Date: 19980505
Docket: 97-2970-IT-I
BETWEEN:
RONALD G. SMITH,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Teskey, J.T.C.C.
[1] The Appellant in his Notice of Appeal therein, appealed
his reassessment of income tax for the years 1994, 1995 and 1996,
and elected the informal procedure.
Issue
[2] The issue before me is whether amounts paid by the
Appellant's former employer, Ball Packaging Products of
Canada ("Ball") in respect of group term life insurance
premiums are to be included in computing the Appellant's
taxable income.
[3] At the conclusion of the hearing, for reasons given then,
I advised the Appellant that his 1994 and 1995 appeals would be
dismissed for reasons given in argument by the Respondent and
upon relying on the decision of my late colleague Sobier, J. in
Beare v. M.N.R., 91 DTC 411.
[4] The 1996 appeal was adjourned to allow the Appellant to
file with me a letter from Ball with regards to the increase in
the 1996 amount over the 1995 amount, in the sum of $431.95. The
Appellant supplied the Court with a letter from Ball. The
pertinent part reads:
Survivor Income Benefit (SIB)
Under the terms of the Group Insurance Plan for the Simcoe
plant, should you pass away before your spouse, she will be
eligible for a monthly SIB in the amount of $150. This is a
benefit for which the company pays a monthly premium to the
Maritime Life Insurance Company and is, under Revenue Canada
rules, considered a taxable benefit. It is not, nor has it ever
been, a benefit which is payable as part of any pension plan. As
you know, the Simcoe Hourly Pension Plan was wound up upon the
plant's closure.
I have enclosed a copy of the Index Section from the Labour
Agreement which clearly shows the Survivor Income Benefit as a
benefit included under the Group Insurance Plan.
The monthly premium is $22.22 plus Provincial Sales Tax for
each $100 of coverage.
1.5 X $22.22 X 12 mths X 1.08 $431.95
The amount shown in Box 28 of your 1996 T4A, which must be
included with your 1996 tax return, is a combination of the
annual Life Insurance premium at $971.38 and the annual SIB
premium at $431.95 for a total taxable benefit of $1,403.33.
[5] I am satisfied that the amount of $431.95, paid during
1996 in respect of survivor income benefits is an amount that is
included in income pursuant to subsection 6(4) of the
Income Tax Act (the "Act"). The
amount is clearly funding a pension.
[6] The regulation amending the Income Tax Regulation
SOR/97-494 requires that premiums paid in respect of
survivor income benefit be included in calculating the prescribed
benefit of the group life insurance benefit for the purposes of
subsection 6(4) of the Act.
[7] Section 2702 of the Income Tax Regulations
(the "Regulations") outlines the
calculation of the term insurance benefit which by virtue of
section 2701 of the Regulations is a component of the
prescribed benefit, which must be included in income pursuant to
subsection 6(4) of the Act. Subsection 2702(3)
of the Regulations expressly provides a means of
calculating the amount of term insurance on a person's life,
for the purposes of calculating the term insurance benefit where
the proceeds of the insurance are payable only in the form of
periodic payments. The form of payment, namely periodically, is
expressly contemplated by the legislation and are the amounts in
respect of group term insurance.
[8] The amount of $431.95 was not premium in respect of a
pension plan, it is in respect of group term life insurance.
[9] For these reasons, the appeal for the year 1996 is also
dismissed.
Signed at Ottawa, Canada, this 5th day of May, 1998.
"Gordon Teskey"
J.T.C.C.
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