Citation: 2008 TCC 480
Date: 20080829
Dockets: 2006-1098(IT)G, 2006‑1101(IT)G,
2006‑1102(IT)G,
2006‑1103(IT)G, 2006‑1104(IT)G, 2006‑1107(IT)G,
2006‑1108(IT)G, 2006‑1807(IT)G, 2006‑1809(IT)G,
2006‑1810(IT)G, 2006‑1811(IT)G, 2006‑1812(IT)G,
2006‑1813(IT)G, 2006‑1100(IT)G,
BETWEEN:
DENISE VACHON, EXECUTOR OF THE
ESTATE OF ROGER VACHON,
PIERRE MOREL, JEANNINE GIRARD,
GUY GINGRAS, LILIANE DUFOUR,
MARYSE BOUDREAULT, PIERRE BHERER,
GILLES BELZILE, CHANTAL CÔTÉ,
RÉJEANNE GRAVEL, VALOIS PELLETIER,
ALAIN THERRIEN, DANY VIGNEAULT,
YVES TREMBLAY,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent,
and
Dockets: 2006‑1966(EI),
2006‑1142(EI)
CONSEIL CENTRAL CÔTE‑NORD INC.,
CONSEIL CENTRAL DES SYNDICATS NATIONAUX
DU SAGUENAY/LAC ST‑JEAN,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Archambault J.
[1]
Conseil central Côte‑Nord Inc. ("CC Côte‑Nord") and
six of its officials,
and Conseil central des syndicats nationaux du Saguenay/Lac St‑Jean
("CC Saguenay") and eight of its officials, are appealing
from assessments made by the Minister of National Revenue
("the Minister") in respect of the 2002, 2003, and 2004 taxation
years or one or more of those years ("the relevant period").
[2] In the assessments involving
CC Côte‑Nord and CC Saguenay, the Minister determined the
amounts owed by these central councils under the Employment Insurance
Act (EIA) in respect of the 14 aforementioned union officials (hereinafter "the
14 officials", "the union officials", "the elected
officials" or "the elected union officials"). Those assessments
result from the Minister's decision to consider as "insurable
earnings" the benefits that the 14 officials received from their central
councils in the form of allowances or indemnities for the meal, travel and
child care expenses that they incurred in the performance of their duties for their
central councils. The 14 officials contest the assessments made
by the Minister, who included the value of these benefits in their income
from an office or employment. The officials were elected to the positions of
president, treasurer, executive secretary or representative on one of the
central councils. All of them obtained union leave from their employers — which
include, among others, a hospital, a youth centre, and Provigo Distribution
Inc. ("Provigo") — so that they could devote one or more days per
week to union business while continuing to draw their salary. However, the
unions were required to reimburse the employers of these elected officials for
the salaries and fringe benefit costs for the periods when the officials were
on union leave. The unions were reimbursed by the central councils.
[3] Whether
the Minister's assessments are well-founded depends to a great extent on the
answer to the following question: Did the 14 officials hold, for the purposes
of sections 5 and 6 of the Income Tax Act (ITA), an
"office" as defined in subsection 248(1) of the ITA, and, for
the purposes of the definition of "insurable employment" in the
EIA and the purposes of section 6 of the Employment Insurance
Regulations (EIR), within the meaning of subsection 2(1) of the Canada Pension Plan
(CPP)? To put it more precisely, the question is whether the elected
officials' positions on the central councils entitled them to "a fixed
or ascertainable stipend or remuneration" under
subsection 248(1) of the ITA or subsection 2(1) of the CPP.
Facts
[4] All of the Appellants' appeals were
heard on common evidence. Only three of the 14 officials testified at
the hearing, namely Guy Gingras, an administrative officer for the Hôpital
de Roberval and the treasurer of CC Saguenay; Pierre Morel, a receiver
with Provigo and representative of CC Saguenay; and Chantal Côté, an employee
of the Centre de protection et de réadaptation de la Côte‑Nord
("the Youth Centre") and the treasurer of CC Côte‑Nord.
[5] During the relevant period, Hôpital de
Roberval remunerated Mr. Gingras for 35 hours of work (8 a.m. to
4 p.m. Monday to Friday) at the applicable rate under his collective
agreement. He lives in Roberval, less than a kilometre from the hospital. He
usually walks to work and returns home to eat his lunches. He said that he
has been an active union member for 20 years, initially with his hospital's
local and then as treasurer of CC Saguenay.
[6] Mr. Gingras explained that CSN locals are
grouped together in a federation based on the employers' area of activity, and
are also grouped together under a regional central council such as CC Saguenay
and CC Côte‑Nord. At the very top of the pyramid is the Confédération
nationale ("the Confederation") which offers services, such as legal
services and union membership drive support services, to all members and to
locals and federations. The federations provide the locals with services associated
with collective agreement renewals and grievance management. The central
councils (abbreviated "CC") train union officials and other active
union members.
[7] In order to be elected to a central
council, a person must first be sent as a delegate by his or her local to the convention,
where the members in attendance elect the executive council as well as the various
representatives, such as the occupational health and safety representative. People
elected to a central council serve three-year terms; they are eligible for
re-election to additional three-year terms.
[8] There are 159 locals under CC Saguenay.
[9] CC Saguenay’s offices are in Chicoutimi, roughly 107 km from Roberval. The territory it
serves extends from Saint‑Ludger-de-Milot to La Baie. There are times when, in the performance of his duties as treasurer
for CC Saguenay, Mr. Gingras may leave his home in Roberval at 7 a.m.
and not return until 8 or 9 p.m. Seventy to seventy-five percent of
the time that he spends on union-related work is at the CC Saguenay office
in Chicoutimi. His union activities are not limited
to weekdays: he is sometimes involved in demonstrations elsewhere in Quebec, including Montréal. Mr. Gingras says that he is
not remunerated by CC Saguenay for his duties as its treasurer; he says
that the work is simply an expression of his dedication to union activism. However, the
hospital continues to pay Mr. Gingras an amount equal to the salary that
he would have received if he had been working during the time that he devoted
to his union duties.
[10]The treasurer’s duties include signing bank
instruments, preparing budgets and activity reports, giving treasury training, and
sitting on various boards such as the alternative dispute resolution committee
and the Commission des lésions professionnelles [Quebec
employment injuries board]. Mr. Gingras estimated that, on average, Hôpital
de Roberval grants him three days of union leave per week. He said that
this was just an average, because he sometimes devoted as many as four or five
days a week to CC Saguenay, but sometimes had less to do, notably during
the summer. However, an analysis of the activity reports shows that, throughout
the three relevant taxation years, he was at CC Saguenay far more often than
not.
[11]On the other hand, Mr. Gingras said
that he had to ask Hôpital de Roberval for its permission ten days in advance
under clause 9.03 of the collective agreement between his union and the Comité
patronal de négociation du secteur de la santé et des services sociaux [health
and social services sector employer-side bargaining committee], the Sous‑comité
patronal de négociation des centres hospitaliers publics [public hospitals
employer-side bargaining subcommittee] and the Fédération de la santé et des
services sociaux — CSN [health and social services federation (CSN)] ("the hospitals
collective agreement"). The clause provides as follows:
[TRANSLATION]
9.03 An employee who
is a steward designated by the union may, upon written notice given by the
union ten (10) calendar days in advance, take leave without pay for union
business.
