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Citation: 2006TCC455
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Date: 20061023
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Docket: 2006-139(IT)I
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BETWEEN:
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CHRISTIAN ALCINDOR,
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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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[OFFICIAL
ENGLISH TRANSLATION]
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REASONS FOR JUDGMENT
Bédard J.
Facts
[1] This
appeal under the informal procedure was heard in Montréal on
August 3, 2006.
[2] The
Appellant was an employee of the Canada Customs and Revenue Agency ("the
Agency") until his retirement on November 8, 2002. In December 2002, the Agency
paid the Appellant the following amounts:
(i)
$20,613, which the
Agency characterized as a retiring allowance; and
(ii)
$1,965, which the
Agency characterized as vacation pay.
The Appellant's principal submission is that he did not have to include
these two amounts in computing his income for the 2002 taxation year because
there was no provision in the Income Tax Act ("the Act")
requiring such inclusions.
[3] On
March 11, 1999, the Appellant filed a grievance (No. 99-1208-0003) concerning
his duties and pay. He had been a technical services officer with the Agency
since 1981, providing technical interpretations in relation to consumption
taxes. The Appellant argued that his peers, officers with the technical
interpretations unit in all the other regions, whose university degrees were
essentially of the same type as his and whose positions were once classified as
PM‑03, had been promoted because their positions were reclassified as
AU-02. In fact, the Appellant was submitting that he was the victim of
discrimination.
[4] At
the end of a mediation session held on March 5 and March 6, 2002, the
purpose of which was to settle this grievance and other disputes, the
Appellant, the union and the Agency signed a Memorandum of Understanding
("the MOU")1 the principal clauses of which
stipulated as follows:
[TRANSLATION]
1. On April 1, 2002, the
employee shall leave his current position as Technical Interpretation Officer –
Excise, PM-3. The employment relationship with the employer shall subsist.
2. From April 1, 2002, to
November 8, 2002, the employer shall remunerate the employee as follows:
A. From April 1
to October 4, 2002, the employee shall be on authorized paid leave for a period
of six months and five working days.
B. From October
7 to November 8, 2002, the employee shall be on annual leave. This period
corresponds to the 13 days (or two and a half weeks) that he will have
accumulated during the six-month authorized paid leave, plus the 12 days
of annual leave that he has banked until March 31, 2002, which days
shall elapse during this period.
3. On November 8, 2002, the
employee shall retire. The employment relationship shall be definitively
severed at the end of the complainant's working day on that date.
3A. Following his retirement,
the employee shall receive his 23-week severance pay under the collective
agreement.
[5] The
Appellant was an employee of the Agency and the Department of National Revenue
for 20 years and 358 days prior to his retirement on November 8, 2002. It should be noted that, apart from the commitment
to retire in accordance with the MOU, the Appellant could have retired on the
same date with an immediate annuity plus $20,613.63 in severance pay. I note
that, under the terms of section 62.14 of the collective agreement between the Agency and the Public
Service Alliance of Canada ("the collective agreement"), "[t]he
equivalent full-time period in years shall be multiplied by the full-time
weekly pay rate for the appropriate group and level to produce the severance
pay benefit." In other words, the collective agreement provides that the
Appellant is entitled, upon retirement, to severance pay equal to 21 weeks of
salary.
[6] Thus,
contrary to the stipulation in section 3A of the MOU, the collective agreement
provided for 21 weeks worth of severance pay, not 23 weeks. The severance
pay to which the Appellant was entitled at November 8, 2002, was
$20,613.63 (21 weeks multiplied by the Appellant's weekly salary), not
$22,678.63 (23 weeks multiplied by the Appellant's weekly salary.)
[7] Marc
Bellavance, the Agency's Assistant Director, Human Resources, for the Quebec
region, who signed the MOU on the Agency's behalf, testified that it was only
after signing the MOU that the Agency realized that the Appellant was entitled
to 21 weeks worth of severance pay, as opposed to 23 weeks. Mr. Bellavance
explained that in any event, the Agency had decided to pay the Appellant the
sum of $1,965, or the equivalent of two weeks of salary, as vacation pay.
The Appellant's position
[8] The arguments made by the Appellant in the
Notice of Appeal and in his oral submissions can essentially be found in his
notice of objection.
