Date: 19991203
Docket: 98-791-IT-I
BETWEEN:
GERALD WISLA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
(Delivered orally from the bench at Edmonton,Alberta, on
Monday, April 12th, 1999 and edited for greater clarity)
Archambault, J.T.C.C.
[1] This is an appeal by Mr. Wisla from an income tax
assessment respecting the 1993 taxation year. The Minister of
National Revenue (Minister) has included in computing
Mr. Wisla’s income a sum of $562, representing the
value of a gold ring that Mr. Wisla received from his
employer. A similar ring was given to all employees who had
achieved 15 years of employment with that employer, Cardinal
River Coal Ltd.
[2] An evaluation of the ring prepared by Mr. Steve Davies of
Birk's Corporate Sales was introduced as evidence. Because
the company logo and other features on the ring are not of a
nature to be of any value to a third party, Mr. Davies came
to the conclusion that should an employee wish to sell his or her
ring, that person should not expect to receive more than the
scrap value of the ring, which he estimated at $76.16. A similar
valuation was given by Mrs. Kicia, a jeweler in the
community where Mr. Wisla resided, who concluded that the
ring had no retail value due to the presence of the corporate
logo and estimated its scrap value at $73.
Analysis
[3] Mr. Wisla took the position that the receipt of the
ring did not confer on him a taxable benefit pursuant to
paragraph 6(1)(a) of the Income Tax Act. He
contended that the ring was given by the employer company for no
consideration, that is, without any expectation of receiving a
benefit from him.
[4] I cannot share this point of view. In my opinion, in
giving such a ring to all of its employees who had accumulated 15
years of long service, the company's purpose was to create an
incentive for its employees. In my view, the ring was a benefit
that was received by Mr. Wisla in respect of, in the course
of or by virtue of his office or employment with Cardinal River
Coal Ltd.
[5] The remaining issue to be decided is the value of the
ring. I believe that we have here a very unusual and exceptional
case. The ring given to Mr. Wisla is not only a gold ring
but a gold ring that is stamped with the corporate logos of
Cardinal River Coal Ltd., Consol of Canada Inc. and Luscar Ltd.
The words “Cardinal River Coal Ltd.” are displayed in
a circular fashion around the three logos. The presence of these
logos and these words on the ring results, in my view, in a
substantial reduction in the value of the ring.
[6] Counsel for the Minister drew the Court’s attention
to the decision in The Queen v. Phillips, 94 DTC 6177 at
6183, where Mr. Justice Robertson refers to the decision in
Lor-Wes Contracting Ltd. v The Queen, [1986] 1 F.C. 346,
and more particularly to the dicta of MacGuigan, J.A. at
page 352. MacGuigan, J.A. there states that section 6 of the
Act seeks to limit tax avoidance relating to monetary and
non-monetary compensation not reflected in wages or salaries. He
adds that employees who receive their compensation in cash should
be treated on the same footing as those who receive compensation
in some combination of cash and payment in kind.
[7] I believe that the value of the ring in this particular
case should basically be equal to its scrap value, that is the
economic value of the ring at the time of receipt. I am convinced
that this case is not one where the employer was trying to
implement a tax avoidance arrangement to lower the impact of
conferring a benefit on its employees.
[8] For all these reasons, Mr. Wisla's appeal is
allowed with costs and the Notice of Assessment is referred back
to the Minister for reconsideration and reassessment on the basis
that the ring that he received in 1993 from his employer was
worth $73.
Signed at Montréal, Quebec, this 3rd day of December
1999.
"Pierre Archambault"
J.T.C.C.
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