The Queen v. Ken & Ray's Collins Bay Supermarket Ltd., 75 DTC 5346, [1975] CTC 504 (FCTD)

In respect of its 1969 and 1970 taxation years the taxpayer deducted management bonuses whose quantum was not ascertained until after the end of the taxation year and which, due in part to a reduction in the taxpayer's profitability, were not paid. Kerr, J. held that in order for the taxpayer to be considered to have "incurred" an expense in the year it must have obligated itself in the year to pay the bonuses. Instead, "the decision to grant bonuses was gratuitous".

Kerr, J. indicated, obiter, that s. 18(1)(e) would have applied to unpaid bonuses which the taxpayer sought to deduct: "When the decision to pay bonuses was taken in the fall of 1968 the amount that would be paid was uncertain, although a range of $25,000 to $30,000 was decided, and payment was contingent on necessary funds being available".