However, the employer shall continue to provide
the employee with remuneration equal to the remuneration that the employee
would receive if the employee were at work, provided the union reimburses the
salary, the additional remuneration contemplated in section 6 of
Appendix D, the applicable premiums, the fringe benefits, and the
employer's share of the benefit plan. Such reimbursement shall be made within
thirty (30) days after the employer claims it.
[Emphasis added.]
[12]Mr. Gingras confirmed that requests for
union leave are rarely denied. However, he said that they can be denied if his
presence at the hospital is essential. According to Mr. Gingras, the
remuneration paid by the hospital enables him to preserve his rights to a
pension under his pension plan.
[13]At the end of the month, Hôpital de
Roberval bills CC Saguenay, not only for the remuneration that it paid Mr. Gingras
for the periods he worked for CC Saguenay, but also for his benefits,
which are worth 19.91% of his regular pay. The amounts paid by CC Saguenay
are allocated to various accounts, including account #3500 for duties as
treasurer, account #3720 for duties as delegate and account #6320 for training
duties.
[14]Mr. Gingras also explained CC Saguenay's
expense reimbursement scales (Exhibit I‑1, tab 34) which I
reproduce below:
POLICY ON SCALES
Amended August 30, 2004
|
Breakfast
|
$7.20
|
|
Lunch
|
$14.85
|
|
Supper
|
$20.40
|
|
Snack
|
$3.10
|
|
Overnight stay
|
$99.20
|
Total: $144.75 / day
$0.416 per kilometre
a)
Breakfast
1- Breakfast will be reimbursed if a meeting is held before
8:30 a.m.
2- Out-of-town overnight stays are reimbursed.
3- Meeting places requiring more than 100 km of
outbound travel, if the meeting begins at 9 a.m.
b)
Lunch
1- Lunch will be reimbursed if a full day's
union leave is required (morning and afternoon) or an activity is required
at a mealtime.
2- The meeting ends later than 12 noon.
3- The meeting ends later than11:30 a.m. and more
than 100 km of outbound travel is required.
c)
Supper
1- Supper will be reimbursed where a day's
leave is required and an activity is scheduled for the evening.
2- The afternoon meeting ends later than 5:30
p.m.
3- A meeting takes place during an evening and more
than 100 km of outbound travel is required.
4- The meeting begins the next morning and more
than 200 km of outbound travel is required.
d)
Snack
1-
A snack will be reimbursed if an activity ends
later than 9 p.m.
2-
When an overnight stay is reimbursed.
e)
Overnight stay
1- We will
reimburse an overnight stay when the circumstances require us to do so (i.e. when
an act of nature paralyzes the location where the activity is being held, or
the union official is unable to return home, notably by reason of a storm,
flooding, etc.). Reference: school closures, Transports Québec warnings, or
other warnings.
1-[sic] The
meeting continues on the following day and more than 100 km of outbound travel
is required. In addition, an officer, in the course of his or her duties, is
entitled to claim an overnight stay expense once per week on average, but, if
so, no supper, snack or breakfast expenses shall be reimbursed and the person
in question must work the next day.
2- The meeting
begins the following morning and more than 200 km of outbound travel from home
is required.
3- Overnight stay
expenses on the last day of a meeting will be reimbursed if the meeting ends
after 5 p.m. and more than 200 km of inbound travel is required.
4- Overnight stay
expenses on the last day of a meeting will be reimbursed if the meeting ends
after 4 p.m. and more than 300 km of travel is required.
However, from October 1 through April 30:
a) Overnight stay
expenses on the last day of a meeting will be reimbursed after 3:30 pm. if
more than 200 km of inbound travel is required.
b) Overnight stay
expenses on the last day of a meeting will be reimbursed after 1:30 p.m.
if more than 300 km of inbound travel is required.
A person who attends meetings or training
courses or who participates in union activities outside the person's regular
hours of work may claim child care expenses.
These allowances will only be granted if
the expenses have been incurred, and they are available to persons with
children age 16 or younger, or under 18 if they are disabled or
emotionally/socially maladjusted and require someone to be with them.
Where both parents or spouses are engaged in
union activities at the same time, only one of them will be reimbursed. These
allowances must not be used for the purpose of remunerating the other parent or
spouse.
After midnight, daycare expenses will be
covered only if payment for overnight stay has been made.
In addition, for the supper period, claims of
$10 for one child and $5 for each additional child may be made in respect of expenses
incurred for child care or for late pick-up from the daycare centre.
|
Number of
children
|
1
|
2
|
3
|
4+
|
|
Morning
|
$10
|
$15
|
$20
|
$5
|
|
Afternoon
|
$10
|
$15
|
$20
|
$5
|
|
Evening
work, after 6 p.m.
|
$15
|
$20
|
$25
|
$5
|
|
Night
work, after midnight
|
$20
|
$30
|
$40
|
$5
|
. . .
The Central Council will only reimburse pay
and benefits actually lost.
In order to be reimbursed for a claim, the
person must adequately fill out an activity report and submit it no more
than 15 days after the week in which the activity took place.
Any claim for salary in connection with
meetings away, other than the Confederation office or council must
include a pay stub from the week in which the actual loss of salary occurred.
The Central Council will reimburse pay
actually lost by a union member who was granted leave from employment in
order to perform a duty for the Central Council.
If the union has the benefit of salary
maintenance by the employer, the Central Council will reimburse
the union or the employer for 100% of the gross salary, and, if
applicable, the related expenses, upon submission of vouchers.
If the union does not have the benefit of salary
maintenance, the Council shall pay the member 50% of the salary, in accordance
with the CSN form entitled [TRANSLATION] "Salary payment claim for persons
on leave".
If the member is from the hotel or restaurant
industry, the Central Council will reimburse tips in accordance with the
union's policy. The union must provide the Central Council with the said policy.
If the member is not a member of the local
council, and is called upon to be a member of a Confederation council, the
Central Council's reimbursement policy can be applied, provided the executive
committee so authorizes.
. . .
Days worked during a vacation period or on weekday programmed leave for regional or national activities
or for national bodies and committees, including time allotted to
transportation, will be made up for, in the course of the fiscal year to
which they apply.
In order to eliminate any over-remuneration,
the union member must file a report with the Central Council treasurer, setting
out the hours worked on those days.
Expenses incurred in connection with
activities held during a vacation period or on weekday programmed leave shall
be reimbursed to the union member even if time is made up for.
Any person on extended sick leave or in receipt of CSST and RAAQ benefits [workers' compensation or statutory
auto insurance benefits] is considered to be on absence with justification, and
is therefore ineligible for salary reimbursement and must abstain from
any union activity.
In the event of sporadic absence due to illness,
the union activist's collective agreement shall apply.
|
Absences
due to an act of nature
|
A union activist on
the Central Council is entitled to be absent from work, with his or her pay
maintained, where the absence results from an act of nature that paralyzes the
activist's locality (storm, flood, etc.) and prevents the activist from
reporting for work. (Reference: School closure, Transport Québec warnings
or other warnings).
[Emphasis added.]
[15]Mr. Gingras confirmed that all allowances
for expenses incurred on union business are paid without proof from the union
members that the expense was incurred: their word is considered good enough. Hotel
allowances were one such allowance that he referred to. However, meal
allowances are not granted where the meeting attended by the member is catered by
its organizers. Mr. Gingras also stated that an elected union official living
in Chicoutimi would not be entitled to a lunch or supper
allowance unless the meal were related to work.
[16]Mr. Gingras is one of the elected
union officials who was granted a child care allowance. He explained that he
has three children: one of them was born in 1993 and the others were born in
1990. Generally, when he works at Hôpital de Roberval, he gets home at
about 4 or 4:30 p.m. However, when he is working in Chicoutimi for CC Saguenay, he cannot get back before 6 p.m.
