Citation: 2006TCC383
Date: 20060721
Docket: 2005-2573(IT)I
BETWEEN:
LISE PELLERIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1] This is the appeal
under the Income Tax Act ("the Act") from assessments
pertaining to the 2002 and 2003 taxation years.
[2] The Appellant
reported the amounts of $15,081 and $15,340 as employment income.
[3] The evidence
discloses that these were amounts that her son, a victim of a major accident,
paid her in consideration of the care and attention that she gave him due to a
significant and permanent partial disability involving very serious after-effects.
Following a road accident, the Appellant's son received a financial allowance, some
of which was spent on outside help that enabled him to function.
[4] The Appellant's son
continues to receive compensation for non-pecuniary damage. The compensation is
established in accordance with the Société de l'assurance automobile du Québec's
tables; in fact, part of it is intended for personal home assistance because he
depends on the help of others due to his physical condition.
[5] On November 18,
2003, the Appellant sought an adjustment for the taxation years 1996 through
2002 on the ground that the amounts that she received from her son, and reported
as employment income, should not be taxed.
[6] On March 1, 2004, the
Minister of National Revenue ("the Minister") notified the
Appellant in writing that no adjustment would be made.
[7] In making the
assessments dated May 8, 2003, and May 17, 2004, for the
2002 and 2003 taxation years, the Minister assumed the following facts:
[TRANSLATION]
(a) Richard Pellerin, the Appellant's son, had
a very serious road accident on May 22, 1996.
(b) Richard Pellerin, the Appellant's son, was
born on March 5, 1976. He was 20 years old at the time of the
accident.
(c) The Appellant's son receives an annual
amount from the Société d'assurance automobile du Québec ("SAAQ") in
reimbursement of his personal home assistance expenses, subject to a maximum.
In order to receive this amount, he must submit receipts signed by the person
or persons who provide him with such services.
(d) During the taxation years in issue, the
Appellant's son lived at his parents' home.
(e) During the taxation years in issue, the
Appellant was the person who provided the personal home assistance services to Richard
Pellerin.
(f) For the taxation years in issue, Richard
Pellerin remunerated his mother, the Appellant, by giving her the amounts
received from the SAAQ as advances on the personal home assistance expenses.
(g) Richard Pellerin, the Appellant's son,
issued a T4 slip to the Appellant for each tax year in issue. On these slips,
he entered, among other things, the said amounts in box 14 as employment
income.
(h) For the taxation years in issue, the
Appellant reported these amounts as employment income.
(i) The Minister confirmed the assessments in
respect of the 2002 and 2003 taxation years for the following reasons:
(i) the Appellant's son is an adult;
(ii) the SAAQ does not consider Richard Pellerin, the
Appellant's son, incapacitated within the meaning of the Civil Code of Québec,
because it pays the advances directly to him;
(iii) Richard Pellerin freely chose to use the
services of his mother, the Appellant, and to remunerate her for her services;
(iv) no parental or support obligation has been
shown to exist;
(v) the Appellant provides personal home assistance
services in exchange for remuneration; and
(vi) the Appellant is an employee in respect of the
services that she provides.
[8] The facts set out
in the Reply to the Notice of Appeal were not contested and are listed
correctly.
[9] The Canada Customs
and Revenue Agency submits that my decision in Maurice v. Her Majesty the
Queen, Docket 2000‑2873(IT)I, dated March 19, 2001,
and reported at [2001] T.C.J. No. 164, was contextual and was based
on its particular facts. Thus, the CCRA submits that the instant case should
not be decided in the same way because it is very different.
[10] The Respondent emphasized
that the Société de l'assurance automobile du Québec paid the amounts directly
to the Appellant's son, and that he was an adult at the time, and was capable
of entering into contracts despite his significant physical and mental impairment.
[11] The issue is whether
the Minister, in computing the Appellant's income for the years 2002 and 2003,
respectively, properly included the amounts of $15,081 and $15,340 as income
from employment.
[12] The Respondent
submitted that the Appellant's son was a person of full age endowed with legal
capacity, and could therefore be a party to a valid juridical act.
[13] Initially, the
Appellant considered the amounts received to be employment income. This was
clearly based on the advice and instruction of a person with some knowledge of
accounting.
[14] It is most probably
based on her reading of my reasons for judgment in Maurice, supra,
that the Appellant decided to request a review of her file.
[15] The facts of the
case at bar differ from those in Maurice, supra, where the
recipient of the accident compensation was a young child who was not endowed
with legal capacity. The person involved in the case at bar, namely the
Appellant's son, is an adult who is not the subject of any legal protection,
and therefore has full capacity despite his injuries and permanent neurological
after‑effects.
[16] The Société
d'assurance automobile du Québec pays compensation directly to the Appellant's
son so that he can obtain the assistance that is necessary because of the
permanent after-effects of his injuries. The son has therefore decided to give
the compensation to his mother, in recognition of the assistance and support
that she provided him.
[17] Although the work
was described briefly, the duties were not defined. This was undeniably a
relationship in which the emotional dimension played a predominant role and in which
supervision featured prominently.
[18] The Appellant was very
concerned about her son's health and safety and devoted all her energy and
efforts to ensure that her son had the best quality of life possible.
[19] This was in no way a
business relationship or even an employment contract. The affection stemming
from the parental bond was the primary and fundamental reason for the
relationship. The notion of profit was non-existent and there was no
relationship of subordination.
[20] How should the
amounts that the Appellant was paid by her son be characterized? Certainly not
as remuneration in exchange for work. The amounts had nothing to do with
the services rendered. They were essentially amounts given gratuitously out of
appreciation and recognition. It is clear that the Appellant would have
provided the same care in the same way, even without a gift or recompense.
[21] Consequently, the
appeal is allowed, and the assessments are referred back to the Minister for
reconsideration and reassessment on the basis that the amounts of $15,081 and
$15,340, respectively, are to be subtracted from the Appellant's income, and
that the appropriate corrective action is to be taken as a consequence of this
judgment. There shall be no costs.
Signed at Ottawa, Canada, this 21st day of July 2006.
"Alain Tardif"
Translation certified true
on this 29th day of June 2007.
Brian McCordick, Translator
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