Citation: 2010TCC333
Date: 20100618
Docket: 2009-3765(EI)
BETWEEN:
RONALD W. TAYLOR,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
The
issue in this appeal is whether the Appellant was obligated to pay a premium
under the Employment Insurance Act (the “EI Act”) in relation to
a payment that was made to him in 2007.
[2]
The Appellant
started work as a police officer with the Toronto Police Department in 1967. He
retired in February 2000. After his retirement it was determined that a certain
amount would be paid to individuals who were members of the Toronto Police
force during the period from 1973 to 1989 (based on the number of months that
such individuals were employed during this period). Since the Appellant was a
member of the Toronto Police force throughout this period of time he received a
payment of $9,363. While he was working with the city of Toronto Police Department his employer
was the Toronto Police Services Board. After his retirement the pension benefits
that he received (and continues to receive) were paid to him by the
Metropolitan Toronto Police Benefit Fund. The payment that he received in 2007
was made by the Toronto Police Association.
[3]
When
the lump sum payment was made to him in 2007, the sum of $168.54 was deducted therefrom
and remitted as a premium payable by the Appellant under the EI Act. It
is the position of the Appellant that he was not working in 2007 and therefore no
amount should be payable by him under the EI Act in relation to the payment
he received in 2007.
[4]
There
was confusion on the part of both the Appellant and counsel for the Respondent
in relation to how the amount of $168.54 was determined. The Appellant was
under the understanding that since he had paid the maximum premium that would
have been payable under the EI Act for each year during the period from
1973 to 1989, that no premium should be payable in relation to this lump sum
payment.
[5]
Counsel
for the Respondent had indicated that the premiums payable under the EI Act
in relation to this lump sum payment were dealt with in the ruling that had
been obtained by the Toronto Police Association from the Canada Revenue Agency.
She indicated that the ruling confirmed that the premium that was payable under
the EI Act in relation to the lump sum payment was only the difference
between the premiums that would have been payable under the EI Act for
the years to which the payment was related (if the amount would have been received
during these years) and the amounts that were paid during these years (which is
the same as the Appellant’s understanding). This would raise the question of
how the payment of $9,363 would be allocated to the years 1973 to 1989.
[6]
However
the advance income tax ruling that was filed during the course of the hearing does
not address any issues arising under the EI Act. As well it seems
obvious to me that the $168.54 is simply 1.8% (which was the employee premium
rate for 2007 under the EI Act) of the amount paid in 2007. Therefore it seems obvious to me that
the amount was simply determined by multiplying the employee premium rate in
effect for 2007 by the amount of the payment made in 2007 and it has nothing to
do with the amount of employee premiums paid (or payable) during the period
from 1973 to 1989.
[7]
Section
67 of the EI Act provides that:
67. Subject to section 70, a person
employed in insurable employment shall pay, by deduction as provided in
subsection 82(1), a premium equal to their insurable earnings multiplied by the
premium rate set under section 66 or 66.3, as the case may be.
[8]
Therefore
in order for a premium to be payable by the Appellant under the EI Act
in relation to the payment that he received in 2007, he would have to be
employed in insurable employment and the amount received would have to be insurable
earnings.
[9]
“Insurable
earnings” is defined in subsection 2(1) of the EI Act as follows:
“insurable earnings” means the total
amount of the earnings, as determined in accordance with Part IV, that an
insured person has from insurable employment;
[10] Subsection 108(1) of the
EI Act (which is in Part IV of that Act) provides that:
108. (1) The Minister may, with the
approval of the Governor in Council, make regulations
…
(g) for defining and determining
earnings, pay periods and the amount of insurable earnings of insured persons
and for allocating their earnings to any period of insurable employment;
[11] Subsection 2(1) of the Insurable
Earnings and Collection of Premiums Regulations (“IECPR”), provides, in
part, that:
2. (1) For the purposes of the definition "insurable
earnings" in subsection 2(1) of the Act and for the purposes of these
Regulations, the total amount of earnings that an insured person has from
insurable employment is
(a) the total of all amounts, whether wholly or
partly pecuniary, received or enjoyed by the insured person that are paid to
the person by the person's employer in respect of that employment, and
…
[12] In the Reply, the
following assumptions were made, which were not challenged by the Appellant:
8. In making his decision, the Minister
relied on the following assumptions of fact:
…
(g) in 2007, the
Appellant received a lump-sum payment from the [Toronto Police Association], in
respect of his former employment with the [Toronto Police Services Board];
…
(l) the payment
represented the Appellant’s share of excess contributions made to the OMERS
pension fund by the [Toronto Police Services Board];
(m) excessive
pension contributions were made during the years 1973 to 1989, by the [Toronto
Police Services Board];
(n) the Appellant
was neither a member, nor a contributor to the OMERS pension fund;
(o) the Appellant
received the benefit because of his former employment with the [Toronto Police
Services Board];
[13] In the advance income
tax ruling dated June 7, 2007 that was obtained in relation to the payment made
to the Appellant and the other recipients, the proposed transactions are
described. In this advance ruling it is stated that the amount that was paid to
the Appellant was paid from a reserve fund that had been established by the
Toronto Police Services Board (the former employer of the Appellant). The
reserve fund was established because the Toronto Police Association allowed the
Toronto Police Services Board to reduce its pension contributions by a portion of
the excess in the pension plan. The payment was made by the Toronto Police
Services Board to the Toronto Police Association as representative of the
employees and the Toronto Police Association distributed the payment to the
Appellant and the other qualified individuals.
