Goetz,
TCJ:—The
appellant
appeals
from
a
reassessment
for
his
1980
taxation
year
wherein
he
sought
to
deduct
from
his
income
the
sum
of
$200
on
the
basis
that
the
sum
was
included
in
his
annual
professional
membership
fees
and
dues
to
maintain
his
professional
status
within
the
Alberta
Teachers’
Association.
It
was
agreed
by
both
counsel
for
the
appellant
and
for
the
respondent
that
the
statement
of
facts,
as
set
out
in
the
notice
of
appeal,
clearly
sets
out
the
position
of
the
appellant
with
the
exception
of
the
position
taken
by
the
Crown
in
paragraphs
3
and
4
of
its
reply
to
notice
of
appeal
The
said
statement
of
facts
reads
as
follows:
1.
Throughout
his
1980
taxation
year
the
appellant
was
employed
by
the
Edmonton
Public
School
Board
as
a
school
teacher.
2.
The
Alberta
Teachers’
Association
(the
“Association”),
a
body
corporate
and
politic,
was
created
and
exists
pursuant
to
The
Teaching
Profession
Act,
RSA
1970
c
362.
3.
Every
teacher
employed
by
a
school
board
in
Alberta
is
required
to
be
an
active
member
of
the
Association.
Section
5
of
The
Teaching
Profession
Act
states:
“5.
(1)
Subject
to
this
section
the
employment
of
a
teacher
by
a
school
board,
other
than
as
a
superintendent,
is
conditional
upon
the
teacher
being
and
continuing
to
be
an
active
member
of
the
association.
(2)
When
a
school
board
employs
a
teacher,
other
than
as
a
superintendent,
the
board
shall
notify
the
association
in
writing
of
the
name
of
the
teacher,
the
date
of
commencement
of
employment
and
the
amount
of
salary
to
be
paid,
and
notwithstanding
subsection
(1),
the
employment
of
the
teacher
by
the
school
board
is
valid
until
the
association
notifies
the
school
board
in
writing
that
the
teacher
is
not
an
active
member.
(3)
When
a
teacher
who
is
employed
by
a
school
board,
other
than
as
a
superintendent,
ceases
to
be
an
active
member,
the
board
may
continue
to
employ
the
teacher
until
the
association
notifies
the
board
in
writing
that
the
teacher
is
not
an
active
member.”
4,
The
annual
dues
payable
by
members
of
the
Association
are
governed
by
bylaws
8(1),
8(2)
and
10
of
the
General
Bylaws
of
the
Association.
As
they
were
in
effect
up
to
on
or
about
September
1,
1980,
such
provisions
were:
”8.
(1)
Members’
fees
in
the
Association
shall
include
those
recommended
by
the
Provincial
Executive
Council
and
prescribed
from
time
to
time
by
a
two-thirds
vote
of
a
representative
assembly.
(2)
Until
varied
pursuant
to
Bylaws
8(1)
or
10,
the
fees
shall
be:
(a)
for
an
active
member
employed
full-time,
$384
per
annum;
(b)
for
an
active
member
on
leave
of
absence,
$24
per
annum;
(c)
for
an
active
member
employed
part-time
or
as
a
substitute,
one
percent
of
earnings
in
each
month;
(d)
for
an
associate
member,
$30
per
annum
from
September
1,
1976;
(e)
for
a
student
member,
$1
per
annum;
(f)
for
an
honorary
member
or
life
member,
no
fee.”
“10.
Where,
in
the
opinion
of
the
Provincial
Executive
Council,
an
emergency
exists,
it
may
fix
and
collect
from
whatever
active
members
it
deems
appropriate,
except
recipients
of
monies
from
the
special
emergency
reserve,
additional
fees
not
exceeding
$10
per
week
per
member.
The
Provincial
Executive
Council
may
fix
and
collect
such
additional
fees
during
the
continuance
of
the
emergency
and
for
so
long
thereafter
as
it
deems
advisable.
The
additional
fees
so
collected
shall
be
added
to
the
special
emergency
reserve
to
be
disbursed
from
time
to
time
in
such
manner
and
to
such
persons
as
the
Provincial
Executive
Council
in
its
discretion
may
determine.”
5.
