Citation: 2009TCC349
Date: 20090708
Docket: 2008-3072(IT)I
BETWEEN:
RUSS PUTLAND,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Beaubier, D.J.
[1]
This appeal pursuant to
the Informal Procedure was heard at Lethbridge, Alberta
on June 24, 2009. The Appellant was the only witness.
[2]
The particulars in
dispute are set out in paragraphs 3, 8, 9, 10, 11, 12 and 14 of the Reply. They
read:
3. With respect to paragraph 6 of the Notice of Appeal,
(a) He admits that the Appellant was paid damages of $26,000 (the
“Amount”) by the Employer.
8. On January 28, 2008 the Minister reassessed the Appellant’s 2006
taxation year, to include the Amount as other income for the retiring allowance
received from the Employer.
9. On February 5, 2008, the Appellant served on the Minister a
Notice of Objection to the 2006 reassessment.
10. On September 12, 2008, the Minister confirmed the reassessment
by means of a Notice of Confirmation.
11. In so reassessing the Appellant for the 2006 taxation year, and
in confirming the reassessment, the Minister assumed the following facts:
(a) the Appellant was employed by the Employer up to an including
December 22, 2005;
(b) the Employer terminated the Appellant’s employment for cause on
December 22, 2005;
(c) the Appellant subsequently began legal proceedings against the
Employer for wrongful dismissal;
(d) in the Appellant’s lawsuit he was seeking bonus payments, lost
wages, and salary differential;
(e) the Employer paid the Appellant the Amount to settle the legal
dispute.
12. The Issues to be decided are:
(a) whether the Amount paid to the Appellant was a retiring allowance
for loss of an office or employment.
14. He submits that:
(a) the Amount paid to the Appellant by the Employer was a retiring
allowance per subsection 248(1) of the Act;
(b) the Amount was paid in respect of the loss of an office or
employment;
(c) the Amount was properly included into income pursuant to
subparagraph 56(1)(a)(ii) of the Act;
[3]
Assumptions 11(a), (b),
(c) and (e) were confirmed by the evidence. Assumption 3(d) is incorrect
because the Appellant also claimed for damages respecting the rental of a van
that he used in the course of his employment on the instructions of his
employer, Cargill Limited (“Cargill”).
[4]
There was a series of
offers made by Cargill to settle the Appellant’s claim. The first was for
$10,000 with no particulars, on May 3, 2006 (Exhibit A-3). On August 8, 2006,
its lawyers raised 3 items:
(1)
$3,500 respecting the van
(2)
$8,589.36 on account of loss of salary
(3) $8,289.14 on further account of salary.
[5]
The Appellant sued in
Court by Statement of Claim filed March 8, 2006 (Exhibit R-1). Subparagraph
16(a) claimed “Damage for breach of the employment contract…”.
[6]
Mediation followed
whereupon Cargill paid the Appellant $26,000 in September 2006 without
specification except the words “general damages” and in consideration of the
Appellant withdrawing his lawsuit (Exhibit A-6).
[7]
Subsection 248(1) of
the Income Tax Act describes a “retiring allowance” as meaning a benefit
received:
(b) in respect of a loss of an office or employment of a taxpayer,
whether or not received as … damages … by the taxpayer…
[8]
Subparagraph 56(1)(a)(ii)
of the Income Tax Act includes in computing a taxpayer’s income
(ii) a retiring allowance ….
[9]
The fact is that the
$26,000 was paid by his former employer Cargill to the Appellant as damages in
respect to his employment by Cargill and the loss of that employment. He would
not have received it otherwise. Thus the $26,000 falls within the definition of
“retiring allowance” in the Income Tax Act. See, in particular, Overin
v. R. 98 DTC 1299 and Grant v. R. 2008 DTC 3035.
[10]
For this reason his
appeal is dismissed.
Signed at Saskatoon, Saskatchewan, this 8th day of July 2009.
“D.W. Beaubier”
Email this Content