A
W
Prociuk:—By
consent
of
both
counsel,
the
above
appeals
were
heard
on
common
evidence.
They
were
presented
as
test
cases
representing
a
total
of
some
350
similar
situations.
The
appeal
in
each
case
is
from
reassessments
by
the
respondent
of
income
for
the
taxation
years
1973
and
1974
wherein
certain
supplementary
strike
benefits
received
by
each
appellant
were
added
to
his
or
her
income
and
taxed
accordingly.
The
ground
of
appeal
is
that
this
is
in
the
same
category
as
basic
strike
pay,
and
is
therefore
not
taxable
because
the
respondent
had
not
assessed
the
appellants
in
respect
of
the
basic
strike
pay
they
had
received.
The
facts
of
the
case
are
essentially
not
in
dispute
and
are
as
follows:
Victoria
Press
Ltd,
of
Victoria,
British
Columbia,
publishes
two
daily
newspapers,
the
Victoria
Times
and
the
Daily
Colonist.
In
the
years
in
question,
it
employed
some
350
people
in
various
capacities.
The
said
350
employees
are
all
union
members,
each
a
member
of
his
or
her
appropriate
union,
of
which
there
were
five
in
all.
One
union
went
on
strike
on
December
1,
1973
because
the
negotiations
for
a
new
contract
could
not
be
finalized.
The
remaining
unions
were
locked
out.
All
members
of
the
said
unions,
with
the
exception
of
five
or
seven
employees
who
did
not
concur
in
the
strike
action,
met
at
the
union
headquarters
office
in
Victoria
the
following
day.
A
duty
roster
was
drawn
up,
and
each
member
was
assigned
to
or
volunteered
for
a
certain
job
such
as
surveillance,
picketing
or
working
in
the
union
headquarters
office.
The
members
also
decided
to
publish
a
newspaper
of
their
own
to
be
called
the
Victoria
Express.
About
90%
of
the
union
members
took
part
in
this
venture,
each
doing
the
work
that
he
or
she
had
formerly
done
when
employed
by
Victoria
Press
Ltd.
A
union
representative,
David
A
Maolntyre,
stated
in
evidence
that
it
was
felt
by
the
membership
that
there
were
at
least
four
reasons
for
publishing
this
newspaper:
(1)
it
would
keep
the
membership
busy;
(2)
the
publication
of
a
newspaper
would
fill
the
void
in
the
community;
(3)
continuity
of
customers
and
advertisers
would
be
maintained;
and
(4)
any
profit
would
be
available
for
distribution
amongst
the
members
of
the
various
unions
as
a
supplementary
strike
benefit.
The
union
members
made
arrangements
with
private
printing
establishments
on
the
Island
and
in
the
City
of
Vancouver
to
use
their
facilities
after
hours.
This
venture
continued
till
the
latter
part
of
May
1974,
when
the
strike
was
settled
and
the
employees
returned
to
work
for
Victoria
Press
Ltd.
To
facilitate
the
business
administration
of
the
Victoria
Express,
the
union
members
asked
Pugstem
Publications
Ltd,
a
registered
British
Columbia
corporation,
whose
directors
were
members
of
various
unions,
to
undertake
this
work.
Pugstem
collected
the
money
from
the
sale
of
copies
of
the
Victoria
Express
(which
was
published
three
times
a
week),
paid
the
expenses
incurred
and
turned
the
net
proceeds
over
to
the
union
offices.
During
the
period
of
the
strike,
each
member
received
a
stated
sum
from
his
union
as
basic
strike
pay,
which
was
paid
out
of
a
fund
created
from
part
of
the
annual
contributions
of
the
members
by
way
of
union
dues.
The
amount
payable
to
a
member
on
strike
depended
on
the
strike-pay
formula
employed
by
his
particular
union.
For
example,
two
unions
allotted
$50
per
week
per
member,
two
unions
allotted
basic
strike
pay
on
the
basis
of
the
rate
of
pay
earned
by
each
given
member,
and
one
union
took
into
account
the
number
of
dependants
a
member
had
to
support
while
on
strike.
The
net
proceeds
of
the
operation
of
the
Victoria
Express
were
divided
among
the
five
unions
on
a
pro
rata
basis,
and
each
union
distributed
its
share
to
its
members
in
accordance
with
its
formula
for
basic
strike
pay.
Each
union
member
received
this
supplementary
benefit
irrespective
of
what
outside
work
he
did
or
what
services
he
actually
provided
during
the
strike
as
long
as
he
supported
the
strike
movement
and
participated,
in
some
measure,
in
picketing
or
surveillance,
union
headquarters
office
work,
or
duties
of
some
kind
in
connection
with
the
publication
of
the
Victoria
Express.