On
or
about
May
27,
1980
teachers
employed
by
the
Board
of
Education
of
Calgary,
Alberta
commenced
a
strike.
6.
The
entitlement
of
striking
teachers
to
receive
strike
benefits
from
the
Association
is
governed
by
administrative
procedures
which
have
been
approved
by
annual
representative
assemblies.
The
relevant
paragraph
1s:
“C.5
Teachers
who
take
legal
strike
action
or
who
are
subject
to
lockout
receive
at
the
discretion
of
the
Provincial
Executive
Council
a
flat
rate
of
financial
support
during
such
strike
or
lockout,
if
the
strike
or
action
leading
to
such
lockout
has
the
approval
of
the
Provincial
Executive
Council
of
the
Alberta
Teachers’
Association.”
7.
The
Provincial
Executive
Council
made
a
discretionary
decision
to
grant
financial
support
to
assist
the
striking
Calgary
teachers.
8.
The
decision
to
assist
the
striking
Calgary
teachers
imposed
a
financial
obligation
on
the
Association
which
then
convened
a
representative
assembly
to
discuss
possible
financial
difficulties
of
the
Association
if
the
Calgary
strike
continued
a
lengthy
period
of
time
and
if
other
emergencies
arose.
9.
The
representative
assembly
was
held
on
June
22,
1980
and
the
following
motions
were
passed:
(a)
BE
IT
RESOLVED,
that,
effective
September
1,
1980,
the
fee
payable
under
Bylaw
8(2)(a)
for
an
active
member
employed
full-time
be
$867
per
annum.
(b)
BE
IT
RESOLVED,
that,
effective
January
1,
1981,
the
fee
payable
under
Bylaw
8(2)(a)
for
an
active
member
employed
full-time
be
$387
per
annum.
10.
As
a
result
of
the
foregoing
amendments,
Association
Bylaw
8(2)
became:
“8.
(2)
Until
varied
pursuant
to
Bylaws
8(1)
or
10,
the
fees
shall
be:
(a)
for
an
active
member
employed
full-time
$267
per
annum
from
September
1,
1979,
$867
per
annum
from
September
1,
1980
and
$387
per
annum
from
January
1,
1981;
(b)
for
an
active
member
on
leave
of
absence,
$24
per
annum;
(c)
for
an
active
member
employed
part-time
or
as
a
substitute,
one
percent
of
earnings
in
each
month,
and
from
September
1,
1980,
two
percent
of
earnings
in
each
month;
(d)
for
an
associate
member,
$30
per
annum
from
September
1,
1976;
(e)
for
a
student
member,
$1
per
annum;
(f)
for
an
honorary
member
or
life
member,
no
fee.”
11.
As
a
result
of
the
aforesaid
amendments,
the
monthly
dues
of
each
member
were
increased
by
$50.00
per
month
for
the
months
September
to
December,
1980,
inclusive
and
$10.00
a
month
for
the
months
January
through
August
1981,
inclusive.
12.
In
his
1980
income
tax
return
the
Appellant
deducted
all
amounts
paid
in
1980
to
the
Association
including
the
amount
of
$200.00
(being
the
aforesaid
$50.00
per
month
for
each
of
the
months
September,
1980
to
December,
1980,
inclusive).
13.
The
Respondent
disallowed
the
deduction
by
the
Appellant
of
the
said
$200.00.
14.
The
Appellant
objected
to
such
disallowance
but
the
assessment
was
confirmed
by
the
Respondent
by
Notice
dated
January,
22,
1982.
Paragraphs
3
and
4
of
the
reply
to
notice
of
appeal
read
as
follows:
3.
With
respect
to
paragraph
11
and
12
he
states
that
the
additional
amounts
of
$50.00
and
10.00
respectively
were
a
special
levy
rather
than
increased
monthly
dues.
In
all
other
respects
he
admits
the
said
paragraphs.
4.
In
assessing
the
Appellant’s
tax
liability
for
his
1980
taxation
year
and
with
respect
to
the
matters
here
in
issue
the
Respondent
assumed
that
the
amount
of
$200.00
paid
by
the
Appellant
during
his
1980
taxation
year
were
not
‘‘annual
dues”
within
the
meaning
of
subparagraph
8(
1
)(i)(iv)
of
the
Income
Tax
Act
but
rather
a
special
levy
on
account
of
the
cost
of
the
strike
action
by
the
Calgary
teachers.
