Beauchamp v. The Queen, docket 2001-681-IT-I (Informal Procedure)

[OFFICIAL ENGLISH TRANSLATION]

2001-681(IT)I

BETWEEN:

ANDRÉ BEAUCHAMP,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on March 4, 2002, at Montréal, Quebec, by

the Honourable Judge Lucie Lamarre

Appearances

Agent for the Appellant:             François Maillé

Counsel for the Respondent:      Claude Lamoureux

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is dismissed.

Signed at Ottawa, Canada, this 15th day of March 2002.

"Lucie Lamarre"

J.T.C.C.

Translation certified true

on this 21st day of May 2003.

Sophie Debbané, Revisor

[OFFICIAL ENGLISH TRANSLATION]

Date: 20020315

Docket: 2001-681(IT)I

BETWEEN:

ANDRÉ BEAUCHAMP,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Lamarre, J.T.C.C.

[1]      The appeal from the assessment made for the 1998 taxation year is dismissed for the reasons stated below.

[2]      The evidence shows that the amount of $109,751 received by the appellant in 1998, along with $32,255 in interest, represents employment income for the appellant for that year and not a retiring allowance, which means that he could not transfer that amount to a registered retirement savings plan ("RRSP") under paragraph 60(j.1) of the Income Tax Act ("Act").

[3]      The appellant, who had been laid off in 1992 by his employer, Épiciers-Unis Métro Richelieu Inc., was reinstated in his job in 1997 as a result of a grievance lodged against his employer. The employer was ordered by a competent tribunal to pay the appellant $109,751 plus interest in retroactive payment of his employment income from the date he was laid off to the date he was reinstated.

[4]      "Retiring allowance" is defined as follows in subsection 248(1) of the Act:

"retiring allowance" - "retiring allowance" means an amount (other than a superannuation or pension benefit, an amount received as a consequence of the death of an employee or a benefit described in subparagraph 6(1)(a)(iv)) received

(a) on or after retirement of a taxpayer from an office or employment in recognition of the taxpayer's long service, or

(b) in respect of a loss of an office or employment of a taxpayer, whether or not received as, on account or in lieu of payment of, damages or pursuant to an order or judgment of a competent tribunal,

by the taxpayer or, after the taxpayer's death, by a dependant or a relation of the taxpayer or by the legal representative of the taxpayer;

[5]      It is clear from the evidence that the amount received by the appellant from his employer in 1998 was not paid in respect of a loss of employment since the appellant returned to his job in 1997. The amounts were paid in 1998 to reimburse him for the salary that he should have been paid during the years when he was unlawfully laid off by his employer.

[6]      The amount not being a retiring allowance, the appellant could not avail himself of paragraph 60(j.1) of the Act to transfer it into an RRSP.

[7]      Moreover, the appellant benefited from a concessionary tax rate on the amount received in 1998, since, in computing his taxable income, he was able to claim the deduction for a retroactive lump-sum payment received pursuant to an arbitration award under sections 110.2 and 120.31 of the Act. Those provisions apply only in computing the tax payable for the year in which the appellant received such a lump sum. They are not applicable in computing the earned income for preceding years for the purposes of determining his RRSP deduction, as defined in subsection 146(1) of the Act.

[8]      For these reasons, the appellant could not obtain an RRSP deduction higher than the $10,751 already allowed to him by the respondent, an amount that had been determined in accordance with subsections 146(1) and (5) of the Act on the basis of the appellant's earned income for the preceding year (which could not take into account a portion of the lump sum paid to the appellant in 1998 since, before that year, it was not part of his net income).

[9]      Accordingly, the appeal is dismissed.

Signed at Ottawa, Canada, this 15th day of March 2002.

"Lucie Lamarre"

J.T.C.C.

Translation certified true

on this 21st day of May 2003.

Sophie Debbané, Revisor