Brisson v. R., [1998] 1 CTC 2528

Teskey T.C.J.:

In the matter of the appeals 95-3767(IT)I, 96-2878(IT)I, 95-3769(IT)I and 96-2874(IT)I, which were all heard on common evidence, the issue herein is whether periodic payments paid by National Life Assurance Company are taxable or not.

The facts that the Minister assumed in the Reply to the Notice of Appeal stand unchallenged and accepted by the Appellant. Over and above those facts set forth in paragraph 13 of the Reply, is the fact that the injury to Mr. Brisson had been determined by the Pension Board to be in fact duty related, and this fact the Minister admits in paragraph 5(c) of the Reply.

Section 81 of the Income Tax Act, subsection (1), states that there are certain amounts not to be included in computing the income of a taxpayer for a taxation year. Subparagraph (i) reads,

R.C.M.P. pension or compensation - A pension payment or compensation received under section 5, 31 or 45 of the Royal Canadian Mounted Police Pension Continuation Act, Chapter R-10 of the Revised Statutes of Canada, 1970 or section 32 or 33 of the Royal Canadian Mounted Police Superannuation Act in respect of an injury, disability of death.

The Respondent acknowledges that sections 31 and 45 of the Royal Canadian Mounted Police Pension Continuation Act and sections 32 or 33 of the Royal Canadian Mounted Police Superannuation Act has no bearing in this appeal. Therefore the appeal boils down to is this payment, are these payments received by the Appellant arise from or come out of section 5.

Section 5 of the Royal Canadian Mounted Police Pension Continuation Act, subparagraph (1) reads,

Where a person has, either before or after the 1st day of April 1960 suffered a disability as a result of any injury or disease or aggravation thereof that arose out of, or was directly connected with, his service in the Force, he may be granted compensation, including medical and hospital expenses, at such rates and in such manner as the Governor in Council may prescribe.

The Minister’s position, notwithstanding the fact that the Minister acknowledges that this injury was duty related, is that the payments must be generated or from the R.C.M.P. directly in order to qualify for this exemption, and therefore the money is taxable pursuant to section 6 of the Income Tax Act.

In light of the fact admitted by the Minister in paragraph 13(f) of the Reply, which reads,

The amounts were paid to the Appellant by the National Life Assurance Company and were paid pursuant to a sickness or accident insurance plan or a disability insurance plan.

That combined with the fact that they acknowledge that the injury that would give rise to the payments from National Life Assurance Company were work related, the only question is, in my opinion, can the National Life Assurance Company payments be considered to be payments made pursuant to paragraph 5(1) of the R.C.M.P. Pension Continuation Act. I think so.

I believe the Respondent’s position is that the payments have to come directly from the R.C.M.P. is not tenable. There certainly is nothing wrong, in fact it probably makes good economic sense, for the R.C.M.P. to fund what is obviously a moral obligation to compensate its officers and members if they are injured or receive a disability on the job. I see no difference between them setting aside a portion of their budget each year on an actuarial basis so that they can do this, or by funding this obligation with an insurance company who have actuaries on staff and the payment of the premium insures that their officers and constables and employees will be properly protected and covered should an injury on the job be suffered.

Therefore I find that these payments do, or are covered within the purview of section 5, and therefore the appeal is allowed, and as there are no costs that can be awarded to the Appellant, it’s awarded without costs. The assessments are referred back to the Minister for reconsideration and reassessment on the basis that the periodic payments received from National Life Assurance Company are not to be included in the calculation of income.

Appeal allowed.