Counsel
for
the
respondent
filed
a
document
entitled:
Minutes
of
an
Emergent
Representative
Assembly
of
The
Alberta
Teachers’
Association
Edmonton
Plaza
June
28,
1980.
I
feel
it
useful
to
make
quotations
of
certain
excerpts
from
the
minutes
of
that
meeting
as
follows:
The
Chairman
repeated
that
the
objective
of
the
meeting
is
to
authorize
a
fee
increase
to
replenish
the
special
emergency
reserve
which
has
been
depleted
by
the
cost
of
the
strike
by
the
teachers
(approximately
4,200)
of
the
Calgary
Public
bargaining
unit
and
to
decide
on
the
most
economical
and
effective
method
of
meeting
all
the
associated
financial
commitments
of
the
withdrawal
of
services.
He
remarked
that,
important
and
necessary
though
it
is
to
analyze
and
assess
the
events
and
tactical
moves
which
have
precipitated
the
strike,
this
meeting
is
not
the
place
for
judgmental
statements
or
criticisms
which
will
provoke
dissension.
The
assembly
must
address
itself
to
the
immediate
need,
and
its
decisions,
once
made,
must
be
supported
by
all
in
the
interests
of
the
total
teaching
body.
‘‘When
we
leave
here”,
he
said,
‘‘we
must
display
a
strongly
united
teacher
organization
—
united
in
the
cause
of
improving
education
and
improving
the
profession
as
a
whole.
We
must
leave
with
a
declaration
of
solidarity
and
undivided
support
for
our
colleagues
in
Calgary
Public.”
M
L
McInnis
(Edmonton
Public)
remarked
on
the
small
number
of
members
of
the
bargaining
unit
who
had
attended
the
general
meetings
on
April
10
and
April
18
(1,997
and
2,211,
respectively)
which
authorized
the
application
for
a
strike
vote
and
which
rejected
the
memorandum
of
agreement.
Mr
Ackerman
advised
that
the
local’s
constitution
provides
that
those
in
attendance
at
a
general
meeting
shall
decide
how
a
vote
shall
be
taken
and,
in
each
case,
it
was
decided
to
take
the
vote
at
the
meeting
called
for
that
purpose
and
not
in
the
schools.
L
H
Lapointe
(Calgary
Separate)
remarked
that
the
most
significant
fact
attesting
to
the
solidarity
and
unanimity
of
the
bargaining
unit
is
that
3,997
teachers
rejected
the
board
offer
at
the
June
8
meeting.
To
a
request
from
P
W
Sproule
(Calgary
Public),
Mr
Ackerman
explained
that
the
letter
which
accompanied
the
board
proposal
of
June
17
did
not
address
the
teacher
demand
for
a
reduction
in
assigned
instructional
time;
the
board,
rather,
was
stating
its
willingness
to
add
another
50
teachers
to
the
pool
of
those
who
are
assigned
to
relieve
staff
with
exceptional
workloads,
particularly
those
offering
various
extra-curricular
activities.
H
C
Jonson
(Finance
Committee
chairman)
began
his
presentation
with
several
points
of
clarification
regarding
the
resolutions
presented
to
this
assembly:
Association
fees
cannot
be
adjusted
prior
to
September
1,
1980
and
that
date
permits
adequate
notice
to
boards;
Association
bylaws
require
that
the
amount
of
the
fee
be
stated
in
an
annual
figure;
all
the
additional
revenue
raised
will
be
allocated
to
the
special
emergency
reserve;
the
large
initial
increase
in
the
fee
which
is
recommended
is
intended
to
meet
the
immediate
financial
impact
of
the
strike,
while
the
smaller
increase
from
January
through
August
of
1981
will
provide
some
capability
to
deal
with
other
possible
bargaining
emergencies.
To
a
question
from
R
J
Johnston
(Red
Deer
City),
Mr
Jonson
said
the
legal
and
financial
advice
is
that
the
additional
fee
cannot
be
claimed
as
a
deduction
from
taxable
income.
