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Citation: 2007TCC350
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Date: 20070625
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Docket: 2006-2479(IT)I
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BETWEEN:
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DEBBRA LOUBIER,
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Appellant,
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And
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
(Edited from the transcript of Reasons for Judgment
delivered orally from the Bench on May 30, 2007 at Toronto, Ontario)
Little J.
A. FACTS
[1] The Appellant was an employee of Revenue Canada, now known as the Canada Revenue Agency (the “CRA”).
[2] The Appellant commenced working for Revenue Canada in 1981.
[3] In 1984 and 1990, the Public Service Alliance of Canada (the PSAC)
presented human rights complaints on behalf of certain employees represented by
its female-dominated occupational groups to the Canadian Human Rights
Commission (the Commission). Approximately 200,000 federal employees were
involved in this application.
[4] The complainants maintain that the Treasury Board (the Employer of
the Appellant and the other employees), had acted contrary to section 11 of the
Canadian Human Rights Act (the “CHRA”), by failing to provide
equal pay for work of equal value (this is referred to hereinafter as pay
equity).
[5] On July 29, 1998, the Canadian Human Rights Tribunal (the Tribunal)
upheld the complaints and held that the Treasury Board had acted in violation
of section 11 of the CHRA. The Tribunal ordered the Treasury Board to
pay the Appellant and other civil servants a pay equity wage, adjusted
retroactively to March 8, 1985.
[6] The Tribunal's Order also ordered that interest be paid on the net
amount of direct wages calculated as owing for each year of the retroactive
period, plus post‑judgment interest.
[7] The Attorney General of Canada appealed the decision to the Federal Court, Trial Division.
[8] On October 19, 1999, the Federal Court, Trial Division, rejected the
Attorney General's appeal of the Order.
[9] On October 29, 1999, the PSAC and Treasury Board entered into the Memorandum
of Agreement. Pursuant to the Memorandum of Agreement, the Appellant received
the amount of $22,506.30, described as interest, in the 2000 taxation
year.
[10] Public Works and Government Services of Canada
issued a T5 slip for the 2000 taxation year to the Appellant, indicating the
payment of $22,506.30, as interest.
[11] When filing her income tax return for the 2000
taxation year, the Appellant included the amount of $22,506.30 in her income.
The Appellant was assessed by the CRA as filed on May 3, 2001.
[12] On August 22, 2001, the Appellant filed a Notice
of Objection. On June 2, 2006, the CRA confirmed the assessment.
B. ISSUE
[13] In her Notice of Appeal dated August 2, 2006,
the Appellant asked whether the inclusion of interest in the amount of
$22,506.30 was done in accordance with the Income Tax Act (the “Act”)
in the 2000 taxation year.
C. ANALYSIS
AND DECISION
[14] From my analysis of all of the relevant
documents, including the Partial Agreed Statement of Facts signed by both
parties, I have concluded that the payment in issue is described, defined
and calculated as interest by the decision of the Tribunal on July 29, 1998.
Furthermore, interest was specified in the Agreement between PSAC and Treasury
Board in an Agreement dated October 29, 1999. The payment was not damages or
some other type of payment; the payment was purely interest.
[15] Paragraph 12(1)(c) of the Act reads as
follows:
There shall be included in computing the income of a
taxpayer for a taxation year as income from a business or property such of the
following amounts as are applicable:
…
(c) subject to subsection (3) and (5),
any amount received or receivable by the taxpayer in the year (depending on the
method regularly followed by the taxpayer in computing the taxpayer's income)
as, on account of, in lieu of payment of or in satisfaction of, interest to the
extent that the interest was not included in computing the taxpayer's income
for a preceding taxation year;
[16] It should be noted that the Partial Agreed Statement
of Facts indicates that the interest was not included in the Appellant's income
for a previous year.
[17] The question that I must address is what is
interest for the purpose of paragraph 12(1)(c) of the Act. In this
case, the evidence indicates that the interest was paid to the Appellant and to
the other complainants in respect of the Federal Government's retention of
monies which should have been paid to female employees from March 8, 1985 to
the date of the award.
[18] I believe that the Court decision which is
helpful to explain the application of paragraph 12(1)(c) of the Act is
the decision of Madam Justice Reed in Miller v. The Queen, 85 DTC 5354.
Reading from that case, I want to emphasize one or two points. Justice Reed
said:
… It is open to the parties to govern their
relationship by retroactive agreements:
[19] That is what the parties did here. They agreed
on a retroactive agreement and they agreed to specify interest not compound
interest as requested by the representative of the PSAC, but simple interest.
Furthermore, Justice Reed said at page 5359:
In my view, the $62.51 was genuinely a payment of
interest. The parties agreed that their relationship would be governed on the
basis of the retroactive agreement. This involved the retention of monies owing
to the Plaintiff for which compensation was ultimately paid. The compensation
paid was described by the parties and the arbitration board as interest. It was
calculated on an accrual basis by reference to a normal rate of interest, then
current, or with respect to the employer's cost of borrowing. I can see no
reason why this does not fall within the meaning of the word “interest” as it
is used in section 110.1 of the Income Tax Act.
[20] Based on my analysis of the facts and relying
upon the Federal Court decision in Miller quoted above, I have concluded
that the interest payment in the amount of $22,506.30 received by the Appellant
in the year 2000 is properly included in the Appellant's income for the 2000
taxation year in accordance with paragraph 12(1)(c) of the Act.
[21] The appeal is dismissed without costs.
Signed at Toronto, Ontario, this 25th
day of June 2007.
Little
J.
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