Those arguments are:
[TRANSLATION]
In support of my objection, I
submit, first of all:
(1)
that
the amount of $3,787.82 includes two amounts: $1,822.82, which is indeed
vacation pay (a fact that I do not contest); and the difference of $1,965,
which I contest. I submit that the second amount is not vacation pay and is not
a taxable benefit or taxable income. The $1,965 must not be included in my
income as vacation pay or on any other basis. It is not an amount from an
office or employment, not is it a taxable retiring allowance under subparagraph
56(1)(a)(ii) of the Income Tax Act (ITA); and
(2)
that
the $1,965 must meet with the same fate as the $20,613.63, since both amounts
are attributable to clause 3A of a contract of adhesion between the CCRA and
myself, dated March 6, 2002. The amounts do not result from my collective agreement, to which I am
not a party but merely a beneficiary. The employer cannot rewrite clause 3A of
the contract of March 6, 2002 at it pleases by characterizing these
inextricable amounts under clause 3A of the said contract alternately as
vacation pay (see box 17A of the record of termination of employment) and as a
retiring allowance (See box C of the record of termination of employment).
Neither of these two amounts is a
taxable benefit or taxable income, and neither of them is covered by any
provision of the ITA. Both of them are gifts, donations or payments by reason
of harm caused to me.
Analysis and conclusion
[9] The term "retiring allowance" is
defined as follows in subsection 248(1) of the Act:
"retiring allowance"
means an amount (other than a superannuation or pension benefit, an amount
received as a consequence of the death of an employee or a benefit described in
subparagraph 6(1)(a)(iv)) received
(a)
on
or after retirement of a taxpayer from an office or employment in recognition
of the taxpayer's long service, or
(b)
in
respect of a loss of an office or employment of a taxpayer, whether or not
received as, on account or in lieu of payment of, damages or pursuant to an
order or judgment of a competent tribunal,
by the taxpayer or, after the taxpayer's death, by a
dependant or a relation of the taxpayer or by the legal representative of the
taxpayer;
[10] Subparagraph 56(1)(a)(ii) of the Act
reads:
56. [Amounts to be
included in income for year]
(1) Without restricting the
generality of section 3, there shall be included in computing the income of a
taxpayer for a taxation year
(a) Pension
benefits, unemployment insurance benefits, etc. any amount received by the
taxpayer in the year as, on account or in lieu of payment of, or in
satisfaction of,
. . .
(ii) a retiring
allowance, other than an amount received out of or under an employee benefit
plan, a retirement compensation arrangement or a salary deferral arrangement,
. . .
[11] I find that the payment of $20,613.83 in the
case at bar was a retiring allowance. It corresponds to the definition of
"retiring allowance" in section 248 of the Act. This amount of
$20,613.63 was paid to the Appellant upon, or following, his retirement in
recognition of his long service.
[12] I cannot subscribe to the Appellant's claim that
the amount of $20,613.63 did not result from the collective agreement.
Section 3A of the MOU merely confirmed that, in any event, upon retiring
on November 8, 2002, the Appellant was entitled to the severance benefit
contemplated in the collective agreement. The fact that the parties made a
good-faith mistake about the number of weeks of salary to which the Appellant
was entitled as a severance benefit under the collective agreement does not
change the characterization of the amount of $20,613.63 received by the
Appellant. I cannot see how the amount of $20,613.63 received by the Appellant
was anything other than a retiring allowance. That is the only conclusion that
I can reasonably reach.
[13] What about the amount of $1,965 that the Agency
paid the Appellant as vacation pay? Regardless of how the Agency defined the
payment, it is up to the Court to characterize it. I find that the payment of
$1,965 should be considered a retiring allowance as defined by section 248
of the Act. Thus, it must be added to the Appellant's income for the 2002
taxation year in accordance with subparagraph 56(1)(a)(ii) of the
Act.
[14] In the case at bar, the Agency paid the amount
of $1,965 to the Appellant, either in consideration of his agreement to leave
his employment and retire, or in recognition of his long service. Thus, the
payment in question comes within the definition of "retiring
allowance" in section 248 of the Act.
[15] Even if the amount of $1,965 was not paid by the
Agency under the collective agreement, this does not prevent it from being a
retiring allowance. A retiring allowance does not necessarily have to be
paid by the employer pursuant to a contractual obligation or a provision of the
collective agreement that governs the employer. Whether the Agency was required
to pay the $1,965 or not, and whether it paid the amount in recognition of the
Appellant's long service or to ensure that he would leave his employment and
retire, the amount is, in my opinion, a retiring allowance within the meaning
of section 248 of the Act.
[16] As for the Appellant's argument that the amounts of $20,613.63 and
$1,965 constituted damages for harm that he was caused, I should emphasize that
the Appellant adduced no evidence in support of this argument. Quite the
contrary, it was proven that the grievance was related to a job classification
problem and was therefore a contractual dispute, not a dispute of a delictual
or quasi-delictual nature.
[17] For these reasons, the appeal is dismissed.
Signed at Ottawa, Canada, this 23rd day of October 2006.
Bédard
J.
Translation
certified true
on this 13th day of
July 2007.
Brian McCordick,
Translator
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