Citation: 2007CCI231
Date: 20070523
Docket: 2006-872(EI)
BETWEEN:
JEAN GUYARD,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Angers, J.
[1] This is an appeal
from a decision of the Minister of National Revenue (the "Minister")
according to which the employment held by the appellant with the transition committee
of the agglomeration of Québec (the "Committee") was insurable
employment within the meaning of the Employment Insurance Act (the
"Act"). This decision, which concerns the 2004 and 2005 taxation
years, was rendered on the basis of the argument that the appellant, as a
member of the Committee, held an office within the meaning of paragraph 6(f)
of the Employment Insurance Regulations (the "Regulations") and
subsection 2(1) of the Canada Pension Plan (the "Plan").
[2] The Employment
Insurance premiums at issue are the following:
|
Year
|
EI premiums
|
Penalty
|
Interest
|
Total
|
|
2004
|
$9,883.27
|
$938.32
|
$202.01
|
$11,023.60
|
|
2005
|
$6,824.90
|
$632.49
|
$63.89
|
$7,521.28
|
[3] The Committee was
appointed by the Minister of Municipal Affairs, Sports and Recreation of Quebec
under the Act respecting the consultation of citizens with respect to the
territorial reorganization of certain municipalities. The Committee is a
legal person (corporation) and a mandatary (agent) of the Quebec government. The appellant was
appointed a member of this Committee by an order in council on June 20, 2004. The Committee was to see
to the demerger of the former towns of Ancienne Lorette and St-Augustin and facilitate
the division of human, financial and physical resources of the successor
municipal administrations. In his duties for the Committee, the appellant was
responsible for computers and buildings.
[4] The appellant
signed an agreement specifying the conditions of his appointment, which were as
follows:
[translation]
Remuneration and other conditions of
employment of Jean Guyard as member of a transition committee for the
territorial reorganization of certain municipalities.
1. Purpose
Act as a member of the transition
committee of the city of Québec, hereafter the Committee, appointed under the Act respecting the consultation of
citizens with respect to the territorial reorganization of certain
municipalities (2000,
chapter 14), under the responsibility of the Chairperson of the Committee.
2. Duration
The duties to be performed by
Jean Guyard as a member of the Committee begin on June 21, 2004, and end
on the date of the dissolution of the Committee, subject to the provisions of
section 6.
3. Professional fees
From the date of the beginning of the
performance of his duties, Jean Guyard will be paid professional fees of
$678 per day for a minimum of 8 hours of work per day and a maximum of 261 days
per year, upon submission of a professional fees invoice. These professional fees
correspond to those to be paid to Jean Guyard as a Committee member, after
deduction of the equivalent of half of the retirement pension he is currently
receiving for his years of service in the Quebec public service.
This rate of pay includes any increase to
compensate for the lack of fringe benefits (vacation, sick leave, other leave,
employer contributions to fringe benefits and other fringe benefits).
4. Expenses
4.1 Travel and accommodation expenses
For travel and accommodation expenses
incurred for the purposes of his employment, the Committee will reimburse Jean
Guyard in accordance with the rules applicable to members of public bodies as
specified by the government by Order in Council No. 2500-83 dated November 30, 1983, taking into account any amendments that have been
or will be made thereto.
4.2 Entertainment
expenses
Upon presentation of
supporting documentation, Jean Guyard will be entitled to the
reimbursement by the Committee of all expenses incurred in the performance of
his duties up to an amount of $2,415, in accordance with the rules applicable
to executive officers of public bodies, which were enacted by the government by
Order in Council No. 1308-80, dated April 28, 1980, taking into account any
amendments that have been or will be made thereto.
5. Ethics and rules of
professional conduct
Jean Guyard must abide by all
standards of ethics and rules of professional conduct applicable to public
administrators under the Regulation respecting ethics and discipline in the
public service, in a schedule to Order in Council No. 924-98, dated June 17, 1998, taking into consideration any amendments that have
been made or will be made thereto.
6. Termination
This agreement expires on the date
specified in section 2, subject however to the following provisions:
6.1 Resignation
Jean Guyard may resign from his
position as Committee member, without penalty, by giving one month's written notice.
Notice of resignation must be sent to the
Minister of Municipal Affairs, Sports and Recreation.