[14] In Toronto Police
Services Board et al v. Ontario, 45 O.R. (3d) 622, 178 D.L.R. (4th) 440, the
Ontario Court of Appeal dealt with the OMERS (Ontario Municipal Employees
Retirement System) and the excess funds that had accumulated. In paragraph 20
Justice Krever stated that:
20 The Employers agree that the
benefit provided through the supplementary agreements arose almost entirely
through collective bargaining. I agree with Rosenberg J. that, as a result, it
should be assumed that "the cost of these benefits was considered in the
overall compensation package at the time of implementation." The benefits
may reasonably be thought of as present wages postponed or deferred. Thus to
say that the employees have entirely no interest in the application of these
funds would be unrealistic.
[15] Subsection 10(1) of the IECPR, provides,
in part, that:
10. (1) Where, in any case not coming
within any other provision of these Regulations, an insured person works
(a) under the general control or
direct supervision of, or is paid by, a person other than the insured person's
actual employer, or
…
that other person shall, for the
purposes of maintaining records, calculating the insurable earnings of the
insured person and paying, deducting and remitting the premiums payable on
those insurable earnings under the Act and these Regulations, be deemed to be
the employer of the insured person in addition to the actual employer.
[16] As a result it seems
clear to me that the payment that the Appellant received in 2007 was funded by
the Toronto Police Services Board (the Appellant’s former employer) and made to
the Appellant by the Toronto Police Association (who was deemed to be an
employer in addition to the Toronto Police Services Board as a result of the
application of subsection 10(1) of the IECPR for certain administrative
purposes including deducting and remitting the premium). This payment was in
respect of the employment of the Appellant by the Toronto Police Services
Board.
[17] Insurable employment is
defined in section 5. This section provides, in part, that:
5. (1) Subject to subsection (2),
insurable employment is
(a) employment in Canada by one or more
employers, under any express or implied contract of service or apprenticeship,
written or oral, whether the earnings of the employed person are received from
the employer or some other person and whether the earnings are calculated by
time or by the piece, or partly by time and partly by the piece, or otherwise;
The employment of the Appellant by
the Toronto Police Services Board was clearly insurable employment. Therefore
the lump sum payment that the Appellant received in 2007 would be insurable
earnings. To be insurable earnings the earnings must be from insurable
employment and in respect of that employment. There is no requirement that the
person be engaged in insurable employment at the time that the earnings are
received.
[18] In section 67 of the EI
Act there is a requirement that the Appellant be employed in insurable
employment. There is a specific reference to section 70 in section 67 of the EI Act.
This section provides that:
70. If insurable earnings are paid to a
person after the end of the year in which their insurable employment occurred,
the insurable employment is, for the purposes of determining insurable earnings
and premiums payable, deemed to have occurred in the year in which the
insurable earnings are paid.
[19] There is no time period specified
in section 70 of the EI Act for the payment of insurable earnings after
the end of the year in which the insurable employment occurred. Therefore even
though the payment was made approximately 7 years after the Appellant retired,
as a result of the provisions of section 70 of the EI Act his insurable
employment is deemed to have occurred in 2007.
[20] Therefore the Appellant
received insurable earnings in 2007 and his insurable employment was deemed to have
occurred in 2007. As a result, unfortunately, even though he received the lump
sum payment seven years after he retired, he is obligated to pay a premium
under the EI Act in relation to such payment.
[21] The Appellant’s appeal
is dismissed, without costs.
Signed at Ottawa,
Canada, this 18th day of June, 2010.
“Wyman W. Webb”
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