Tremblay,
T.C.J.
[TRANSLATION]:—This
case
was
heard
on
February
8,
1985
at
Québec,
Quebec.
1.
Issue
The
issue
is
whether
the
appellant,
a
lawyer
working
in
the
legislative
affairs
branch
of
the
Quebec
Department
of
Justice,
is
justified,
in
computing
his
income
for
the
1982
taxation
year,
in
deducting
the
sum
of
$500
as
a
contribution
to
a
registered
retirement
savings
plan
in
addition
to
$3,500
contributed
to
a
registered
pension
plan.
The
appellant
maintained
that
his
employer
does
not
pay
or
credit
anything
to
his
pension
plan
and
that
therefore
he
is
entitled
to
a
maximum
of
$5,500
as
provided
in
paragraph
146(5)(b)
of
the
Income
Tax
Act.
The
respondent
disallowed
the
deduction
of
$500,
maintaining
that
the
appellant’s
employer
contributed
to
his
pension
plan
in
1982
and
that
consequently
it
is
paragraph
146(5)(a)
providing
for
a
maximum
of
$3,500
that
applies.
2.
The
Burden
of
Proof
2.01
The
burden
is
on
the
appellant
to
show
that
the
respondent's
assessment
is
incorrect.
This
burden
of
proof
derives
not
from
one
particular
section
of
the
Act
but
from
a
number
of
judicial
decisions,
including
the
judgment
delivered
by
the
Supreme
Court
of
Canada
in
Johnston
v.
M.N.R.,
[1948]
C.T.C.
195;
3
D.T.C.
1182.
2.02
This
judgment
also
held
that
the
assumptions
of
fact
on
which
the
respondent
relied
in
establishing
the
assessment
are
also
presumed
to
be
true.
These
facts
presumed
by
the
respondent
are
set
out
in
paragraph
3
of
the
reply
to
the
appellant’s
notice
of
appeal,
which
reads
as
follows:
In
assessing
the
appellant
for
his
1982
taxation
year,
the
respondent
relied
on
the
following
facts,
inter
alia:
(a)
The
appellant
is
a
lawyer
who
has
been
a
member
in
good
standing
of
the
Quebec
Bar
since
1972;
(b)
The
appellant
is
employed
in
this
capacity
and
has
a
position
in
the
legislative
affairs
branch
of
the
Quebec
Department
of
Justice;
(c)
The
appellant
is
a
permanent
employee
of
the
Quebec
government
covered
by
the
Public
Service
Act;
(d)
The
appellant’s
salary
in
1982
was
$56,527.37,
from
which
$3,590.31
was
deducted
as
a
contribution
to
a
pension
plan;
(e)
Also
in
1982
the
appellant
contributed
$500
to
a
registered
retirement
savings
plan
(RRSP)
bearing
number
B114642
administered
by
Royal
Trust;
(f)
As
a
Quebec
government
employee,
the
employee
is
or
will
be
entitled
to
a
pension
the
amount
of
which
depends
in
part
on
amounts
and/or
contributions
that
are
or
will
be
contributed
to
the
plan
by
his
employer;
(g)
Consequently,
during
1982
the
appellant
could
only
deduct
from
his
income
$3,500
contributed
to
a
pension
plan.
3.
Facts
3.01
The
appellant
has
been
a
provincial
government
employee
since
September
5,
1972.
He
has
been
subject
to
the
Quebec
Public
Service
Act
since
that
date.
3.02
Moreover,
in
1982,
the
year
at
issue,
the
appellant
was
also
subject
to
the
Act
respecting
the
Civil
Service
Superannuation
Plan
(Chapter
R-12).
Sections
50
and
55(1)
are
clear
in
this
regard
and
the
fact
is
not
in
dispute.
In
addition,
section
54
of
the
Act
states:
This
division
(ie
Division
II
comprizing
sections
50
to
99.3
of
the
Act)
applies
to
an
officer
appointed
or
hired
after
1
April
1942
but
before
1
July
1973
.
.
.
The
appellant
was
hired
on
September
5,
1972.
3.03
Mr.
Pierre-Yves
Julien,
chief
of
the
actuarial
branch
at
the
Commission
administrative
des
régimes
de
retraite
et
d’assurances,
testified
that:
(a)
The
said
Commission
is
in
effect
the
body
empowered
to
administer
the
pension
plan
or
plans
for
provincial
government
employees.
(b)
Most
Quebec
government
employees
have
a
pension
fund;
casual
employees
are
excluded.
(c)
There
are
three
main
plans:
(a)
two
in
existence
prior
to
July
1,
1973:
(1)
the
Civil
Service
Superannuation
Plan
(C.S.S.P.)