6.2 Dismissal
Jean Guyard also agrees that the Minister
may cancel this agreement at any time, without notice or compensation, for malversation,
maladministration, gross fault or any ground of equal seriousness, the proof of
which lies upon the government.
This agreement may also be resiliated by
the Minister at any time for a breach of the standards of ethics and
professional conduct, pursuant to the regulation mentioned in section 5.
7. Any verbal
agreement not included in this document is null and void.
[5] The Committee had
an office in Ste-Foy, but its members could work from home. Every member could
determine his or her own working days. It was admitted that the work was
performed by the appellant and the other members under a contract for services.
[6] Therefore, at issue
is whether the appellant held insurable employment within the meaning of the Act,
or more specifically, whether the appellant held an office within the meaning
of paragraph 6(f) of the Regulations and subsection 2(1) of
the Plan.
[7] The appellant
submits that, because there is no employer–employee relationship between him
and the Committee, this is not insurable employment within the meaning of the Act.
In support of this argument, he cites an excerpt from a letter sent to him by
the team supervisor for Employment Insurance and Canada Pension Plan appeals,
in which it was specified that his employment did not meet the requirements of
a contract for services because there was no employer–employee relationship. He
adds that, because he regularly collected the GST and QST on his professional fees
and performed other tasks for other organizations during his mandate, he did
not hold employment but was rather self-employed.
[8] However, it must
also be noted that, in the same letter written by the team supervisor to the
appellant, it was specified that his employment was insurable because he held
an office for the Committee.
[9] For his part, the
respondent pleads the position taken by the team supervisor, to the effect that
the three conditions specified in the Regulations and the Plan have been met.
These three conditions are as follows:
(1) The
position must entitle the individual to a fixed or ascertainable stipend or
remuneration;
(2) The
office held must be with a corporation that is an agent of a province (which is
admitted);
(3) The
province concerned must be one whose government has agreed to insure all of its
employees.
[10] Therefore, the
respondent submits that the appellant's remuneration was "fixed or
ascertainable" because the appellant could determine on what days he would
work, provided that he worked at least eight hours per day according to the established
per diem rate. As far as the third condition is concerned, the respondent
submits that it was not necessary to have a formal agreement for each
employment and that such an agreement may be tacit. The respondent adds that it
would be excessive to require that an agreement be negotiated every time the
government of a province or one of its agents finds itself in a situation where
its members holds an office, because in any event, according to the respondent,
the Act does not require such an agreement.
[11] The starting point
is paragraph 5(2)(c) of the Act, which provides that insurable
employment does not include employment in Canada by Her Majesty in right of a
province. However, the Act provides for exceptions which allow certain kinds of
employment specified in regulations made under subsections 5(4) and 5(5) of the
Act to be included in the category of insurable employment.
[12] The exceptions
relevant to the present case are found in paragraphs 5(4)(d) and (g),
which read as follows:
(4) Regulations
to include employment — The Commission may, with the approval of the
Governor in Council, make regulations for including in insurable employment
(d) employment in Canada by Her Majesty in
right of a province if the government of the province waives exclusion and
agrees to insure all its employees engaged in that employment;
(g) the tenure
of an office as defined in subsection 2(1) of the Canada Pension Plan.
[13] Therefore, under
paragraph 5(4)(g), the Commission may make regulations for including in
"insurable employment" an office within the meaning of subsection
2(1) of the Plan, which defines "office" as follows:
“office” means the position of an individual
entitling him to a fixed or ascertainable stipend or remuneration and includes
a judicial office, the office of a minister of the Crown, the office of a
lieutenant governor, the office of a member of the Senate or House of Commons,
a member of a legislative assembly or a member of a legislative or executive
council and any other office the incumbent of which is elected by popular vote
or is elected or appointed in a representative capacity, and also includes the
position of a corporation director, and “officer” means a person holding such
an office;
[14] Therefore, the Regulations
made under the Act provide for the inclusion of an office in insurable
employment. The relevant provisions of the Regulations are subsections 2(1) and
2(2) and subparagraphs 6(f)(ii) and 6(f)(iii), which read as
follows:
Section 2
(1) Employment in Canada by Her Majesty
in right of a province that would, except for paragraph 5(2)(c) of the
Act, be insurable employment is included in insurable employment if the
government of the province enters into an agreement with the Commission whereby
that government agrees to waive exclusion and to insure all its employees
engaged in such employment.
