Saunders – Tax Court of Canada treats award to CRA employees for being unfairly denied overtime hours as taxable

Three CRA collections employees were awarded a lump sum by the Public Service Labour Relations and Employment Board pursuant to their grievance for having been unfairly denied the right to work overtime hours. They described the conduct of the assistant director in connection with their complaints as harassing, and claimed that the award constituted damages for personal injury and violation of their rights under their collective agreement, and should be treated as a personal injury award that was non-taxable under s. 81(1)(g.1).

After referring to the Tsiaprailis surrogatum principle, Wong J dismissed the appeal, stating:

[T]he compensation award - based on an agreed number of hours - replaced the remuneration the appellants would have received had they been offered and in turn accepted overtime work. Those amounts would have been taxable as employment income at first instance.

Neal Armstrong. Summary of Saunders v. The Queen, 2020 TCC 114 under s. 81(1)(g.1).