(2)
the
Teachers
pension
Plan
(T.P.P.)
(b)
one
in
existence
since
July
1,
1973;
(3)
the
Government
and
Public
Employees
Retirement
Plan
(G.P.E.
R.P.).
This
plan
covers
all
new
public
service
employees
hired
since
July
1,
1973
and
also
all
employees
who
have
personally
decided
to
transfer
from
an
old
plan
(C.S.S.P.)
or
T.P.P.)
to
the
new
plan.
(d)
The
appellant
is
governed
by
the
pre-1973
civil
service
plan
and
did
not
request
a
transfer.
(e)
The
amount
contributed
to
the
C.S.S.P.
by
the
employee
is
not
sufficient
to
cover
the
benefits
or
annuities
he
will
withdraw
on
his
retirement
(transcript
18).
(f)
There
are
two
(2)
different
ways
of
funding
pension
plans:
(1)
the
method
called
full
funding,
and
(2)
the
method
called
apportionment
(f)(1)
Full
funding,
which
is
used
for
all
private
plans,
consists
in
investing
the
employee’s
and
the
employer’s
share
in
an
interest-bearing
retirement
fund.
(f)(2)
Apportionment
involves
paying
the
employer’s
share
into
the
provincial
consolidated
revenue
fund.
The
provincial
government
undertakes
to
pay
benefits
to
the
employee
when
he
retires.
This
method
is
used
not
only
by
the
province
of
Quebec
but
also
by
other
provinces.
3.04
Schedule
A
of
the
Act
respecting
the
Civil
Service
Superannuation
Plan,
referred
to
in
section
72
of
the
said
Act,
does
not
include
the
Quebec
government.
The
first
paragraph
of
section
72
reads
as
follows:
72
The
employers
contemplated
in
Schedule
A
shall
pay
to
the
Commission,
at
the
same
time
as
they
remit
the
contribution
of
their
officers,
an
amount
equal
to
that
contribution.
The
employers
listed
in
Schedule
A
who
must
pay
their
contribution
are
as
follows:
The
Caisse
de
dépôt
et
placement
du
Québec
The
Centre
d’Insémination
artificielle
du
Québec
(CIAQ)
Inc
The
Commission
des
normes
du
travail
The
Commission
de
la
santé
et
de
la
sécurité
du
travail
The
Office
des
autoroutes
du
Québec
The
Régie
de
l’assurance-automobile
du
Québec
The
Régie
de
l’assurance-maladie
du
Québec
The
Régie
des
rentes
du
Québec
The
Société
des
alcools
du
Québec
The
Société
des
loteries
et
courses
du
Québec
The
town
of
Vaudreuil
in
respect
of
employees
who
were,
on
31
May
1981,
employees
of
the
Station
expérimentale
de
Vaudreuil.
According
to
Pierre-Yves
Julien,
the
amounts
received
from
these
organizations,
being
the
share
of
the
organization
as
employer,
are
forwarded
to
the
Department
of
Finance
and
paid
into
Quebec's
consolidated
revenue
fund.
When
the
time
comes
the
benefits
to
be
paid
to
the
pensioners
of
the
said
organizations,
listed
in
Schedule
A,
will
come
out
of
the
consolidated
revenue
fund.
3.05
Since
July
1,
1973,
however,
Mr.
Julien
explained,
the
employee's
share
has
no
longer
been
paid
into
the
province's
consolidated
revenue
fund,
but
into
the
Caisse
de
dépôt
et
de
placement.
The
share
of
the
organization
as
employer
is
not
paid
on
an
annual
basis,
but
only
when
the
employee
retires.
Under
the
new
plan,
the
benefits
will
thus
come
from
both
the
Caisse
de
dépôt
et
de
placement
and
the
consolidated
revenue
fund.
Under
the
old
plans
all
the
benefits
came
out
of
the
consolidated
revenue
fund
(transcript
27,
28).
3.06
Mr.
Julien
also
explained
that
on
July
1,
1982
the
Quebec
government
decided
to
alter
its
position
with
respect
to
employee
contributions.
Up
to
that
date
the
government
had
said
in
essence:
“I
am
demanding
a
set
contribution
from
the
employee;
I
take
responsibility
for
future
benefits,
regardless
of
whether
my
share
is
much
higher
that
that
of
the
employee."
And
yet
up
to
that
time
the
Act
read
as
follows:
SEC
69.2
The
cost
of
the
plan
is
shared
equally
between
the
employee
and
the
employer.