(2) For greater certainty, employment in
Canada by Her Majesty in right of a province, for the purposes of subsection
(1), includes only employment in Canada of employees who are appointed and
remunerated under an Act governing that province's public service, or who are
employed in Canada by a corporation, commission or other body that is an agent
of Her Majesty in right of the province.
Section 6
Employment in any of the following
employments, unless it is excluded from insurable employment by any provision
of these Regulations, is included in insurable employment:
(f) employment of a person who holds an
office, as defined in subsection 2(1) of the Canada Pension Plan
(ii) where the person
is appointed and remunerated under an Act governing the public service of a
province, the government of which has, pursuant to subsection 2(1), agreed to
insure all of its employees
(iii) where
the person holds the office in or under a corporation, commission or other body
that is an agent of Her Majesty in right of a province referred to in
subparagraph (ii),
[15] This is the basis for
the three conditions referred to above. It is admitted, as has already been
mentioned, that the appellant holds office with a corporation (the Transition
Committee of the Agglomeration of Québec) which is an agent of the Quebec government.
Moreover, the Act respecting the consultation of citizens with respect to
the territorial reorganization of certain municipalities provided for this
in section 52. Therefore, subparagraph 6(f)(ii) and
subsection 2(1) of the Plan must be analyzed to determine whether the
appellant held employment for which he was entitled to fixed or ascertainable
remuneration and whether the Quebec government had made an agreement with the Commission to
insure all of its employees.
[16] With regard to this
last condition, in Payette v. Canada, [2002] T.C.J. No. 386, Dussault
J. concluded that, because the word "agreed" has been used in
subparagraph 6(f)(ii) and in subsection 2(1) of the Regulations, this presupposes
that there is an agreement between the Commission and the provincial government
to insure its employees, more specifically, an agreement which would make the
offices held with the body in question insurable. He wrote the following at
paragraph 33:
33 It is quite
clear that an agreement implies consent to something by two or more parties. An
Order in Council is a unilateral action that does not meet the minimum
requirement of an agreement between two governments set out in subsection 2(1)
of the Regulations. Failing evidence of an agreement between the Quebec
government and the Canada Employment Insurance Commission that insured the
appellants, the members of the review committee formed by the Commission des
services juridiques, the Court considers that subparagraph 6(f)(iii) of the
Regulations cannot be applied to this case.
[17] It is also important
to cite the excerpts which explain the line of reasoning followed by Dussault
J. in reaching this conclusion. I reproduce paragraphs 27 and 28 here:
27 There is more. Even if
the Court assumed that the members of the review committee held an office as
defined in subsection 2(1) of the Canada Pension Plan, the Court considers that
subparagraph 6(f)(iii) of the Regulations cannot be applied to this
case. Under subparagraph 6(f)(iii) of the Regulations, the office must
be "in or under a corporation, commission or other body that is an agent
of Her Majesty in right of a province". Subparagraph 6(f)(ii) of
the Regulations refers to "a province, the government of which has,
pursuant to subsection 2(1), agreed to insure all of its employees".
Under subsection 2(1) of the Regulations, employment otherwise excluded under
paragraph 5(2)(c) of the Act shall be included in insurable employment
"if the government of the province enters into an agreement with the
Commission whereby that government agrees to waive exclusion and to insure all
its employees engaged in such employment."
28 From the outset, the
Court cannot fail to underscore that the wording of the Regulations is hardly a
model of clarity. Although subsection 2(1) of the Act defines the word
"employment" as "the act of employing or the state of being
employed", paragraph 6(f) of the Regulations begins with the words,
" . . . employment of a person who holds an office, as defined in
subsection 2(1) of the Canada Pension Plan . . . ". Thus, although the
holder of an office is not an employee, this wording suggests that the holder
of an office nevertheless holds employment. It may be added here, as
counsel for the respondent has noted, that the word "employment"
has been interpreted to include more than work performed under a contract of
service or a master-servant relationship and may designate, more generally, an
occupation. On this point, reference may be made to the Federal Court of
Appeal decision in Sheridan v. Canada (Minister of National Revenue-M.N.R.) (F.C.A.), [1985] F.C.J. 230, in
which that Court relied on two Supreme Court of Canada decisions: The Queen
v. Scheer Limited, [1974] S.C.R. 1046; and Martin Service Station v. The
Minister of National Revenue, [1977] 2 S.C.R. 996. The word
"employment" used at the beginning of paragraph 6(f) of the
Regulations obviously has a broader meaning. However, the ambiguity
remains in subparagraph 6(f)(ii) because an office is included in
insurable employment if the government of a province has, pursuant to
subsection 2(1) of the Regulations, agreed to insure all of its employees. The
ambiguity persists in subparagraph 6(f)(iii), which refers to a province
referred to in subparagraph 6(f)(ii), that is, a province of which the
government has, pursuant to subsection 2(1) of the Regulations, agreed to
insure all of its employees. One may certainly, and rightly, ask if the
expression "all of its employees" covers the holders of an office
referred to in an agreement required under subsection 2(1) of the Regulations
or if the agreement must be specific on this aspect. In the present
appeals, however, this question need not be answered since, as will be seen,
there is no evidence that there is any agreement between the Quebec government and the
Canada Employment Insurance Commission.