Asked
for
further
comment,
C
P
Clarke
(Association
solicitor)
said
the
relevant
federal
legislation
is
quite
explicit
regarding
the
non-deductibility
of
money
collected
for
the
purpose
of
supporting
a
strike.
The
interpretation
bulletin
(IT-103)
also
leaves
no
room
for
doubt.
He
said
the
firm
has
been
unable
to
conceive
of
any
procedure
for
overcoming
the
difficulty
especially
since
it
is
a
principle
of
tax
law
that
authorities
are
entitled
to
probe
behind
appearances.
Mr
Jonson
said,
in
reply
to
other
questions,
that
the
$267
portion
of
the
annual
fee,
confirmed
by
the
1980
annual
Representative
Assembly,
should
retain
its
tax
deductibility.
To
further
questions
from
B
J
Ganchev
(Calgary
Separate),
C
C
Fahlman
(Edmonton
Public),
M
W
Martyn
(Parkland),
N
S
Miazga
(Ponoka),
and
R
D
Zadunayski
(Red
Deer
City),
Mr
Jonson
repeated
the
opinion
that
any
increase
authorized
by
this
assembly
to
cover
strike
costs
and
replenishment
of
the
reserve
will
not
be
eligible
for
any
tax
benefit
nor
will
labelling
of
the
additional
sums
as
a
general
fee
increase
or
deferring
collection
satisfy
tax
authorities.
Mr
Clarke
said
it
is
the
firm’s
opinion,
after
reviewing
the
legislation,
that
the
interpretation
of
the
tax
department
is
a
correct
one.
He
quoted
from
the
interpretation
bulletin
already
mentioned
—
The
part
of
the
annual
dues
of
a
member
that
is
levied
for
the
purpose
of
providing
for
the
current
or
anticipated
costs
of
prosecuting
legal
strikes
of
the
union
1s,
if
reasonable
in
the
circumstances,
deductible
for
tax
purposes.
Special
assessments
made
during
a
year
on
some
or
all
members
of
a
trade
union
to
provide
funds
for
the
prosecution
of
a
strike
are
not
annual
dues.
Such
assessments,
therefore,
are
not
deductible
for
tax
purposes.”
To
a
question
from
L
L
Jacques
(Red
Deer
District),
B
Jordan
(treasurer)
informed
the
assembly
that
the
Association’s
current
investment
portfolio
has
a
book
value
of
$2.56
million,
that
its
market
value
as
of
August
1979
was
$2.40
million,
and
that
that
value
has
decreased
since
then.
The
interest
yield
of
the
portfolio
is
currently
about
9.6
percent.
The
potential
loss
on
disposal
of
the
portfolio
has
been
estimated
at
$286,000.
L
H
Lapointe
(Calgary
Separate)
stated
his
opinion
that,
considering
the
loss
to
teachers
because
of
the
non-deductibility
of
the
additional
money
to
be
collected
from
them,
disposal
of
the
portfolio
would
result
in
a
net
saving
of
half
a
million
dollars.
To
a
question
from
W
M
McManus
(Calgary
Separate),
B
T
Keeler
confirmed
that
the
investment
portfolio
represents
both
money
allocated
to
the
special
emergency
reserve
and
other
assets.
Indeed,
he
said,
the
portfolio
is
a
part
of
the
security
offered
the
bank
for
the
$4
million
loan
from
which
the
strike
cheques
have
been
issued.
R
L
Rhine
(Edmonton
Public)
appealed
to
representatives
to
‘‘get
on
with
the
business”,
“Whether
or
not
we
like
the
decision
of
the
tax
department”,
he
said,
“we
have
come
here
to
provide
support
to
colleagues
in
Calgary.”
Mr
Martyn
added
that
teachers
have
come
a
long
way
and
their
worry
about
tax
considerations
is
“demeaning”.
Subsection
8(1)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended,
reads
as
follows:
8.