As
of
July
1,
1982,
the
government
said
in
substance;
“With
a
view
to
sharing
the
cost
of
the
plans
and
any
fluctuations
therein,
I
shall
henceforth
provide
that
the
cost
of
the
plans
is
to
be
determined
by
an
actuarial
assessment.
That
cost
will
be
divided
in
two.”
As
of
that
date
section
69.2
was
repealed
by
section
37
of
chapter
24
of
the
1983
statutes,
but
was
replaced
by
section
176
of
the
Act
respecting
the
Government
and
Public
Employees
Retirement
Plan,
which
reads
as
follows:
SEC
176
The
cost
of
the
Government
and
Public
Employees
Retirement
Plan,
the
Teachers
Pension
Plan
and
the
Civil
Service
Superannuation
Plan
is,
from
1
July
1982,
shared
equally
between
the
employees
and
the
employers
(RSQ,
chapter
R-12,
enacted
by
SQ
1983,
c
24,
s
1).
Since
this
provision
came
into
force,
Mr.
Julien
said,
the
employee's
contribution
is
likely
to
vary.
Roughly
speaking,
in
order
to
pay
what
the
pension
plan
will
pay
in
benefits
if
that
costs
14
per
cent
of
the
employee's
salary,
the
employee
will
now
pay
7
per
cent
and
the
government
7
per
cent.
Formerly,
prior
to
July
1,
1982,
the
employee
paid
6
per
cent
and
the
government
8
per
cent.
According
to
Mr.
Julien,
on
December
31,
1983,
approximately
23,000
public
servants
and
40,000
teachers
were
governed
by
this
formula
in
section
176,
cited
above.
Over
the
next
ten
years
275,000
employees
from
the
G.P.E.R.P.
plan
will
be
added
to
these
numbers.
3.07
The
witness,
in
order
to
illustrate
the
share
the
government
pays
when
it
pays
out
benefits,
said
that
in
1983
the
share
of
the
employees
as
well
as
the
employer-organizations
(other
than
the
government)
was
$68,700,000.
During
that
same
year,
however,
the
government
paid
out
benefits
of
$127,000,000
to
pensioners.
3.08
Mr.
Julien
explained
that
the
provincial
government
as
employer
does
not
take
money
out
of
the
province's
consolidated
revenue
fund
each
year
in
an
amount
equal
to
its
employees'
contribution
and
pay
it
to
the
Commission,
which
would
pay
it
back
into
the
province's
consolidated
revenue
fund.
This
is
all
done
simply
through
accounting
entries.
4.
Act,
Case
Law
and
Analysis
4.01
Act
The
principal
provisions
of
the
Income
Tax
Act
involved
in
this
appeal
are
paragraphs
146(5)(a)
and
(b).
The
principal
provisions
of
other
statutes
are
cited
above.
Paragraphs
146(5)(a)
and
(b)
read
as
follows:
SEC
146(5)
Amount
of
premium
deductible.
There
may
be
deducted
in
computing
the
income
for
a
taxation
year
of
a
taxpayer
who
is
an
annuitant
under
a
registered
retirement
savings
plan
.
.
.
the
aggregate
of
all
amounts
.
.
.
not
exceeding
the
amount,
if
any,
by
which
(a)
where
the
taxpayer
was
employed
in
the
year
and
(i)
as
a
consequence
thereof
was
a
person
who
is
or
may
become
entitled
to
benefits
under
a
pension
fund
or
plan
that
provides
for
payment
of
a
pension
to
him
payable
in
while
or
in
part
out
of
contributions
made
or
to
be
made
to
the
fund
or
plan
or
out
of
or
in
respect
of
amounts
credited
or
to
be
credited
in
lieu
of
such
contributions
by
a
person
other
than
the
taxpayer
in
respect
of
the
taxpayer's
employment
in
the
year,
(ii)
an
amount
that
.
.
.
does
not
exceed
the
lesser
of
$3,500
and
20%
of
his
earned
income
for
the
year,
or
(b)
in
any
other
case,
the
lesser
of
$5,500
and
20%
of
his
earned
income
for
that
taxation
year.
[Emphasis
added.]
4.02
Case
Law
The
appellant
referred
the
Court
to
the
judgment
in
Beauregard
v.
The
Queen
rendered
by
the
Federal
Court
of
Appeal,
148
D.L.R.
(3d)
205,
in
June
1983.
4.03
Analysis
4.03.1
The
appellant
maintained
that
in
his
1982
tax
return
he
was
entitled
to
claim
the
sum
of
$500
contributed
to
a
retirement
savings
plan,
in
addition
to
the
$3,500
contributed
to
a
pension
plan.
