the
Act
which,
as
already
mentioned,
is
couched
in
language
which
appears
to
be
wider
than
the
English
taxation
rule
on
which
the
txpayers
in
Hochstrasser
v
Mayes
and
Jennings
v
Kinder
(supra)
were
held
not
to
be
taxable.
The
Canadian
taxation
section
indeed
uses
such
embracing
words
that
at
first
glance
it
appears
extremely
difficult
to
see
how
anything
can
slip
through
this
wide
and
closely
interlaced
legislative
net.
In
order,
however,
to
properly
evaluate
its
intent
it
is,
I
believe,
necessary
to
bear
in
mind
firstly,
that
section
5
of
the
Act
is
concerned
solely
with
the
taxation
of
income
identified
by
its
relationship
to
a
certain
entity,
namely,
an
office
or
employment
and
in
order
to
be
taxable
as
income
from
an
office
or
employment,
money
received
by
an
employee
must
not
merely
constitute
income
as
distinct
from
capital,
but
it
must
arise
from
his
office
or
employment.
Similar
comments
were
made
in
Hochstrasser
v
Mayes
with
reference
to
the
English
legislation
by
Viscount
Simonds
at
p
705
and
by
Lord
Radcliffe,
at
p
707.
Secondly,
the
question
whether
a
payment
arises
from
an
office
or
employment
depends
on
its
causative
relationship
to
an
office
or
employment,
in
other
words,
whether
the
services
in
the
employment
are
the
effective
cause
of
the
payment.
I
should
add
here
that
the
question
of
what
was
the
effective
cause
of
the
payment
is
to
be
found
in
the
legal
source
of
the
payment,
and
here
this
source
was
the
agreement
which
resulted
from
the
open
offer
of
the
employer
to
compensate
its
employee
for
his
loss
and
the
acceptance
by
him
of
such
offer.
The
cause
of
the
payments
is
not
the
services
rendered,
although
such
services
are
the
occasion
of
the
payment,
but
the
fact
that
because
of
the
manner
in
which
the
services
must
be
rendered
or
will
be
rendered,
he
will
incur
or
have
to
incur
a
loss
which
other
employees
paying
taxes
do
not
have
to
suffer.
Thurlow,
ACJ
adopted
that
passage
and
the
following
words
of
Viscount
Cave
LC
in
Seymour
v
Reed,
[1927]
AC
554
(HL)
at
559:
The
question,
therefore,
is
whether
sum
of
939£,
16s
fell
within
the
description,
contained
in
r
1
of
Sch
E
of
“salaries,
fees,
wages,
perquisites
or
profits
whatso
ever
therefrom”
(ie,
from
an
office
or
employment
of
profit)
“for
the
year
of
assessment”,
so
as
to
be
liable
to
income
tax
under
that
Schedule.
These
words
and
the
corresponding
expressions
contained
in
the
earlier
statutes
(which
were
not
materially
different)
have
been
the
subject
of
judicial
interpretation
in
cases
which
have
been
cited
to
your
Lordships;
and
must
now
(I
think)
be
taken
as
settled
that
they
include
all
payments
made
to
the
holder
of
an
office
or
employment
as
such,
that
is
to
say,
by
way
of
remuneration
for
his
services,
even
though
such
payments
may
be
voluntary,
but
that
they
do
not
include
a
mere
gift
or
present
(such
as
a
testimonial)
which
is
made
to
him
on
personal
grounds
and
not
by
way
of
payment
for
his
services.
The
question
to
be
answered
is,
as
Rowlatt
J
put
it:
“Is
it
in
the
end
a
personal
gift
or
is
it
remuneration?”
If
the
latter,
it
is
subject
to
the
tax;
if
the
former,
it
is
not.
Mr
Justice
Thurlow
then
said,
at
572:
While
the
language
of
the
statutes
differ,
the
test
expressed
by
Viscount
Cave
LC
(supra)
appears
to
me
to
express,
as
well
as
it
can
be
expressed,
the
essence
of
what
falls
within
the
taxing
provision
of
the
Income
Tax
Act.