29. . . .
Nevertheless,
the Court considers that subparagraph 6(f)(iii) does not apply to this
case since there is no evidence of any agreement between the Quebec government and the
Canada Employment Insurance Commission whereby the Quebec government would have agreed "to
waive exclusion and to insure all its employees engaged in such
employment". Such an agreement is an essential condition set out in
subparagraph 6(f)(iii) of the Regulations by reference to
subparagraph 6(f)(ii) and to subsection 2(1) of the Regulations.
[18] The same situation
exists in the present case. The respondent submits that paragraph 5(4)(d)
authorizes the Commission to make regulations to include in insurable
employment all provincial employees engaged in such employment if that province
agrees to waive the exclusion, such that it is not specified anywhere in the Act
that there must be an agreement. According to the respondent, the orders in
council submitted are evidence that employment with the Quebec government became
insured employment. The respondent acknowledges that there was no agreement and
submits that the orders in council are sufficient. In the alternative, the
respondent submits that such an agreement is implied, as it must be
acknowledged that Quebec government employers have been insuring their employees for a number of
years. Accordingly, the condition specified in subparagraph 6(f)(iii)
has been met.
[19] Paragraph 5(4)(g)
is the provision that allows the Commission to make regulations to include an
office in insurable employment. Under subsection 2(2) of the Regulations,
subsection 2(1) applies only to employees who are appointed and remunerated
under an Act governing a province's public service where they are employed by a
corporation that is an agent of Her Majesty. Subsection 2(1) specifically
states that employment of this sort is insurable employment if the government
of the province enters into an agreement with
the Commission whereby that government agrees to waive exclusion and to insure
all its employees engaged in such employment.
[20] When the provisions
of subsection 2(1) of the Regulations are applied to subparagraphs 6(f)(iii)
and 6(f)(ii), reference is always made to the government of the province
that has entered into an agreement to insure all its employees. I have studied
the orders in council submitted in evidence to the Court, and they are the same
ones that were adduced in evidence in Payette, supra.
[21] I agree with the
remarks of Dussault J. at paragraph 33, where he concluded that it is quite
clear that an agreement implies consent to something by two or more parties. An
order in council is a unilateral action which does not meet the minimum
requirement of an agreement between two governments, as required under
subsection 2(1) of the Regulations. Dussault J. continued by stating that,
failing evidence that there was an agreement between the Quebec government and
the Commission that insured the appellant in that case, subparagraph 6(f)(iii)
of the Regulations cannot apply. In my opinion, the situation in the case at
bar is the same, and I reach the same conclusion.
[22] Given my conclusion,
it would not be necessary to analyze the last condition, but I do think it is important
for the purposes of this case to analyze it anyway. Was the appellant entitled
to "fixed or ascertainable" remuneration in the performance of his
duties for the Committee within the meaning of the definition of "office"
in subsection 2(1) of the Plan? I am of the opinion, like Dussault J. in Payette,
supra, that the case law concerning the definition of "office"
found in the Income Tax Act applies in the case at bar.
