Nadeau – Court of Quebec finds that lump sums paid pursuant to a CBCA oppression action of two terminated shareholder-employees were retiring allowances

The Superior Court of Quebec found:

  • that the two taxpayers, who were minority shareholders, employees and directors of a private family corporation (“Comairco”), were the victims of oppression in that they had been summarily dismissed from their positions in order that their sharing in the profits of Comairco through bonuses and dividends could be substantially reduced; and
  • that their suit for oppression pursuant to s. 241 of the CBCA should be answered inter alia through the Court’s order that the shareholding of each be redeemed for $4.5 million and that they be paid lump sums (of $65,000 and $50,000, respectively) by reason of their wrongful dismissal.

In finding that the latter sums were taxable as retiring allowances, Dortélus JCQ stated:

The fact that the award was made pursuant to the CBCA section 241 and not under the Civil Code does not alter the reason for the award, which was to compensate the plaintiffs for damages directly resulting from the loss of their employment.

Neal Armstrong. Summary of Nadeau v. Agence du revenu du Québec, 2021 QCCQ 4638 under s. 248(1) – retiring allowance.