While
exact
figures
as
to
the
extent
of
these
supplementary
strike
benefits
were
not
placed
in
evidence,
I
gathered
from
the
general
tone
of
the
evidence
given
by
the
various
witnesses
that
the
amounts
were
reasonably
substantial.
Pugstem
turned
over
all
net
earnings
to
the
union
offices
as
it
was
requested
to
do
so
by
the
Union
Members’
Steering
Committee.
Learned
counsel
for
the
appellants
argued
that,
while
newspaper
profits
are
taxable,
they
become
tax-exempt
once
in
the
hands
of
the
union,
by
virtue
of
paragraph
149(1
)(k)
of
the
Income
Tax
Act,
which
reads
as
follows:
149.
(1)
No
tax
is
payable
under
this
Part
upon
the
taxable
income
of
a
person
for
a
period
when
that
person
was
(k)
a
labour
organization
or
society
or
a
benevolent
or
fraternal
benefit
society
or
order;
Learned
counsel
for
the
appellants
further
submitted
that
here
there
was
no
employer-employee
relationship;
no
one
was
paid
on
the
basis
of
the
amount
of
work
done;
no
one
was
in
control
of
work
to
be
done
and
the
manner
of
doing
it;
there
were
no
fringe
benefits
such
as
a
pension
plan,
for
example;
each
member
was
free
to
engage
in
outside
employment
(and
there
is
evidence
on
record
that
at
least
some
members
took
on
outside
work
such
as
taxi-driving
or
working
for
another
printing
concern
after
their
particular
undertaking
of
strike
work
was
completed);
and
no
union
member
had
any
right
to
claim
a
share
of
the
profits
from
the
sale
of
the
newspapers.
They
got
what
they
got
because
they
were
union
members
who
helped
the
common
cause
of
prosecuting
the
strike.
Learned
counsel
for
the
respondent
submitted
that
this
was
a
joint
business
venture
organized
and
conducted
by
the
union
members.
The
venture
was
profitable
and
the
net
proceeds
were
shared
by
the
members
in
accordance
with
the
strike-pay
formula
applicable
in
each
union.
The
net
proceeds
constitute
income
from
a
business
venture
and
the
amount
thereof
in
the
hands
of
each
member
is
taxable.
It
is
established
that
the
respondent
has
not
assessed
the
basic
strike
pay.
The
appellants
state
that
they
turned
over
the
profits
from
the
operation
of
the
Victoria
Express
to
the
union
in
toto
and
then
received
their
respective
shares
as
supplementary
strike
pay
or
benefits.
In
other
words
they
say
that
the
main
strike
funds
of
the
unions
were
augmented
by
the
addition
of
the
profits
from
the
newspaper
business
operated
by
them
and
therefore
all
payments
out
of
this
fund
should
be
treated
in
the
same
way
and
the
supplementary
benefits
should
not
have
been
taxed
by
the
respondent.
While
the
issue
of
the
taxability
of
the
basic
strike
pay
is
not
in
issue
before
the
Board,
I
am
of
the
view
that
it
ought
not
to
be
bypassed
simply
because
it
is
not
in
issue,
particularly
when
I
cannot
see
any
essential
difference
in
the
taxability
of
the
two
categories.
In
both
categories
the
moneys
which
constituted
the
respective
funds
were
originally
earned
by
the
striking
members.
There
appears
to
be
no
statutory
sanction
for
not
assessing
basic
strike
pay.
It
is
distributed
by
an
international
union
to
union
members
involved
in
a
strike.
This
fund
is
built
up
from
an
allotted
proportion
of
the
union
dues
paid
by
each
member,
and
the
contributor
is
allowed
to
deduct
amounts
paid
as
union
dues
from
his
income.
In
the
case
of
pension
plans,
unemployment
insurance
or
registered
retirement
savings
plans,
when
the
amounts
contributed
by
a
taxpayer
are
deductible
from
his
income
when
paid,
they
are
also
taxable
as
income
when
they
are
paid
out
to
the
taxpayer
at
some
future
date.
As
to
the
supplementary
strike
pay
or
benefits,
I
do
not
think
that
placing
the
taxable
income
from
a
commercial
venture
within
the
four
walls
of
a
union
and
then
getting
it
back
by
way
of
a
distribution
pursuant
to
a
certain
formula,
renders
it
tax-exempt.
The
form
cannot
change
the
substance.
Accordingly,
I
have
concluded
that
the
appeal
in
each
case
ought
to
be
dismissed.
Appeals
dismissed.
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