[23] In answer to the
question as to what was Parliament's intent when it used the words "fixed
or ascertainable", counsel for the respondent submits that the intention
was to include the situation where a person appears for the most part to be an employee,
except insofar as this office holder is unsupervised. According to counsel for
the respondent, a person who earns $10 per hour or $678 per day receives fixed
remuneration. By determining the number of days he worked on the basis of the
work to be performed, the appellant was able to determine the amount of his
remuneration with a minimum degree of accuracy. According to counsel for the
respondent, this situation can be distinguished from cases dealing with the
same issue, especially Payette, supra, and Guérin v. M.N.R.,
52 DTC 118, Mackeen v. M.N.R., 67 DTC 281 and Merchant
v. The Queen, 84 DTC 6215.
[24] Merchant, supra,
summarizes the current state of the law on this issue. In this judgment of the
Federal Court of Appeal, Reed J.A. decided this question as follows:
In [sic] the opening words of the definition of "office"
in section 248(1), however, are not inclusive in nature; they impart a
mandatory aspect to the definition. In order to be classified as income from an
office the remuneration must be fixed and ascertainable.
I was referred to
the decision of the Tax Appeal Board in MacKeen v. Minister of National Revenue
67 DTC 281 in which it
was held that a person appointed to a Royal Commission was not an office holder
for income tax purposes. The terms of his appointment were that he would be
paid $100.00 per day as well as $20.00 per day while absent from his home and
his actual out of pocket transportation costs. The Tax Appeal Board held that
the income he received was business income and not attributable to the holding
of an office. This decision was reached for a number of reasons (e.g. the
position of commissioner was not a permanent one and the taxpayer had agreed,
at the time of his appointment, to the travel expense amounts provided for by
the government). Accordingly, I do not place too much emphasis on that part of the
judgment which held the taxpayer's income not to be ascertainable. Indeed, I
think such income is ascertainable. I take that word to mean that the amount to
be paid is capable of being made certain, or capable of being determined but
not that a definite sum be known by the office holder at the commencement of holding
office. The word has to have some meaning beyond 'fixed' or else it is
completely redundant.
The decision in Guérin v. Minister of National Revenue 52
DTC 118, by the Tax Appeal Board, was also cited to me. In that case, income
received by a judge who temporarily ceased acting in a judicial capacity and
took up sitting as a chairman of various arbitration boards was not held to be
income from an office. In that case, the taxpayer was paid a stipulated amount
for each sitting but there was no way of knowing the number of sittings any
given board would have nor the number of boards on which the appellant would
sit. The Tax Appeal Board held that as long as the number of sittings was
indeterminate, the remuneration for the office could not be said to be
ascertainable and therefore the income must be treated as business income, at
p. 121:
By "position
entitling one to a fixed or ascertainable stipend or remuneration" Parliament,
in my opinion, meant a position carrying such a remuneration that when
accepting it a person knows exactly how much he will receive for the services
he is called upon to render . . .
I am not convinced that at the time of taking office the
taxpayer must know how much he will receive. It seems to me a per diem rate, or
a specified amount per sitting renders the income sufficiently ascertainable to
meet the definition in section 248(1). However, there are other factors in
the Guérin case which make the income unascertainable and in my view should
have served as the focus of that decision:
It has been
established that the appellant must himself pay for the services of a part-time
secretary and that he must also pay for the stationery he needs, for the use of
a typewriter and all other supplies . . . It has been further established that
the appellant is often called upon to pay the transportation of his secretary
and other persons acting as advisers and that often-times he has to pay for the
meals of his assistants and advisers.
These
it seems to me are the crucial factors in making the remuneration received, as
a result of holding the position of arbitrator, not ascertainable.
[25] Reed, J. seems to be
of the opinion that a per diem rate is sufficient to make the
remuneration "fixed" or "ascertainable" so as to meet the
definition in the Income Tax Act, but he adds that there are
other factors to be considered which may make the remuneration less
"ascertainable". In that case, he referred to a multitude of expenses
which consequently made the remuneration not "ascertainable". In
fact, it was on this point that Dussault J., in Payette, supra,
was not of the same opinion. He stated that "stipend" and "remuneration"
mean gross income, not income net of expenses. Dussault J. suggested that
if the remuneration is not fixed, it had to be determined with a minimum degree
of accuracy by using some kind of formula. I quote the following passage at
paragraph 24 of the decision:
24 However, in
commenting on the decision in Guérin (supra), Reed J.
appears to assume that in that case the remuneration was not ascertainable
mainly because of the expenses the appellant was obliged to incur. The Court
does not agree with that position. The words "stipend" and
"remuneration" mean gross income, not income net of expenses.