Consequently, he is given a $10 allowance to cover child care expenses from
4:30 to 6 p.m. He also stated that his wife works outside the home and
sometimes has to leave town and go to an Aboriginal reserve far from her usual workplace.
Given these circumstances, the Minister's auditor determined that the
child care allowances that were granted where both Mr. Gingras and his
spouse were away from home should not be considered taxable benefits.
[17]Mr. Gingras confirmed that Jeannine Girard,
the president of CC Saguenay, was on union leave for an average of four
days per week, and that vice-president Liliane Dufour and executive
secretary Roger Vachon took an average of three days of union leave per
week. As for Pierre Morel, the representative responsible for occupational
health and safety training, his leave varied from one to two days per week. The
amount of leave taken by the other elected union officials varied depending on the
need.
[18]Mr. Gingras also confirmed that
Messrs. Bherer, Morel and Tremblay lived in Alma,
64 km from Chicoutimi. Ms. Dufour lived in St‑Félix-d'Otis,
and in La Baie, 21 km from Chicoutimi. Ms.
Boudreault also lived in La Baie. Ms. Girard lived in Roberval, 107 km
from Chicoutimi, and Mr. Vachon lived in Jonquière,
23 km from Chicoutimi.
[19]In his testimony, Mr. Morel confirmed
that he worked at Provigo in Alma, Monday to Friday from 5 a.m.
to 3 p.m. He lived four or five kilometres from work and it took four
minutes to get there by car. Paragraph 3.07 of the Provigo collective agreement
provides as follows:
ARTICLE
3 UNION DUTIES
.
. .
3.07 (A) The
union representatives referred to in article 3, or such persons as the
Union delegate, after obtaining leave from their manager or from the
person acting in lieu of their manager, which leave shall not be denied except
with major justification, may be absent from their work in order to take
part in an official union activity, including but not limited to
(a) conventions,
(b) educational
meetings, and
(c) courses organized by
the Union or any body with which the Union is affiliated.
B) The
employee must provide one week's notice. It is understood that a maximum
of four (4) employees can be absent at the same time for the purposes of this
paragraph. It is further agreed that the Employer shall pay the absent representatives
their full salary and benefits.
C) The
Employer shall bill the Union for all amounts incurred to maintain salaries and
benefits, and the Union shall
reimburse these amounts.
[Emphasis added.]
[20]Ms. Côté was the only elected CC Côte‑Nord
official who testified. She explained that its territory extends from Tadoussac
to Blanc‑Sablon and that it has two offices: one in Baie‑Comeau and
the other in Sept‑Îles. The distance between those towns is 250 km. Ms. Côté
lives in Sept‑Îles and is the treasurer of CC Côte‑Nord. She
works 35 hours per week at the Youth Centre, Monday to Friday from 8:30 a.m. to
4:30 p.m. She estimates that she is on union leave two days a week, on average.
[21]Ms. Côté confirmed that she has a
child born in 1996, and that she lived alone during the relevant period. She
confirmed that she was entitled to the child care allowance when she had to
incur child care expenses in order to attend evening assemblies, but not for
periods during which she normally had to bear such expenses herself, that is to
say, during regular office hours. The only amounts that the auditor taxed in
her hands are expenses, totalling $60, which were incurred when she was in Sept‑Îles.
She confirmed that these expenses were related to evening meetings.
[22]The other CC Côte‑Nord officials
are Gilles Belzile, its president, who lived in Baie-Comeau during
the relevant period and was an employee of the Commission scolaire de l'Estuaire; Alain Therrien,
the executive secretary, who lived in Baie‑Comeau and was an employee of Centre
hospitalier régional de Baie‑Comeau; Valois Pelletier, vice-president,
Western Sector, who lived in Baie‑Comeau as well and was an employee of the
Alcoa aluminum smelter; Dany Vigneault, vice-president, Eastern Sector,
who lived in Port Cartier and was an employee of that municipality; and Réjeanne Gravel,
a CC Côte‑Nord representative employed by Centre hospitalier
régional de Sept‑Îles.
[23]The CC Côte‑Nord expense
reimbursement policy is essentially the same as the CC Saguenay's. The main
differences are as follows. Breakfasts are reimbursed if the meeting begins at
8:00 as opposed to 8:30 a.m. For lunches, the meeting does not need to last all
day; it is sufficient that it begin in the morning and extend into the
afternoon, or, if it ends in the morning, that the distance travelled exceed
100 km. The travel and expense reimbursement policy and the salary
reimbursement policy, set out at pages 4 to 7 of Exhibit I-2, tab 22, is
reproduced below:
[TRANSLATION]
TRAVEL REIMBURSEMENT POLICY
THE REIMBURSEMENT OF PUBLIC TRANSIT
COSTS REMAINS
THE GUIDING PRINCIPLE. THE
UNAVAILABILITY OR
INEFFICIENCY OF PUBLIC TRANSIT MAY WARRANT
A
CLAIM BASED ON DISTANCE DRIVEN.
HOWEVER, THE USE OF AN AUTOMOBILE MUST NOT
HAVE THE EFFECT OF ALLOWING A PERSON TO CLAIM MORE EXPENSES OR WAGES THAN THE
PERSON WOULD HAVE BEEN ENTITLED TO RECEIVE IF THE PERSON HAD USED PUBLIC
TRANSIT.
1. The cost of
public transit, reserved seven days in advance, may be claimed as a travel
expense where it has actually been incurred. The bus, train, ferry or plane
ticket and boarding pass must be provided.
2. A person who
actually uses his or her vehicle is entitled to a travel expense reimbursement
of $0.416 per kilometre.
3. The number of
kilometres for the trip is calculated based on the distance between the
person's home and the meeting place.
4. Taxi expenses
from the airport or station to the location of the overnight accommodations or
the meeting, upon submission of receipts.
5.
Travel expenses based on the distance
between the person's home and the airport or station, as the case may
be, are reimbursed.
. . .
EXPENSE
REIMBURSEMENT POLICY
OVERNIGHT
ACCOMMODATIONS
Overnight
accommodation expenses that have been incurred are eligible for reimbursement
in accordance with the Confederation's scale if
1. the
meeting continues the following day and more than 100 KM must be
travelled to return home from the meeting place;
2. the meeting
begins the following morning and more than 200 KM must be travelled
to reach the meeting place;
3. the overnight
accommodation expenses for the last day of a meeting are eligible for
reimbursement if the meeting ends after 9 p.m. and more than 200 KM
must be travelled to return home from the meeting place;
4. the overnight accommodation
expenses for the last day of a meeting are eligible for reimbursement if more
than 300 KM must be travelled to return home from the meeting place
and the meeting ends after 5:30 p.m.
EXPENSE REIMBURSEMENT POLICY
CHILD CARE EXPENSES
|
|
1 CHILD
|
2 CHILDREN
|
3 CHILDREN
|
|
MORNING
|
10.00
|
15.00
|
20.00
|
|
AFTERNOON
|
10.00
|
15.00
|
20.00
|
|
EVENING
– 7 PM
|
15.00
|
20.00
|
25.00
|
|
NIGHT–
PAST MIDNIGHT
|
20.00
|
30.00
|
40.00
|
1. Child care
expenses are eligible for reimbursement if they were incurred and paid for by a
person who has children 16 years of age or younger, or children under 18 who
are physically or mentally disabled and require child care service.
