Date: 19990707
Docket: 98-1449(IT)I
BETWEEN:
CHARLES KENNEDY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Watson, D.J.T.C.C.
[1] This appeal was
heard in Sudbury, Ontario, on June 24, 1999 under the Informal
Procedure.
[2] In computing his
income for the 1995 taxation year, the Appellant reported income
from employment as follows:
T4
Supplementary employment
income
$54,182.39
Less:
"Out of court
settlement"
$4,794.00
Income
from
employment
$49,388.39
[3] By Notice of
Reassessment dated August 22, 1997, the Minister of National
Revenue (the "Minister") reassessed the Appellant's
income tax return for the 1995 taxation year disallowing the
reduction from employment income in
the amount of $4,794.00 thereby increasing
his income from employment from $49,388.39 to $54,182.39.
[4] In reassessing
the Appellant's income tax return for the 1995 taxation year,
the Minister made the following assumptions of fact:
"(a)
at all relevant times, the Appellant was employed by The
Government of the Province of Ontario, (the
"Employer");
(b)
between January 1, 1986 and August 1, 1993, the Appellant had
filed a classification grievance with the Employer;
(c)
on July 8, 1993, Bill 48, which was introduced by the Honourable
F. Laughren the then Minister of Finance of the Employer,
received Royal Assent;
(d)
Part IV of the said Bill referred to paragraph 7(c) above stated,
among other things, that the Minister of Finance may designate,
as a sectoral framework, a plan that relates to a sector, but not
after August 1, 1993;
(e)
the sectoral framework referred to paragraph 7(d) above stated
that, among other things, there will be no wage or salary
increases before April 1, 1996 for any employee of the
Employer;
(f) on or about
August 1, 1993, the Employer and the Ontario Public Service
Employees Union agreed that, among other things, all employees
classification grievances that have not been rendered by August
1, 1993 are withdrawn effective August 1, 1993, and an amount of
$20 million has been allocated for the purpose of compensating
employees with respect to the said classification grievances;
(g)
on or about August 1, 1993, the Appellant's said grievance
referred to in paragraph 7(b) above was effectively withdrawn or
rendered void by agreement;
(h)
on September 2, 1995, the Appellant was issued a payment, in the
taxable gross amount of $4,794.00, less income tax withheld in
the amount of $672.36, for a net amount of $4,121.64, by the
Employer, as a result of an agreement between the Appellant's
union and the Employer;
(i) the said
$4,794.00 amount referred to in subparagraph 7(h) above was
received by the Appellant in the 1995 taxation year;
(j) the said
$4,794.00 amount referred to in subparagraph 7(h) above was an
income from office or employment within the meaning of sections
3, 4, 5 and 6, and subsection 248(1) of the Income Tax
Act, (the "Act"); and
(k)
the said $4,794.00 amount referred to in subparagraph 7(h) above
was required to be included in the computation of the
Appellant's income for the 1995 taxation year."
[5] The facts are not
contested by the Appellant. The only issue before the Court is
whether the amount of $4,794.00 received by the Appellant from
his employer in the 1995 taxation year was income from an office
or employment and as such required to be included in the
computation of his income for that year.
[6] In September
1988, the Appellant filed a grievance through his union for
reclassification of his position. Before the arbitrator could
render his decision, the social contract was entered into by the
employer and his union rendering null and void the
reclassification grievance and an amount of $20 million was
allocated for the purpose of compensating employees with respect
to their classification grievances. In his grievance, the
Appellant requested a possible reduction in his work load and an
increase in his remuneration.
[7] The Respondent
relied on sections 3 and 4, subsections 5(1) and 248(1) and
paragraph 6(1)(a) of the Income Tax Act. The
Appellant relied on Interpretation Bulletins IT-196R2, IT-202R2
and IT-365R2.
[8] I have reviewed
the case law provided to me at the hearing.
[9] Section 3 of the
Income Tax Act indicates what needs to be included as
income for a taxation year; subsection 3(a) gives examples
of taxable income, however the list is not exhaustive and
includes "Income from office or employment".
[10] In describing what
consists of "income from office or employment",
paragraph 6(1)(a) of the Income Tax Act, the
expression "other benefits of any kind whatever received or
enjoyed by the taxpayer in the year in respect of, in the course
of, or by virtue of an office or employment" is used.
[11] In the case of R.
v. Savage [1983] C.T.C. 393 at page 399, Dickson J.
stated:
"Our Act contains the stipulation, not
found in the English statutes referred to, "benefits of any
kind whatever ... in respect of, in the course of, or by virtue
of an office or employment". The meaning of "benefit of
whatever kind" is clearly quite broad..."
[12] Furthermore, Dickson
J. states:
"I agree with what was said by Evans, JA
in R v Poynton, [1972] 3 O.R. 727 at 738, speaking of
benefits received or enjoyed in respect of, in the course of, or
by virtue of an office or employment:
I do not believe the language to be
restricted to benefits that are related to the office or
employment in the sense that they represent a form of
remuneration for services rendered. If it is a material
acquisition which confers an economic benefit on the taxpayer and
does not constitute an exemption, eg, loan or gift, then it is
within the all-embracing definition of s 3."
[13] In the case of
Nowegijick v The Queen, [1983] C.T.C. 20, at page 25,
Dickson J. stated:
"...The phrase "in respect of"
is probably the widest of any expression intended to convey some
connection between two related subject matters."
[14] The Appellant has the
onus of establishing, on a balance of probabilities, that the
Minister's reassessment was ill-founded in fact and in law.
Taking into consideration all of the circumstances of this
appeal, including the testimony of the Appellant, the admissions
and the documentary evidence in the light of the case law, I am
satisfied that the Appellant has failed in this onus.
5]
Accordingly, the appeal is dismissed.
Signed at Ottawa, Canada, this 7th day of
July 1999.
D.J.T.C.C.
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