This is clear from the wording of subsection 5(1) of the Income Tax Act.
As well, the Court considers that the descriptor "ascertainable"
must refer to something that can be ascertained a priori; otherwise it would
have no meaning since everything can be ascertained a posteriori. Thus
if the "stipend" or "remuneration" is not fixed, it must
still be ascertainable in advance with at least some degree of accuracy by
using some formula or by referring to certain set factors. The Court considers
that this is the meaning of the decisions in Guérin and MacKeen (supra).
[Emphasis
added.]
[26] In this case, it is
clear that the appellant knows his remuneration, since it is based on a pre
diem rate with a minimum of eight hours of work per day. However, he did
not know the number of days he would have to work per year, except that it must
not exceed 261 days. In his case, his travel, accommodation and entertainment expenses
are reimbursed, which will not affect his remuneration, except if all these
expenses exceed the applicable limits.
[27] That being said, in
my opinion, the definition must be analyzed as a whole. In my view, when
Parliament added a list of positions that it would consider to be offices after
the words "entitling him to a fixed or ascertainable stipend or
remuneration", it stated its intention to include only those taxpayers whose
occupations were permanent in nature or had some element of permanence and
continuity, if not exclusiveness.
[28] Moreover, this
position was studied in Guérin and Mackeen, supra. In Guérin,
Chairman Monet of the Tax Review Board wrote the following on this point:
I also believe that "office" as
defined, implies continuity and permanence; it can certainly not be said that
there is continuity or permanence in the duties of a member of an arbitration
board.
[29] In Mackeen, Commissioner
Boisvert quoted the following excerpt:
G.S.A. Wheatcroft
in The Law of Income Tax, Surtax and Profits Tax (1962), at page 1057,
1-107, says that: "The word "office" denotes a subsisting,
permanent, substantive position which has an existence independent of the
person who fills it, and which goes on and is filled in succession by
successive holders." Acting as a commissioner on a special and limited as
to terms and duration, has none of the characteristics of an office or an
employment.
[30] The idea of permanence
underlying an office seems to me to be part of the analysis which must be
conducted in determining this issue. Therefore, the remuneration must be analyzed
to determine if it is fixed or ascertainable according to the criteria in Merchant
and Payette, and the permanent, continuous and exclusive nature of the
occupation must be considered. In my opinion, this position is consistent with
the principles of interpretation applicable to tax statutes found in Imperial
Oil Ltd. v. Canada, 2006 SCC 46, at paragraphs 24 to 29, which I cite here:
D. Principles of Interpretation Applicable to Tax Statutes
24 This
Court has produced a considerable body of case law on the interpretation of tax
statutes. I neither intend nor need to fully review it. I will
focus on a few key principles which appear to flow from it, and on their
development.
25 The
jurisprudence of this Court is grounded in the modern approach to statutory
interpretation. Since Stubart Investments Ltd. v. The Queen,
[1984] 1 S.C.R. 536, the Court has held that the strict approach to the
interpretation of tax statutes is no longer appropriate and that the modern
approach should also apply to such statutes:
[T]he words of an Act are to be
read in their entire context and in their grammatical and ordinary sense
harmoniously with the scheme of the Act . . . .
(E. A. Driedger, Construction
of Statutes (2nd ed. 1983), at p. 87; Stubart, at p. 578, per
Estey J.; Ludco Enterprises Ltd. v. Canada, [2001] 2 S.C.R.
1082, 2001 SCC 62, at para. 36, per Iacobucci J.)
26 Despite this endorsement of
the modern approach, the particular nature of tax statutes and the
peculiarities of their often complex structures explain a continuing emphasis
on the need to carefully consider the actual words of the ITA, so that
taxpayers can safely rely on them when conducting business and arranging their
tax affairs. Broad considerations of statutory purpose should not be allowed
to displace the specific language used by Parliament (Ludco, at
paras. 38-39).
27 The
Court recently reasserted the key principles governing the interpretation of
tax statutes — although in the context of the “general anti-avoidance rule”, or
“GAAR” — in its judgments in Canada Trustco Mortgage Co. v. Canada, [2005]
2 S.C.R. 601, 2005 SCC 54, and Mathew
v. Canada, [2005] 2 S.C.R. 643, 2005 SCC 55. On the one hand, the
Court acknowledged the continuing relevance of a textual interpretation of such
statutes. On the other hand, it emphasized the importance of reading
their provisions in context, that is, within the overall scheme of the
legislation, as required by the modern approach.