2. A person is
entitled to claim child care expenses only for additional costs incurred
outside his or her normal hours of work, and only where no salary is being claimed.
3. Child care
expenses are reimbursed to only one of the parents or spouses where both are
attending meetings during the same periods. The reimbursement must not be
used as remuneration for the parent or spouse.
SALARY
REIMBURSEMENT POLICY
1. Confederation
office and committee members are reimbursed as follows for wages actually lost:
(a) Where the
organization bills the CSN, the organization must, upon CSN's request, provide
all supporting documents with respect to its claim (Confederation office and
council).
(b) A Confederation
committee member claiming the reimbursement must attach, to the claim, a
confirmation of the genuinely incurred loss of income or job recall, a copy of
the application for union leave, a copy of the pay stub for the period in
question, and a confirmation of place of residence.
2. Wages actually
lost are wages that the person required to be at work would receive if at work,
including any benefits and bonuses and any tips that are ordinarily declared.
3. Any person who
is retired, or on sick leave, worker's compensation, wage‑loss insurance,
unemployment insurance, paid leave or a private or public compensation plan, is
considered to be on authorized leave and is consequently ineligible for wage
reimbursement.
4. Overtime shall
not be reimbursed under any circumstances, except where it is mandatory
overtime under the collective agreement and is part of the regular schedule. A
copy of the provision of the collective agreement must be provided in support
of the claim.
5. Wage
reimbursements for transportation time shall not exceed the amounts
contemplated in the travel expense reimbursement policy.
6.
The CSN shall reimburse the wages of one
delegate from the Confederation office per organization, and the wages of the organization's
ex officio delegate to the Confederation board.
[Emphasis added.]
[24]The collective agreement between the Comité
patronal de négociation pour les commissions scolaires francophones [French-language
school board employer-side negotiation committee] and the Fédération des
employées et employés de services publics Inc. [federation of public utilities
employees], acting on behalf of the syndicats d’employés et d’employées de
soutien des commissions scolaires francophones du Québec [unions of Quebec French-language
school board support workers] provides as follows (Exhibit I‑2,
tab 30, at page 15):
[TRANSLATION]
3-3.01 At the union's
written request, submitted at least fifteen (15) days in advance, the Board shall
grant an employee leave for full-time union activities for an uninterrupted
period of one (1) to twelve (12) months, which shall be renewable under the
same procedure.
At the written request of a union, submitted
at least fifteen (15) days in advance, the Board shall grant an employee
full-time leave without pay for union activities for an uninterrupted period of
one (1) to twelve (12) months, which shall be renewable under the same
procedure. In such cases, section 5‑10.00 will apply, except with respect
to seniority.
With the consent of the Board, and in
accordance with the same terms and conditions, union leave or leave without pay
under this clause may be part‑time.
. . .
3‑3.03 An employee
to whom leave shall have been granted under clause 3-3.01 keeps his or her salary
(including any applicable bonuses) and fringe benefits, and his or her rights
and privileges under the collective agreement.
3‑3.04 For union
leave granted under the first paragraph of clause 3‑3.01, the
union, will reimburse the Board on a quarterly basis for any amount paid to
the person, and any amount paid by the Board for and on behalf of the employee
concerned. This shall be done within thirty (30) days after the Board submits a
statement of account in that regard.
In the case of
part-time union leave contemplated in clause 3‑3.01, the Board and
the union shall agree on the amount to be reimbursed.
[Emphasis added.]
[25]The collective agreement between, on the
employer side, the Comité patronal de négociation du secteur de la santé et des
services sociaux and Sous‑comité patronal de négociation des centres de
protection de l'enfance et de la jeunesse [the health and social services
sector bargaining committee and the child and youth protection centres bargaining
committee] and, on the union side, the Fédération de la santé et des services
sociaux (CSN) [health and social services federation (CSN)] contains a clause
similar to the one in the hospitals’ collective agreement.
[26]Paragraph 4.07(b) of the collective agreement
between the town of Port‑Cartier and the Syndicat national des employés
municipaux de la Ville de Port‑Cartier provides (see Exhibit I‑2,
tab 34, at page 5):
[TRANSLATION]
4.07 Other
union activities
.
. .
(b) Upon
written request submitted by the Union or its representative ten (10) days
in advance, the executive secretary or the executive secretary's representative
shall authorize no more than two stewards to take leave not exceeding
thirty (30) days in duration for any union activities. Such leave
is contingent on the employer finding a replacement.
The Town shall maintain the employee's
regular salary during these days of absence. The Union shall reimburse the said salary to the Town with thirty (30) days
after the Town submits a statement of account to that effect.
[Emphasis added.]
[27]In her testimony, Ms. Côté confirmed
that CC Côte‑Nord covers lunches with a meal allowance when the
executives from its two offices meet on the noon hour at either of those offices.
The same policy applies to evening meetings.
[28]The financial statements for the 36-month
fiscal period from January 1, 2001, to December 31, 2003, report
$54,436 in expenses related to the position of the president of CC Côte‑Nord,
and breaks this down into $37,986 in union-leave salary for the president and $14,468
in union-leave expenses for the president. Similar amounts are stated for
the positions of treasurer and secretary and those of the various
vice-presidents (see Exhibit I‑2, tab 25).
[29]In the course of her audit, the Minister's auditor
suggested to Mr. Gingras that he could have moved to Chicoutimi in order to prevent
the allowances for travel from his residence to the Chicoutimi office, and for meals in Chicoutimi, from
being included in his income as taxable benefits. Mr. Gingras dismissed this
suggestion, reminding the auditor that he had a wife and children who lived in Roberval
and that his three-year term as treasurer was not renewable.
[30]According to Mr. Gingras, the
Minister's assessment had a chilling effect on union member activism. He said
that the assessment not only caused significant allowances, received by elected
union officials for expenses incurred during travel between their homes and the
main central councils, to become taxable, but that it also caused certain
active union members to become ineligible for GST and QST credits, and that, in
his own case, it caused his wife to lose her entitlement to family allowances.
When I asked Mr. Gingras whether the central councils had considered
increasing the remuneration of elected executives, he responded that this was
an issue of affordability.
[31]During her testimony, the auditor said that
she had determined that the elected union officials were entitled to meal,
travel and child care allowances and that they received remuneration. She did
not base her decision on the fact that CC Côte‑Nord and CC Saguenay
reimbursed the employers for the elected officials' salaries. She confirmed
that she excluded from the taxable benefits the amounts reimbursed upon
submission of invoices or bills for expenses like office supplies, which she
considered to be central council expenses. In her determination, the taxable
allowances were limited to those intended to cover the elected officials'
travel between their homes and the offices to which they were supposed to
report, i.e., the Chicoutimi office for CC Saguenay elected officials,
and the Baie-Comeau or Sept‑Îles office for CC Côte‑Nord
elected officials. Thus, she determined that the allowances for Ms. Côté's
travel from her Sept‑Îles home to Baie‑Comeau were not taxable
benefits. The only meal allowances included in the incomes were the meals eaten
when the elected officials were at the various central council offices. The
auditor also confirmed that she did not ask to see Mr. Gingras' restaurant
bills.
Analysis
The relevant statutory provisions
[32]The relevant statutory provisions are
as follows:
ITA
Income from office or employment
5(1) Subject to this Part, a taxpayer's income
for a taxation year from an office or employment is the salary, wages
and other remuneration, including gratuities, received by the taxpayer in the
year.