Is
the
payment
made
“by
way
of
remuneration
for
his
services”
or
is
it
“made
to
him
on
personal
grounds
and
not
by
way
of
payment
for
his
services”?
It
may
be
made
to
an
employee
but
is
it
made
to
him
as
employee
or
simply
as
a
person.
Another
way
of
Stating
it
is
to
say
is
is
received
in
his
capacity
as
employee,
but
that
appears
to
me
to
be
the
same
test.
To
be
received
in
the
capacity
of
employee
it
must,
as
I
see
it,
partake
of
the
character
of
remuneration
for
services.
That
is
the
effect
that,
as
it
seems
to
me,
the
words
“in
respect
of,
in
the
course
of
or
by
virtue
of
an
office
or
employment”
in
paragraph
6(1
)(a)
have.
I
agree
that
the
appropriate
test
in
Phaneuf
was
whether
the
benefit
had
been
conferred
on
Mr
Phaneuf
as
an
employee
or
simply
as
a
person.
It
would
seem
that
Mr
Phaneuf
received,
as
a
person,
the
right
to
acquire
the
shares
and
therefore
the
case
was
correctly
decided.
With
great
respect,
however,
I
do
not
agree
with
the
latter
part
of
the
passage
last
quoted
and
in
particular
the
statement
that,
to
be
received
in
the
capacity
of
employee,
the
payment
must
partake
of
the
character
of
remuneration
for
services.
Such
was
the
conclusion
in
the
English
cases
but
based
on
much
narrower
language.
Our
Act
contains
the
stipulation,
not
found
in
the
English
statutes
referred
to,
“benefits
of
any
kind
whatever
.
.
.
in
respect
of,
in
the
course
of,
or
by
virtue
of
an
office
or
employment”.
The
meaning
of
“benefit
of
whatever
kind”
is
clearly
quite
broad;
in
the
present
case
the
cash
payment
of
$300
easily
falls
within
the
category
of
“benefit”.
Further,
our
Act
speaks
of
a
benefit
“in
respect
of”
an
office
or
employment.
In
Nowegijick
v
The
Queen,
[1983]
CTC
20;
83
DTC
5041
this
Court
said,
at
25
[5045],
that:
The
words
“in
respect
of”
are,
in
my
opinion,
words
of
the
widest
possible
scope.
They
import
such
meanings
as
“in
relation
to”,
“with
reference
to”
or
“in
connection
with”.
The
phrase
“in
respect
of”
probably
the
widest
of
any
expression
intended
to
convey
some
connection
between
two
related
subject
matters.
See
also
Paterson
v
Chadwick,
[1974]
2
All
ER
772
(QBD)
at
775.
I
agree
with
what
was
said
by
Evans,
JA
in
R
v
Poynton,
[1972]
3
OR
727
at
738,
speaking
of
benefits
received
or
enjoyed
in
respect
of,
in
the
course
of,
or
by
virtue
of
an
office
or
employment:
I
do
not
believe
the
language
to
be
restricted
to
benefits
that
are
related
to
the
office
or
employment
in
the
sense
that
they
represent
a
form
of
remuneration
for
services
rendered.
If
it
is
a
material
acquisition
which
confers
an
economic
benefit
on
the
taxpayer
and
does
not
constitute
an
exemption,
eg,
loan
or
gift,
then
it
is
within
the
all-embracing
definition
of
s
3.
It
is
difficult
to
conclude
that
the
payments
by
Excelsior
to
Mrs
Savage
were
not
in
relation
to
or
in
connection
with
her
employment.
As
Mr
Justice
Grant
said,
the
employee
took
the
course
to
improve
his
or
her
knowledge
and
efficiency
in
the
company
business
and
for
better
opportunity
of
promotion.