(1)
In
computing
a
taxpayer’s
income
for
a
taxation
year
from
an
office
or
employment,
there
may
be
deducted
such
of
the
following
amounts
as
are
wholly
applicable
to
that
source
or
such
part
of
the
following
amounts
as
may
reasonably
be
regarded
as
applicable
thereto:
(i)
amounts
paid
by
the
taxpayer
in
the
year
as
(i)
annual
professional
membership
dues
the
payment
of
which
was
necessary
to
maintain
a
professional
status
recognized
by
statute,
(ii)
office
rent,
or
salary
to
an
assistant
or
substitute,
the
payment
of
which
by
the
officer
or
employee
was
required
by
the
contract
of
employment,
(iii)
the
cost
of
supplies
that
were
consumed
directly
in
the
performance
of
the
duties
of
his
office
or
employment
and
that
the
officer
or
employee
was
required
by
the
contract
of
employment
to
supply
and
pay
for,
(iv)
annual
dues
to
maintain
membership
in
a
trade
union
as
defined
(A)
by
section
3
of
the
Canada
Labour
Code,
or
(B)
in
any
provincial
statute
providing
for
the
investigation,
conciliation
or
settlement
of
industrial
disputes,
or
to
maintain
membership
in
an
association
of
public
servants
the
primary
object
of
which
is
to
promote
the
improvement
of
the
members’
conditions
of
employment
or
work,
.
.
.
It
falls
upon
me
to
determine
whether
the
resolution
of
the
Emergent
Representative
Assembly
of
the
Alberta
Teachers’
Association,
as
set
out
in
paragraph
9
of
the
statement
of
facts
in
the
notice
of
appeal,
comes
within
the
ambit
of
paragraph
8(l)(i)
and
subparagraphs
thereto
and
in
the
context
of
all
the
aforementioned
facts.
The
Shorter
Oxford
Dictionary
(1973)
describes
the
word
‘‘annual”
as
follows:
1.
of,
belonging
to,
or
reckoned
by,
the
year;
yearly
2.
recurring
once
every
year
3.
repeated
yearly
and
occupying
the
whole
year
4.
lasting
for
a
year
only.
Counsel
for
the
appellant
cited
the
following
cases:
Martin
v
Lowry,
[1927]
AC
312,
and
Consolidated
Textiles
Ltd
v
MNR,
[1947]
CTC
63;
3
DTC
958,
which
was
a
decision
of
the
Exchequer
Court
of
Canada
in
1947.
Both
these
cases
involve
the
question
of
profits
from
commercial
transactions
which
produced
profits
within
the
year
and
could
be
termed
as
annual
profits.
The
facts
of
both
cases
are
certainly
not
within
the
context
of
the
facts
before
me
and
I
therefore
consider
that
they
do
not
apply.
As
an
example,
I
quote
from
pages
67
and
960,
respectively,
of
the
Consolidated
Textiles
Ltd
decision,
(supra):
Indeed,
the
very
definition
of
taxable
income
in
section
3
as
“the
annual
net
profit
or
gain
or
gratuity,
.
..
directly
or
indirectly
received,’’
is
against
the
appellant’s
contention.
It
is
settled,
I
think,
that
the
word
“annual’’
as
applied
to
profit
or
gain
or
gratuity
does
not
mean
that
the
profit
or
gain
or
gratuity
must
necessarily
be
of
a
recurring
nature
from
year
to
year,
but
rather
that
it
is
the
profit
or
gain
or
gratuity
of
or
in
or
during
the
year
in
respect
of
which
the
assessment
is
made.
The
word
may
thus
include
an
item
of
income
that
may
occur
only
once
.
.
.
It
can
readily
be
seen
that
this
statement
of
law
does
not
apply
to
the
case
at
hand
in
that
it
refers
to
profit
or
gain
or
gratuity.
Counsel
for
the
appellant
also
cited
the
case
of
Herbert
Burke
v
The
Queen,
[1976]
CTC
209;
76
DTC
6075.
This
case
involved
a
member
of
the
International
Typographical
Union,
seeking
to
deduct
annual
dues
in
computing
his
annual
income.
The
Court
held
that
his
dues
constituted
“annual”
dues
within
the
meaning
of
subparagraph
8(l)(i)(iv)
of
the
Act,
but
found
that
the
portion
thereof
applied
to
the
payment
of
Old
Age
and
Mortuary
Benefits
and
was
not
deductible.