Amounts to be
included as income from office or employment
6. (1) There shall be
included in computing the income of a taxpayer for a taxation year as
income from an office or employment such of the following amounts as
are applicable
(a) the value of board,
lodging and other benefits of any kind whatever received or enjoyed by the
taxpayer in the year in respect of, in the course of, or by virtue of an
office or employment, except any benefit
. . .
Personal or living
expenses
(b) all amounts received by the
taxpayer in the year as an allowance for personal or living expenses or
as an allowance for any other purpose, except
. . .
Director's or other
fees
(c) director's or other fees received
by the taxpayer in the year in respect of, in the course of, or by virtue of an
office or employment;
Definitions
248. (1) In this Act,
"office" means the position
of an individual entitling the individual to a fixed or ascertainable
stipend or remuneration and includes a judicial office, the office of a
minister of the Crown, the office of a member of the Senate or House of Commons
of Canada, a member of a legislative assembly or a member of a legislative or
executive council and any other office, the incumbent of which is elected by
popular vote or is elected or appointed in a representative capacity and
also includes the position of a corporation director, and "officer"
means a person holding such an office;
EIA
Types of insurable employment
5. (1)
Subject to subsection (2), insurable employment includes
(a) employment in Canada by one or more employers, under
any express or implied contract of service or apprenticeship, written or
oral, whether the earnings of the employed person are received from the
employer or some other person and whether the earnings are calculated by time
or by the piece, or partly by time and partly by the piece, or otherwise;
. . .
(d) employment included by regulations made under
subsection (4) or (5); and
Employee's
premium
67. Subject to section 70, a person employed
in insurable employment shall pay, by deduction as provided in
subsection 82(1), a premium equal to their insurable earnings multiplied
by the premium rate set under section 66 or 66.3, as the case may be.
Employer's premium
68. Subject to sections 69 and 70, an employer shall
pay a premium equal to 1.4 times the employees' premiums that the employer is
required to deduct under subsection 82(1).
Deduction and payment of premiums
82. (1)
Every employer paying remuneration to a person they employ in insurable
employment shall
(a)
deduct the prescribed amount from the remuneration as or on account of the
employee's premium payable by that insured person under section 67 for any
period for which the remuneration is paid; and
(b)
remit the amount, together with the employer’s premium payable by the employer
under section 68 for that period, to the Receiver General at the prescribed
time and in the prescribed manner.
Assessment
85. (1)
The Minister may assess an employer for an amount payable by the employer
under this Act, or may reassess the employer or make such additional
assessments as the circumstances require, and the expression
"assessment" when used in this Act with reference to any action so
taken by the Minister under this section includes a reassessment or an
additional assessment.
Notice of assessment and liability of
employer
(2) After assessing an employer for an amount payable under this Act, the
Minister shall send the employer a notice of assessment, and when the
notice is sent the assessment is valid and binding subject to being vacated or
varied on appeal under this Act, and the employer is liable to pay the amount
to Her Majesty without delay.
. . .
EIR
6. Employment in any of the following employments, unless it is
excluded from insurable employment by any provision of these Regulations, is included
in insurable employment:
. . .
(f) employment of a person who holds an
office, as defined in subsection 2(1) of the Canada Pension Plan,
. . .
(iv) where the person
holds the office in a union or an association of unions to which
the person was elected by popular vote, or was elected or appointed to
that office in the union or association in a representative capacity, and that
employment is not included in insurable employment by paragraph (a);
Insurable
Earnings and Collection of Premiums Regulations (IER)
2. (1) For the purposes of the definition "insurable
earnings" in subsection 2(1) of the Act and for the purposes of these
Regulations, the total amount of earnings that an insured person has from
insurable employment is
(a) the total of all amounts, whether wholly or partly pecuniary,
received or enjoyed by the insured person that are paid to the person by the
person's employer in respect of that employment, and
(b) the amount of any gratuities that the insured person is required
to declare to the person’s employer under provincial legislation.
10. (1) Where, in any case not coming within
any other provision of these Regulations, an insured person works
(a) under
the general control or direct supervision of, or is paid by, a person
other than the insured person’s actual employer,
(b) with the concurrence of a person other than the insured person's
actual employer, on premises or property with respect to which that other
person has any rights or privileges under a licence, permit or agreement,
that other person shall, for the purposes of maintaining records, calculating the insurable
earnings of the insured person and paying, deducting and remitting the premiums
payable on those insurable earnings under the Act and these Regulations, be
deemed to be the employer of the insured person in addition to the actual
employer.
(2) The amount of any employer's premium paid
by the person who is deemed to be the employer under subsection (1) is
recoverable by that person from the actual employer.
(3) Where a person who is deemed under these
Regulations to be an employer of an insured person fails to pay, deduct or
remit the premiums that an employer is required to pay, deduct or remit under
the Act or these Regulations, the provisions of Parts IV and VI of the Act
shall apply to the person as if the person were the actual employer.
CPP
2. (1) In this Act,
"office" means the position of an
individual entitling him to a fixed or ascertainable stipend or remuneration
and includes a judicial office, the office of a minister of the Crown, the
office of a lieutenant governor, the office of a member of the Senate or House
of Commons, a member of a legislative assembly or a member of a legislative or
executive council and any other office the incumbent of which is elected by
popular vote or is elected or appointed in a representative capacity, and
also includes the position of a corporation director . . .
[Emphasis added.]
The Respondent’s Position
[33]In her oral submissions, counsel for the
Respondent acknowledged that the elected officials did not hold any employment
with the various central councils: there was no employment contract
between those officials and the central councils because there was no
relationship of subordination. However, in her opinion, the elected officials
held an office within the meaning of subsection 248(1) of the ITA and
subsection 2(1) of the CPP. The amounts reimbursed by the central
committees were a "fixed or ascertainable stipend or remuneration"
within the meaning of subsection 248(1) and subsection 2(1) of the
CPP. In addition, in her opinion, these offices entitled their holders to such
remuneration because there were collective agreements which stipulated that the
officials would continue to receive their remuneration from their respective
employers and that the central committees had to reimburse the local unions,
and the local unions had to reimburse the employers. It was the CSN unions
that negotiated such collective agreements. In support of her arguments, she
cited the opinion of Justice Louise Lamarre Proulx in Duguay v. Canada,
[2000] T.C.J. No. 381 (QL). In particular, she quoted paragraph 37:
There is, however, no
doubt that, as president and treasurer, the appellants performed the
duties of an office. The only unusual aspect of this case lies in
the method of paying the stipend or remuneration for the office
held. The appellants were reimbursed for their lost working days. The
effect of the compensatory payments was thus that the treasurer was
reimbursed for a greater amount than the president. Should these
compensatory payments be considered as a fixed or ascertainable stipend or
remuneration? There does not seem to be any case law on all fours with the
circumstances of this case. However, the case law is clear in establishing that
the meaning to be given to the terms "stipend" and
"remuneration" is very broad, and any payment received by reason of
an office or employment must be included within that meaning. I refer in
particular to the decisions of the Supreme Court of Canada in Goldman v.
M.N.R., [1953] C.T.C. 95 and The Queen v. Savage, [1983] 2 S.C.R. 428. The
appropriate test for whether a payment is remuneration or a stipend is
to determine whether the person received the payment for his activities in the
performance of his office or whether he received it simply as an individual.