As
Crown
counsel
submits,
the
sum
of
$300
received
by
Mrs
Savage
from
her
employer
was
a
benefit
and
was
received
or
enjoyed
by
her
in
respect
of,
in
the
course
of
or
by
virtue
of
her
employment
within
the
meaning
of
paragraph
6(1
)(a)
of
the
Income
Tax
Act;
it
was
paid
by
her
employer
in
accordance
with
the
company
policy
upon
the
successful
completion
of
courses
“designed
to
provide
a
broad
understanding
of
modern
life
insurance
and
life
insurance
company
operations”
and
“to
encourage
selfupgrading
of
staff
members”;
the
interest
of
the
employer
“was
that
the
courses
would
make
her
a
more
valuable
employee”;
Mrs
Savage
took
the
courses
to
“improve
[her]
knowledge
and
efficiency
in
the
company
business
and
for
better
opportunity
for
promotion”.
Distinguishing
this
case
from
Phaneuf,
there
was
no
element
of
gift,
personal
bounty
or
of
considerations
extraneous
to
Mrs
Savage’s
employment.
I
would
hold
that
the
payments
received
by
Mrs
Savage
were
in
respect
of
employment.
That,
of
itself,
makes
them
income
from
a
source
under
section
3
of
the
Act.
I
conclude
on
this
point
that,
unless
paragraph
56(1
)(n)
of
the
Income
Tax
Act
relieves,
Mrs
Savage
is
subject
to
income
tax
in
respect
of
the
$300
which
she
received
from
her
employer.
VI
A
Prize
for
Achievement
I
turn
then
to
the
question
of
whether
the
sum
received
by
Mrs
Savage
was
a
prize
within
the
meaning
of
paragraph
56(1
)(n)
of
the
Income
Tax
Act.
The
Crown
takes
two
points:
(i)
the
word
“prize”
connotes
a
reward
for
superiority
in
a
contest
or
competition
with
others,
and
(il)
in
any
event,
paragraph
56(1
)(n)
is
not
an
exemption
provision
and
does
not
affect
payments
which
fall
within
the
other
taxing
provisions
of
the
statute.
On
the
first
point,
the
case
of
The
Queen
v
McLaughlin,
[1979]
1
FC
470
is
cited.
The
taxpayer
had
been
given
$10,000
as
an
award
for
his
achievements
as
chairman
of
the
Ontario
Milk
Marketing
Board.
Judge
Marceau
upheld
the
decision
of
the
Tax
Appeal
Board
which
had
held
that
the
award
did
not
come
within
the
terms
of
paragraph
56(1
)(n)
of
the
Act,
because
it
was
not
a
prize
for
an
endeavour
ordinarily
carried
on
by
the
taxpayer:
In
my
opinion,
the
word
“prize”
connotes
something
striven
for
in
a
competition,
in
a
contest,
and
I
don’t
think
there
can
be
a
competition,
or
a
contest
in
the
real
sense
without
the
participants
being
aware
that
they
are
involved.
The
word
“prize”,
in
ordinary
parlance,
is
not
limited
to
a
reward
for
superiority
in
a
contest
with
others.
A
“prize”
for
achievement
is
nothing
more
nor
less
than
an
award
for
something
accomplished.
There
is
no
need
to
pluck
the
word
“prize”
out
of
context
and
subject
it
to
minute
philological
examination,
or
to
think
of
“prize”
in
the
context
of
the
medal
or
book
one
may
have
won
at
an
earlier
date
on
a
field
day
or
at
school
or
in
a
music
competition.
The
word
“prize”
is
surrounded
in
the
Income
Tax
Act
by
other
words
which
give
it
colour
and
meaning
and
content.
I
repeat
them:
“as
or
on
account
of
a
scholarship,
fellowship,
or
bursary,
or
a
prize
for
achievement
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer”.
Three
comments.
First,
paragraph
56(1
)(n)
is
not
concerned
with
the
identity
of
the
payer
or
the
relationship,
if
any,
between
donor
and
donee.
There
is
nothing
in
the
section
which
renders
the
scholarship,
fellowship,
bursary
or
prize
taxable
on
the
ground
that
the
donor
or
payer
is
the
employer
of
the
taxpayer.
Second,
the
words
“scholarship,
fellowship
or
bursary”,
with
which
the
word
“prize”
is
associated,
are
normally
employed
in
speaking
of
educational
attainments,
usually
in
the
sphere
of
advanced
studies,
and
“polite”
learning.