Counsel
for
the
respondent,
on
the
other
hand,
cited
the
case
of
Western
Leaseholds
v
MNR,
[1961]
CTC
490,
61
DTC
1309,
where
Thorson,
P,
of
the
Exchequer
Court
of
Canada,
disallowed
part
of
the
appellant’s
claim
for
exploration
expenses,
stating
that
the
kind
of
annual
payment
contemplated
by
the
relevant
section
(not
pertinent
hereto)
is
a
payment
that
has
the
quality
of
being
recurrent.
The
fees
and
acquisition
or
bonus
costs
were
not
recurrent
—
they
were
paid
only
once.
They
could
not
possibly
be
regarded
as
annual
payments.
At
495
and
496
and
1312
and
1313
respectively,
he
says:
As
I
have
already
stated,
the
appellant
made
payments
amounting
to
a
total
of
$650,939.35
in
respect
of
its
gross
acreage
of
1,124,082
acres,
which
amount
included
fees
and
acquisition
or
bonus
costs
as
well
as
rentals.
In
assessing
the
appellant
the
Minister
allowed
the
deduction
of
anything
that
might
be
called
a
rental
payment
to
the
extent
of
$324,174.12,
but
disallowed
the
deduction
of
the
rest
of
the
amount
of
the
appellant’s
claim,
namely,
$326,765.23
on
the
ground
that
its
payments
other
than
those
for
rentals,
were
not
annual
payments
not
exceeding
$1.00
per
acre
within
the
meaning
of
subsection
(2A)
of
section
53
and
must
not
be
included
in
the
computation
of
the
deduction
allowed
by
subsection
(1).
Its
contention
was
rejected.
In
the
course
of
his
speech
Lord
Maugham
said,
at
page
795
(quoting
from
the
decision
in
Moss’
Empires
Ltd
v
Inland
Revenue
Commissioner,
[1937]
AC
785):
“It
is,
I
think,
to
be
noted
that
we
are
not
concerned
here
with
the
case
of
annual
profits
or
gains
arising
from
a
trade,
as
to
which
the
decision
in
Martin
v
Lowry,
[1927]
AC
312,
would
be
decisive,
to
show
that
in
the
context
‘annual’
means
‘in
any
one
year’.
In
r
21
‘annual’
must
be
taken
to
have,
like
interest
on
money
or
an
annuity,
the
quality
of
being
recurrent
or
being
capable
of
recurrence.’’
It
is
to
be
noted
that
Thorson,
P
refers
to
prior
cases
including
Martin
v
Lowry,
(supra),
as
relating
to
profit
and
taxes
and
therefore
the
definition
of
“annual”
in
that
case
did
not
fit
into
the
case
before
him.
The
form
of
the
resolution
as
set
out
in
paragraph
9
of
the
statement
of
facts,
in
form,
and
on
the
face
of
it,
certainly
appears
to
be
proper.
However,
one
must
consider
the
substance
of
the
resolution
which
was
merely
to
establish
an
assessment
for
support
of
teachers
in
one
unit
of
the
Edmonton
Public
School
Board,
which
teachers
were
on
strike.
In
this
regard
the
Minutes
of
the
Emergent
Representative
Assembly
of
the
Alberta
Teachers’
Association
are
illuminating
and
especially
having
regard
to
the
large
investment
portfolio
of
that
body
of
$2.56
million.
The
Alberta
Teachers’
Association
was
attempting
to
effect
a
special
levy
against
all
teachers
in
the
Association
to
support
the
striking
teachers.
The
resolution
purporting
to
increase
the
“annual
dues”
was
merely
a
device
whereby
the
Alberta
Teachers’
Association
protected
its
substantial
portfolio
on
account
of
dues,
a
special
levy
to
support
a
strike
of
teachers
in
a
unit
of
the
Board.
The
$200
sought
to
be
deducted
by
the
appellant
was
not
of
a
recurrent
nature
nor
does
it
fit
into
the
generally
accepted
understanding
of
the
word
“annual”
in
that
it
was
not
a
recurring,
yearly
expense
to
the
taxpayer.
I
am
fully
satisfied
that
the
deduction
sought
does
not
come
within
the
provisions
of
subparagraph
8(l)(i)(iv)
of
the
Act
and
I
therefore
dismiss
the
appeal.
Appeal
dismissed.
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