The answer in this case is obvious. What is involved here is not reimbursement
for expenses incurred by the appellants. Reimbursement of those expenses did
not confer an economic benefit on the appellants and was not to be included in
computing their income. Nor did the Minister include it, as appears from the
Reply. See, in this regard, Ransom v. M.N.R., [1968] 1 Ex. C.R. 293, Canada v. Huffman, [1990] F.C.J. No. 529 and Canada
v. Hoefele, [1995] F.C.J. No. 1340. In conclusion,
the fact that the stipend was paid on the basis of the remuneration lost for a
day of work does not preclude that stipend from being a fixed or ascertainable
stipend paid by reason of the office and accordingly taxable under subsection
5(1) of the Act.
[Emphasis
added.]
[34]Counsel for the Respondent also cited the
Federal Court of Appeal's decision in Daniels v. Canada (Attorney
General), [2004] F.C.J. No. 573 (QL), 2004 FCA 125, which affirmed
the decision of Justice Paris of this Court. The taxpayer in Daniels
was a municipal councillor whose county gave him mileage allowances for travel
from his home office to council meetings. Justice Paris confirmed the
Minister's assessment, which included these amounts in the councillor's income
as allowances under paragraph 6(1)(b) of the ITA. The Minister had
excluded all the allowances received in respect of expenses incurred in the performance
of the taxpayer's other responsibilities as municipal councillor. The Federal
Court of Appeal dismissed the taxpayer's appeal. The Court ruled that the
amounts that the auditor included in the taxpayer's income as taxable benefits
should be confirmed because the expenses were personal.
[35]Furthermore, in the case at bar, counsel
for the Respondent submits that the amounts paid by the central councils come
within the definition of "insurable earnings" in
subsection 2(1) of the IER in particular.
The
Appellants' Position
[36]According to counsel for the Appellants,
the issue for determination in the case at bar is whether, for the purposes of
the ITA, the officials held an office within the meaning of
subsection 248(1) of the ITA, and whether, for the purposes of the EIA, they
held an office within the meaning of subsection 2(1) of the CPP. Given the
large number of elected union officials (14) who instituted appeals, counsel
for the Appellants and counsel for the Respondent decided not to argue the
issue of the amount to be included in each official's income as a taxable
benefit. Consequently, the question of whether the 14 officials received a
taxable benefit within the meaning of paragraphs 6(1)(a) and 6(1)(b)
of the ITA was not disputed because its resolution would have involved the
analysis of the individual circumstances of each official. Thus, if
the elected officials held an office for the purpose of the relevant statutes,
all the Appellants' appeals should be dismissed. However, if I determine
that the elected officials held no office for the purpose of those statutes,
all their appeals must be allowed because an element essential to the
application of all the relevant provisions, that is to say, the existence of an
office, would be lacking.
[37]In his arguments, counsel for the
Appellants pointed out that each of the elected union officials was employed
under a contract of employment with an employer; for example, Mr. Gingras
had a contract with Hôpital de Roberval, Ms. Côté with the Youth Centre,
and Mr. Morel with Provigo. In addition to the employment contract,
there are terms and conditions of the collective agreements negotiated between
the employers and the unions representing the officials. In those collective
agreements, the employers made a commitment to pay remuneration equal to the
salaries, or simply to maintain the salaries, of the elected officials who
obtained union leave for the purpose of holding a position on a central council.
[38]The parties agree that all 14 officials were
elected to a post at their central council's convention, and provided services
to a central council while they received their remuneration or salary under the
terms of collective agreements. However, in these same collective agreements,
the local unions agreed to reimburse the employers for the salaries the
officials were paid in respect of the periods when they were rendering services
to the central councils.
[39] Counsel for the Appellants submits as follows. There is
no contract between the central councils and the elected union officials under
which the officials are entitled to remuneration for holding an office on a
central council. Moreover, none of the provisions of the CC Saguenay constitution
and by-laws (Exhibit I‑1, tab 34) or the CC Côte‑Nord
constitution and by-laws (Exhibit I‑2, tab 23) grants a right to
remuneration in exchange for the elected officials carrying out their duties on
a central council. The obligation to repay the salaries is solely between
the central councils and the locals, and it is the locals which, under the
collective agreements, must repay the salaries of officials who are on leave
for union business. Consequently, the elected officials are not entitled to any
salary reimbursements, because they receive their salaries from their
respective employers. The only amounts that the officials are entitled to
receive from their central councils are the allowances which are intended to
compensate them for travel in the course of their union duties, and which cover
meal, transportation and child care expenses. Counsel for the Appellants
submits that these allowances cannot possibly be characterized as hidden remuneration.
He submits that the only correct approach is the one described by Madam Justice
McLachlin of the Supreme Court of Canada in Shell Canada Ltd. v. Canada,
[1999] 3 S.C.R. 622, 1999 CarswellNet 1809, [1999] 4 C.T.C. 313,
99 DTC 5669 (Eng.). In particular, he quotes the following remarks by Madam Justice
McLachlin, at paragraph 39:
39 This Court has repeatedly held that courts must be sensitive to
the economic realities of a particular transaction, rather than being bound
to what first appears to be its legal form: Bronfman Trust, supra,
at pp. 52-53, per Dickson C.J.; Tennant, supra, at
para. 26, per Iacobucci J. But there are at least two caveats
to this rule. First, this Court has never held that the
economic realities of a situation can be used to recharacterize a taxpayer’s bona
fide legal relationships. To the contrary, we have held that,
absent a specific provision of the Act to the contrary or a finding that they
are a sham, the taxpayer’s legal relationships must be respected in
tax cases. Recharacterization is only permissible if the label
attached by the taxpayer to the particular transaction does not properly
reflect its actual legal effect: Continental Bank Leasing Corp. v.
Canada, [1998] 2 S.C.R. 298, at para. 21, per Bastarache J.
[Emphasis added.]
[40]In the submission of counsel, it would be
inappropriate to recharacterize a genuine legal relationship by saying that the
central councils support the salaries that the officials are paid and that the
officials' remuneration is therefore an entitlement stemming from their
acceptance of a position on a central council. Counsel also cited Ransom v.
Minister of National Revenue, 1967 CarswellNet 296, [1967] C.T.C. 346,
67 DTC 5235, where Justice Noël of the Exchequer Court of Canada made
the following comments, at paragraph 42:
. . . Secondly, the question whether a payment arises from an office or
employment depends on its causative relationship to an office or
employment, in other words, whether the services in the employment are the
effective cause of the payment. I should add here that the question of what was
the effective cause of the payment is to be found in the legal source
of the payment, and here this source was the agreement which resulted from
the open offer of the employer to compensate its employee for his loss and the
acceptance by him of such offer. The cause of the payment is not the
services rendered, although such services are the occasion of the payment, but
the fact that because of the manner in which the services must be rendered or
will be rendered, he will incur or have to incur a loss which other employees
paying taxes do not have to suffer.
[Emphasis added.]
[41]Counsel for the Appellants submits that, in
the case at bar, the cause of the payment is the employment contracts and
collective agreements under which the employer, not the local unions or central
councils, must pay the salary. Some say that in order for there to be a sham,
taxpayers must have done something to mislead the tax authorities as to the
taxpayers' true legal relationships; they must have created an appearance that
is inconsistent with reality. In the case at bar, none of the evidence points
to a sham, and counsel for the Respondent did not claim that there was one
either.