His
argument
is
that
paragraph
146(5)(a)
of
the
Income
Tax
Act
cited
earlier,
on
which
the
respondent
based
his
assessment,
does
not
apply
in
his
case.
He
said
that
the
provincial
government
as
employer
had
not
paid
its
share
of
the
premiums
in
respect
of
his
employment
for
1982.
According
to
him,
paying
the
appellant’s
premiums
into
the
province's
consolidated
revenue
fund
does
not
meet
the
requirements
of
subsection
146(5)
even
though
the
provincial
government
promises
to
pay
the
appellant's
benefits,
when
the
time
comes,
out
of
the
consolidated
fund.
In
short,
according
to
the
appellant
the
employer
does
not
contribute
to
the
pension
fund.
4.03.2
The
appellant
based
his
argument
on
paragraph
8
of
Interpretation
Bulletin
IT-124R4,
which
reads
as
follows:
Where
the
individual
is
an
employee
and
belongs
to
a
pension
fund
or
plan
into
which
no
other
person
has
contributed,
or
will
contribute,
in
respect
of
the
employment
in
that
year,
the
$5,500
limit
provided
for
in
146(5)
will
apply.
The
appellant
maintained
that
this
paragraph
was
based
on
the
Beauregard
decision
of
the
Federal
Court
—
Trial
Division,
[1981]
2
F.C.
543.
The
issue
in
that
case
was
whether
an
amendment
to
the
Judges
Act
was
ultra
vires.
This
amendment
had
the
effect
of
making
retirement
annuities
and
benefits
contributory
which
previously
had
been
non-contributory.
Does
the
Constitution
require
Parliament
to
pay
these
benefits
without
obliging
judges
to
assume
part
of
them?
Does
Parliament
have
the
authority
to
reduce
the
salary
of
judges?
The
Federal
Court
of
Appeal’s
decision
(with
a
dissent)
is
that
the
Constitution
does
not
allow
the
imposition
of
a
contributory
pension
plan
on
judges.
The
amendment
to
the
Judges
Act
is
therefore
ultra
vires.
I
do
not
see
how
this
decision
applies
to
the
present
case,
and
it
is
being
appealed
to
the
Supreme
Court,
moreover.
Subsection
146(5)
of
the
Income
Tax
Act
is
sufficiently
clear
in
itself
to
allow
a
reasonable
interpretation
having
regard
to
the
facts
introduced
in
evidence.
4.03.3
First
of
all,
I
maintain
that
the
words
"in
the
year"
at
the
end
of
subparagraph
146(5)(a)(i)
refer
to
"contributions
in
respect
of
the
taxpayer's
employment"
and
not
to
"contributions
made.”
It
is
therefore
a
question
of
employment
in
that
year,
namely
the
year
concerned
here,
1982.
It
is
not
a
question
of
contributions
made
in
the
year
concerned.
Moreover,
the
provision
states
clearly
"contributions
made
or
to
be
made
.
..
or
...
credited
or
to
be
credited
.
.
.”
This
implies
that
they
may
be
made
or
credited
after
the
year
concerned.
Once
again,
however,
even
if
they
are
made
after
the
year
concerned,
they
must
be
in
respect
of
the
taxpayer's
employment
“in
the
year"
concerned.
4.03.4
It
remains
to
be
determined
whether
paying
the
appellant’s
contributions
into
the
province's
consolidated
revenue
fund,
and
then
paying
the
appellant
the
benefits
when
the
time
comes,
amounts
to
“making”
or
"crediting"
contributions.
Paragraphs
3.03
to
3.08
above
describe
the
operation
of
the
various
plans
and
the
principal
legislative
provisions
governing
them.
In
essence
the
plans
end
up,
or
will
soon
end
up,
in
the
province's
consolidated
revenue
fund.
As
the
witness
said,
however,
the
government
does
not
take
money
from
the
consolidated
revenue
fund
each
year,
in
an
amount
equal
to
the
employee's
contribution,
and
give
it
to
the
Commission
administrative
des
régimes
de
retraite
et
d’assurance,
which
would
pay
it
back
into
the
consolidated
revenue
fund.
This
is
all
done
through
accounting
entries.
The
government's
share
does
not
have
to
be
physically
transferred;
the
employee's
share
is
added
to
it
in
the
consolidated
revenue
fund.
Does
this
mean
that
no
contribution
is
made
by
the
government
as
employer?
Even
though
the
form
may
well
be
open
to
criticism,
the
substance
is
there
and
the
requirements
of
146(5)
of
the
Act
have
been
met.
The
reassessment
must
be
upheld.
5.
Conclusion
The
appeal
is
dismissed
in
accordance
with
the
above
reasons
for
judgment.
Appeal
dismissed.
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