Third,
the
prize
must
be
for
“achievement”,
defined
in
the
Shorter
Oxford
Dictionary
(3rd
Ed)
as
“the
action
of
achieving,
anything
achieved,
a
feat,
a
victory”.
“To
achieve”
is
variously
defined,
including
‘to
carry
out
successfully”,
“to
attain”.
The
“achievement”
must
be
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer.
This
rules
out,
for
example,
prizes
won
in
games
of
chance
or
at
a
costume
party
or
for
athletic
achievement.
We
are
concerned
with
the
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer,
in
this
instance,
the
life
insurance
business.
Funk
and
Wagnalls
Standard
College
Dictionary
(Canadian
Edition)
defines
“prize”
as:
1.
That
which
is
offered
or
won
as
an
honor
and
reward
for
superiority
or
success,
as
in
a
contest;
an
award.
2.
Anything
to
be
striven
for
.
.
.
Black’s
Law
Dictionary,
(5th
Ed)
gives,
among
others,
this
definition
of
a
“prize”:
“An
award
or
recompense
for
some
act
done;
some
valuable
thing
offered
by
a
person
for
something
done
by
others”.
This
is
broad
language.
In
my
view,
a
“prize
for
achievement”
does
not
necessarily
connote
an
award
for
victory
in
a
competition
or
contest
with
others.
That
places
too
narrow
and
inflexible
a
meaning
on
the
words.
In
the
case
at
bar
the
award
was
in
recognition
of
bona
fide
accomplishment,
successful
completion
of
course
studies,
and
examinations
in
a
challenging
and
difficult
field
of
endeavour,
in
which
about
61
per
cent
of
those
writing
were
successful
and
about
39
per
cent
failed.
Only
the
successful
candidates
were
eligible
to
receive
a
prize.
It
is
important
also
to
say
that
is
is
not
suggested
here
that
the
system
of
awards
was
introduced
as
a
colourable
device
intended
to
provide
the
employer
with
an
opportunity
of
increasing
the
statutory
exemption
of
employees
by
$500
per
year.
If
and
when
such
a
case
arises
it
can
be
considered
on
its
facts.
The
French
version
of
paragraph
56(1
)(n)
of
the
Income
Tax
Act
as
amended
SC
1973-74,
c
34,
s
15
should
be
read.
It
is,
it
seems
to
me,
in
terms
at
least
as
broad
as
the
English
version:
56.
(1)
Sans
restreindre
la
portée
générale
de
l’article
3,
sont
à
inclure
dans
le
calcul
du
revenu
d’un
contribuable
pour
une
année
d'imposition,
(n)
la
fraction,
si
fraction
il
y
a,
(i)
du
total
de
toutes
les
sommes
reçues
dans
l’année
par
le
contribuable
et
dont
chacune
est
une
somme
qu'il
a
reçue
à
titre
ou
au
titre
de
bourse
d’études,
de
bourse
de
perfectionnement
(fellowship)
ou
de
récompense
couronnant
une
oeuvre
remarquable
réalisée
dans
son
domaine
d’activité
habituel,
qui
est
en
sus
de
(ii)
$500;
et
The
payment
which
Mrs
Savage
received
falls
well
within
the
words
“récompense
couronnant
une
oeuvre
remarquable
réalisée
dans
son
domaine
d’activité
habituel”.
For
the
foregoing
reasons
the
Crown’s
contention,
that
the
word
“prize”
in
paragraph
56(1
)(n)
has
application
only
in
a
contest
or
competition
with
others,
in
my
opinion,
fails.
The
further
submission
on
the
part
of
the
Crown
is
that,
in
any
event,
the
$500
exclusion
in
paragraph
56(1
)(n)
is
not
an
exemption,
and
does
not
affect
payments
which
fall
within
other
taxing
provisions
of
the
statute.
In
terms
of
this
case,
the
Crown’s
position
is
that
even
if
the
$300
is
a
prize
not
taxable
under
paragraph
56(1
)(n),
the
$300
is
nonetheless
taxable
under
sections
5
and
6
as
income
from
employment.
It
is
true
that
the
opening
words
of
subsection
56(1)
speak
in
terms
of
inclusion
and
not
exclusion:
56.