[42]Consequently, counsel for the Appellants emphasizes
that the only source of the remuneration that the union officials are paid is
their respective employers, not the central councils. He referred, among
other things, to the central council policy, set out at tab 22 of
Exhibit I‑2, which expressly stipulates that the union officials are
not entitled to any salary reimbursement if they are retired, on sick
leave, etc. In his submission, the services that the officials provide to
the central councils are a type of volunteer work. In addition, as counsel for
the Respondent stated, even though clause 9.03 of the collective agreement with
the Fédération de la santé et des services sociaux stipulates that stewards can
be on leave without pay for union activities while receiving remuneration equal
to what they would receive if they were at work, they are considered, under
clause 1.01, to be employees (see Exhibit I‑1, tab 36,
page 1.1.1). Indeed, the word [TRANSLATION] "employee" is
defined as follows:
1.01 Employee
"Employee"
means any person who is a member of the bargaining unit and works for the
employer in exchange for remuneration. This term also includes union
officers on union leave as contemplated in section 9 of this
Agreement.
[Emphasis added.]
[43]In addition, there is every reason to
believe that the elected officials' employers produced T4s that reflected the
fact that they paid remuneration to each official on union leave. The amounts
that the officials received from these employers were declared; in fact, this
is shown by tabs 1, 2 and 3 of Exhibit I‑1, which pertain to Mr. Gingras'
2002, 2003 and 2004 taxation years.
[44]Since counsel for the Respondent emphasized
Duguay, counsel for the Appellants submitted that the judge in Duguay
was motivated by tax fairness considerations because the CSN union paid
Mr. Duguay [TRANSLATION] "compensation for the loss of the salary
that his regular employer had not paid him." He cited, inter alia,
paragraph 27 of the decision:
27 Marcel Martin was one of the appellants in the judgment of this
Court in Denis Comptois et al. v. Her Majesty the Queen, [1998] T.C.J. No. 232. He explained that
union members wanted to have union leave regularized because employees who
did not receive it considered it unfair that those who did get it received
their gross wages untaxed. Moreover, in their opinion, those amounts should
be subject to tax just as their income from employment was. This is the reason
for the repeated calls to regularize the payment of union leave.
[Emphasis added.]
[45]In counsel's submission, the ruling made by
the judge at paragraph 37
took this fiscal unfairness into account. However, a distinction should be
drawn with respect to the reasons in Duguay because, first of all, the
judge could have held that the amounts should have been taxed under the
principles of Tsiaprailis v. Canada, [2005] 1 S.C.R. 113, 2005 DTC
5119 (Eng.), at paragraph 7, where Madam Justice Charron wrote:
In my view, this conclusion runs counter to
the principle that awards of damages and settlement payments are inherently
neutral for tax purposes. My colleague takes no issue with this
principle. As she explains, in assessing whether the monies will be
taxable, we must look to the nature and purpose of the payment to determine
what it is intended to replace. The inquiry is a factual one. The tax
consequences of the damage or settlement payment is then determined according
to this characterization. In other words, the tax treatment of the item
will depend on what the amount is intended to replace. This approach
is known as the surrogatum principle. As noted by Abella J., it was
defined in London and Thames Haven Oil Wharves, Ltd. v. Attwooll, [1967] 2 All E.R. 124 (C.A.), and subsequently
adopted in a number of Canadian cases: see P. W. Hogg, J. E. Magee and J.
Li, Principles of Canadian Income Tax Law (4th ed. 2002), at pp. 91-93;
and V. Krishna, The Fundamentals of Canadian Income Tax (8th ed.
2004), at pp. 413-15.
[Emphasis added.]
[46]Counsel for the Appellants submits that the
allowance that Mr. Duguay was paid sought to compensate him for the loss
of salary that he incurred because his employer granted him leave without pay
for union activities, and the amount paid by his union under those
circumstances sought to replace the income that he would have earned if he had
not been granted leave for union activities. In the alternative, counsel notes
that the decision of Justice Lamarre Proulx was rendered before the
decision of the Supreme Court of Canada in Canada v. Fries, [1990] 2 S.C.R.
1322, [1990] 2 C.T.C. 439. There, the Supreme Court held that strike
pay does not constitute income within the meaning of section 3 of the ITA.
In its very brief decision to that effect, the Court reversed the decision
of the Federal Court of Appeal, which had confirmed the Tax Review Board's
decision that such an allowance constituted income within the meaning of
section 3 (see Canada v. Fries, [1989] 3 F.C. 362,
[1989] 1 C.T.C. 471, 89 DTC 5240). According to counsel for the Appellants,
the approach adopted by the Supreme Court of Canada applies to the
reimbursement of salary by Mr. Gingras' union. Consequently, he submits that Duguay
is not to be followed in the case at bar.
[47]Lastly, counsel for the Appellants cited
the decision in Payette v. Minister of National Revenue, 2002 CarswellNat
1983, where Judge Dussault compared the wording of the definition of "office"
(charge) in subsection 2(1) of the CPP with the definition of "office"
(charge) in subsection 248(1) of the ITA, and concluded that even
though there is a slight difference between the terms that each of the French
versions uses to characterize the remuneration, the English versions are
identical in that regard because they both provide for "a fixed or
ascertainable stipend or remuneration". I will reproduce the
definitions again, but in both languages:
|
Subsection 248(1) ITA
"office" means the position
of an individual entitling the individual to a fixed or ascertainable
stipend or remuneration and includes a judicial office, the office
of a minister of the Crown, the office of a member of the Senate or House of
Commons of Canada, a member of
a legislative assembly or a member of a legislative or executive council and
any other office, the incumbent of which is elected by popular vote or is
elected or appointed in a representative capacity and also includes the
position of a corporation
director, and "officer" means a person holding such an office;
|
Subsection 2(1)
CPP
"office"
means the position of an individual entitling him to a fixed or
ascertainable stipend or remuneration and includes a judicial office, the
office of a minister of the Crown, the office of a lieutenant governor, the
office of a member of the Senate or House of Commons, a member of a
legislative assembly or a member of a legislative or executive council and
any other office the incumbent of which is elected by popular vote or is
elected or appointed in a representative capacity, and also includes the
position of a corporation director, and "officer" means a person
holding such an office;
|
|
French version
« charge » Poste
qu'occupe un particulier et qui lui donne droit à un traitement ou à une rémunération fixes
ou vérifiables, y compris une charge judiciaire, la charge de ministre de la Couronne, la charge de membre du Sénat ou de la Chambre des communes du Canada, de membre d'une assemblée législative ou de membre d'un conseil
législatif ou exécutif et toute autre charge dont le titulaire est élu au suffrage universel ou bien choisi ou nommé à titre représentatif, et comprend aussi le poste
d'administrateur de société; « fonctionnaire » ou « cadre » s'entend de la personne qui détient une charge de ce genre, y compris un conseiller municipal et un commissaire
d'école;
|
French version
« fonction » ou «charge
» Le poste qu’occupe un particulier, lui donnant droit à un traitement ou à une
rémunération déterminée ou constatable. Sont visés par la présente
définition une charge judiciaire, la charge de ministre, de lieutenant-gouverneur,
de membre du Sénat ou de la Chambre des communes, de membre d’une assemblée
législative ou d’un conseil législatif ou exécutif et toute autre charge dont
le titulaire est élu par vote populaire ou est élu ou nommé à titre de
représentant, y compris le poste d’administrateur de personne morale;
«fonctionnaire » s’entend d’une personne détenant une telle fonction ou
charge.
|
|
[Emphasis added.]
|
[Emphasis added.]
|
[48]Another aspect of Payette that
counsel for the Appellants stressed is found in the following excerpt:
24 However, in commenting on
the decision in Guérin (supra), Reed J. appears to assume that in
that case the remuneration was not ascertainable mainly because of
the expenses the appellant was obliged to incur. The Court does not agree
with that position. The words "stipend" and "remuneration"
mean gross income, not income net of expenses. This is clear from the wording
of subsection 5(1) of the Income Tax Act. As well, the Court
considers that the descriptor "ascertainable" must refer to something
that can be ascertained a priori; otherwise it would have no meaning
since everything can be ascertained a posteriori. Thus if the
"stipend" or "remuneration" is not fixed, it must still be
ascertainable in advance with at least some degree of accuracy by using
some formula or by referring to certain set factors. The Court considers that
this is the meaning of the decisions in Guérin and MacKeen (supra).