28 In their joint
reasons in Canada Trustco, the Chief Justice and Major J. stated at the
outset that the modern approach applies to the interpretation of tax
statutes. Words are to be read in context, in light of the statute as a
whole, that is, always keeping in mind the words of its other provisions:
It has been long established as a
matter of statutory interpretation that “the words of an Act are to be read in
their entire context and in their grammatical and ordinary sense harmoniously
with the scheme of the Act, the object of the Act, and the intention of
Parliament”: see 65302 British Columbia Ltd. v. Canada, [1999] 3
S.C.R. 804, at para. 50. The interpretation of a statutory provision must be
made according to a textual, contextual and purposive analysis to find a
meaning that is harmonious with the Act as a whole. When the words of a
provision are precise and unequivocal, the ordinary meaning of the words play a
dominant role in the interpretive process. On the other hand, where the words
can support more than one reasonable meaning, the ordinary meaning of the words
plays a lesser role. The relative effects of ordinary meaning, context and
purpose on the interpretive process may vary, but in all cases the court must
seek to read the provisions of an Act as a harmonious whole. [para. 10]
29 The Chief
Justice and Major J. then addressed the underlying tension between textual
interpretation, taxpayers’ expectations as to the reliability of their tax and
business arrangements, the legislature’s objectives and the purposes of
specific provisions or of the statute as a whole:
As a result of the Duke of Westminster principle (Commissioners of
Inland Revenue v. Duke of Westminster, [1936]
A.C. 1 (H.L.)) that taxpayers are entitled to arrange their affairs to minimize
the amount of tax payable, Canadian tax legislation received a strict
interpretation in an era of more literal statutory interpretation than the
present. There is no doubt today that all statutes, including the Income Tax
Act, must be interpreted in a textual, contextual and purposive way.
However, the particularity and detail of many tax provisions have often led to
an emphasis on textual interpretation. Where Parliament has specified precisely
what conditions must be satisfied to achieve a particular result, it is
reasonable to assume that Parliament intended that taxpayers would rely on such
provisions to achieve the result they prescribe. [para. 11]
[31] These excerpts show
that it is important to interpret the definition described in the Plan by
reading the terms in their entire context
and in their grammatical and ordinary sense harmoniously with the scheme of the
Act, the object of the Act, and the intention of Parliament.
[32] According to counsel
for the respondent, Parliament's intention was to cover the situation of a
person that closely resembles employment but is not employment because the
incumbent of the office is not supervised. It could also be said that the
person holding this office is also denied the reimbursement of certain expenses
which are not paid to self-employed persons who operate their own businesses
and incur expenses to earn income. For these reasons, the Income Tax
Act makes this distinction between income from employment or an office and
income from a business. In the context of the current market, the definition of
"office" is increasingly difficult to apply.
[33] In the case at bar,
the appellant is a retired urban planner who offers his services as a
consultant. His services are retained on a basis of eight hours per day at a per
diem rate determined by the Committee. The appellant determines his own
days of work for a maximum of 261 days per year. He may work at home or at the
Committee office. He must submit a professional fees invoice in order to be
paid and is registered for the Goods and Service Tax. He is a professor at Université
Laval and does contract work for other municipalities while being a member of
the Committee. He manages his time and plans his work accordingly. The Committee
for which he rendered services was created for a short period of time, whereas members
of a legislative assembly, members of the Senate or the Lieutenant-Governor, for
example, hold offices that exist independently of their incumbents. In fact, in
answer to the question as to whether the appellant would have been replaced if
he had resigned, he answered that this might have been easy to do at the
beginning of his mandate, but not once it was well under way. It must also be
noted that the Committee's itself existed only temporarily. Therefore, in my
opinion, Parliament's intention was to include only those persons holding an office
with a certain degree of permanence, which is not the case here. Therefore,
subparagraphs 6(f)(ii) and (iii) do not apply in this case.
[34] The appellant did
not hold insurable employment within the meaning of the Act. Therefore, the
appeal is allowed.
Signed at Ottawa, Canada, this 23rd day of May, 2007.
"François Angers"
Translation
certified true
on this 11th day
of October 2007.
Michael Palles,
Reviser
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