(1)
Without
restricting
the
generality
of
section
3,
there
shall
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year,
.
.
.
Section
56
falls
within
Division
B,
subsection
(d)
headed
“Other
Sources
of
Income”.
The
section
enumerates
examples
of
income
that
fall
within
s
3,
repeated
below
for
ease
of
reference,
as
constituting
“income
.
.
.
from
a
source”:
3.
The
income
of
a
taxpayer
for
a
taxation
year
for
the
purposes
of
this
Part
is
his
income
for
the
year
determined
by
the
following
rules:
(a)
determine
the
aggregate
of
amounts
each
of
which
is
the
taxpayer’s
income
for
the
year
(other
than
a
taxable
capital
gain
from
the
disposition
of
a
property)
from
a
source
inside
or
outside
Canada,
including,
without
restricting
the
generality
of
the
foregoing,
his
income
for
the
year
from
each
office,
employment,
business
and
property;
I
agree
with
counsel
for
Mrs
Savage
that
the
opening
words
“Without
restricting
the
generality
of
section
3”,
in
paragraph
56(1)
would
seem
to
have
been
inserted
to
defeat
an
argument
of
“expressio
unius
est
exclusio
alte-
rius”,
in
order
to
relate
income
items
contained
in
paragraph
56(1)
to
the
arithmetical
calculation
set
out
in
section
3.
Income
can
still
be
income
from
a
source
if
it
does
not
fall
within
section
56.
Moreover,
section
56
does
not
enlarge
what
is
taxable
under
section
3,
it
simply
specifies.
When
section
56
is
seen
in
this
context,
it
is
clear
the
Crown’s
submission
cannot
be
sustained.
The
Crown’s
position,
to
repeat,
is
that
a
prize
for
achievement
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer,
if
less
than
$500,
and
if
obtained
in
respect
of,
in
the
course
of,
or
by
reason
of
an
office
or
employment,
is
taxable
under
sections
5
and
6,
notwithstanding
paragraph
56(1)(n).
Paragraph
56(1
)(n)
makes
it
clear
that
a
prize
for
achievement
is
income
from
a
source
under
section
3
just
as
income
from
an
office
or
employment
is
income
from
a
source
under
section
3.
If
a
prize
under
$500
would
still
be
taxable
under
sections
5
and
6,
it
would
have
to
follow
on
the
Crown’s
argument
that
a
prize
under
$500
would
equally
be
taxable
under
section
3.
That
cannot
be
right.
That
would
mean
that
a
prize
over
$500
would
be
taxable
under
paragraph
56(1
)(n)
and
a
prize
up
to
$500
would
be
taxable
under
section
3.
The
$500
exclusion
in
paragraph
56(1
)(n)
would
never
have
any
effect.
It
seems
clear
that
the
first
$500
of
income
received
during
the
year
falling
within
the
terms
of
paragraph
56(1
)(n)
is
exempt
from
tax.
Any
amount
in
excess
of
$500
falls
under
paragraph
56(1
)(n)
and
is
taxable
accordingly.
If
that
is
not
the
effect,
what
purpose
is
served
by
the
subsection?
I
would
dismiss
the
appeal.
Pursuant
to
the
terms
on
which
leave
to
appeal
to
this
Court
was
granted,
the
respondent
is
entitled
to
her
costs
on
a
solicitor
and
client
basis.
The
matter
is
referred
back
to
the
Minister
of
National
Revenue
for
appropriate
action
in
accordance
with
these
reasons
for
judgment.
McIntyre,
J:—I
agree
with
my
colleague
Dickson,
J
that
the
$300
payment
received
by
the
respondent
was
a
prize
“for
achievement
in
a
field
of
endeavour
ordinarily
carried
on
by
the
taxpayer”
within
the
meaning
of
paragraph
56(1
)(n)
of
the
Income
Tax
Act.
Since
it
is
less
than
$500,
it
isexemptfrom
tax.
I
would
therefore
dismiss
the
Crown’s
appeal
without
expressing
any
opinion
on
the
other
matters
referred
to
by
my
colleague.