[Emphasis
added.]
[49]Lastly, counsel for the Appellants argued
that if the Court has the slightest doubt, the benefit of that doubt must go to
the taxpayers, as Mr. Justice Sopinka stated in Fries:
We are not satisfied that the payments by way
of strike pay in this case come within the definition of "income
. . . from a source" within the meaning of s. 3 of the Income
Tax Act, S.C. 1970‑71‑72, c. 63. In these
circumstances the benefit of the doubt must go to the taxpayers. The
appeal is therefore allowed and the decision of the Tax Review Board is
restored. The appellant is to have his costs throughout.
[Emphasis added.]
Decision
[50]In my opinion, the Appellant's position
with respect to the interpretation of the different definitions of
"office" set out in subsection 248(1) of the ITA and
subsection 2(1) of the CPP is the correct one. Indeed, in order for the
officials to hold an office within the meaning of the two provisions, it is
important that their position entitle them to a "fixed and ascertainable
stipend or remuneration". Here, the evidence as a whole clearly shows that
the CSN central council policy is not to remunerate union officials who agree to
serve in various elective positions on central councils. Being committed
union activists, the members agree to engage in the CSN's various activities as
volunteers, notably in their capacity as elected union officials on central
councils.
[51]On the other hand, the central councils'
policy is to take all measures necessary to ensure that the activists incur no
losses from their work with the various organs that make up the CSN's large
family. If an official or representative is on leave without pay for the period
during which he or she has participated in union activities, the central
councils will reimburse his or her salary loss. This accounts for why a
mere representative elected to the central council, who holds a paid position
at a university and earns, say, $100,000, could receive more money for his
union activities than the central council's president, who might earn only a
$50,000 salary from his usual employment. Thus, the objective that the central
councils are pursuing is not to remunerate their executives, but to compensate
them for their loss of salary.
[52]Travel expenses associated with union
activities are regarded the same way. For example, Mr. Gingras, who
lives in Roberval and normally works at Hôpital de Roberval, must be
compensated for his travel, not only when he goes to Montréal or Québec for
union meetings or demonstrations, but also when he travels to the CC Saguenay
office in Chicoutimi. If Mr. Gingras had not agreed to work as a treasurer
at CC Saguenay, and to do so practically full-time during the relevant
period, he would not have had to incur travel expenses. Indeed, he lives close
enough to the hospital, his usual workplace, to get there on foot; in fact, he
is able to return home to eat his lunches. By contrast, when he goes to the CC Saguenay
office in Chicoutimi, he must use his own car and incur expenses
that he would not have incurred if he had not agreed to volunteer for the
union. Since he travels outside the municipality where Hôpital de Roberval, his
employer's institution and his workplace is located, the fact that CC Saguenay
reimburses his travel and meal expenses under such circumstances is to be
expected.
[53]It should also be recalled that Mr. Gingras
must obtain the hospital's authorization each week in order to be available for
his union activities as CC Saguenay treasurer; consequently, there is a
chance that such permission will be denied, as has happened in the past, albeit
rarely. Moreover, it should be recalled that Mr. Gingras is elected for a
three-year term and that it is therefore uncertain that the term will be
renewed. Given these circumstances, it is normal for a volunteer union official
to be compensated for expenses of the kinds in issue, including child care
expenses. Such compensation is not a remuneration or stipend, but, rather, the
reimbursement of a financial loss resulting from union volunteer work. The same
finding must be made with respect to the other elected union officials.
[54]I agree with counsel for the Appellants that
the legal source of the remuneration received by the various union officials is
their respective employment contracts, combined with the terms and conditions
of their collective agreements, even though their respective employers are
reimbursed an amount equal to the applicable salary and fringe benefit costs
for the periods of absence on union leave. Consequently, the union officials are
not entitled, under any contractual relationship or any central council
constitution or by-laws, to a fixed or ascertainable stipend or remuneration
under subsection 248(1) of the ITA or subsection 2(1) of the CPP.
[55]Although it is unnecessary to decide the
question here, I lean toward the position of counsel for the Appellants that if
the elected officials had not received their salary from their employers under
their employment contracts, the compensation for their loss of salary
while on union leave might constitute income from employment in their hands
because it would then be serving to replace the salary that they would
ordinarily have earned under a contract of employment between themselves and
their employers. This interpretation has this advantage that it makes taxable,
as income from employment (not income from an office), the remuneration that
replaces the remuneration that the union official would have earned if he or
she had not been granted leave for union business, regardless of whether the
employer paid the remuneration to the employee under the employment contract or
whether the amount is compensation for a loss of salary paid directly to the
union official by the unions in situations where the employer has granted the
official leave without pay for union business.
[56]In my view, this interpretation is
consistent with the economic reality, which is that the remuneration that each of
the officials earns is based on the terms and conditions of their contractual
relationship with their employer. And this accounts for the fact that a
treasurer of a central council can receive more money for his union activities
than its president. Indeed, the central council's objective is not to
remunerate the officials, but, rather, to compensate them for a loss. Under
these circumstances, the tax treatment reflects the true nature of the legal
relationship between the official and the central council, a relationship in
which the union official provides his or her services on a volunteer basis.
Consequently, there can be no contract of employment, because two of the three
elements essential to the existence of such a contract, that is to say,
remuneration for services, provided under the direction and control of the
employer (article 2085 of the Civil Code of Québec), are not
present. Nor is there any "office" for the purposes of the ITA,
ETA or CPP, since there is no position entitling the individual to a fixed or
ascertainable stipend or remuneration.
[57]In my opinion, this result is entirely in
keeping with the situation of numerous volunteers who work for various
charitable organizations and who render their services without being
remunerated but are compensated for the expenses incurred in connection with
the activities of these organizations, whether they be for profit or not.
Since none of the union officials in the case at bar held an office for the
purposes of the relevant legislation, and there was no contract of employment
between those officials and their unions, it would not be appropriate to
conclude that the ITA, and section 6 in particular, applies, since there
is no source of income, such as an office or employment, as required by the first
part of section 6, which provides: "There shall be included in
computing the income . . . as income from an office or employment such of the
following amounts as are applicable." Since there is no office or employment,
sections 5 et seq. of the ITA simply do not apply here. The provisions
of the EIA do not apply either, specifically because the union officials were
not employed in insurable employment within the meaning of section 5.
[58]For all these reasons, the Appellants'
appeals are allowed. The assessments under the Employment Insurance Act
are vacated, and the assessments under the Income Tax Act are referred
back to the Minister for reconsideration and reassessment on the basis that
none of the union officials held an employment or office with either of the
central councils. The Appellants shall be entitled to only one set of costs.
Signed at Montréal, Quebec, this 29th day of August 2008.
"Pierre Archambault"
Translation
certified true
this 18th day of
December 2008
François Brunet,
reviser
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