2747-7173 Québec Inc. v. M.N.R., docket 1999-3746-EI

Date: 20000628

Docket: 1999-3746-EI

BETWEEN:

2747-7173 QUÉBEC INC. (ALSO KNOWN AS CLIMAN TRANSPORTATION SERVICES REG'S),

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

RICHARD LAMONTAGNE,

Intervenor.

Reasons for Judgment

Somers, D.J.T.C.C.

[1] This appeal was heard in Montreal, Quebec, on April 20, 2000.

[2] The Appellant is appealing from a decision made by the Minister of National Revenue (the "Minister") that the employment held by Richard Lamontagne (the "Worker") with 2747-7173 Quebec Inc., the Payor, during the period at issue, from December 28, 1997 to July 5, 1998 was insurable employment within the meaning of the Employment Insurance Act and that the insurable earning was $21,951.71 for the said period.

[3] The matter at issue is to determine if the insurable earnings of the Worker, for the relevant period was $21,951.71 rather than $17,202.11 as indicated on the T4 issued by the Payor to the Worker (Exhibit A-2). The Respondent relied on subsection 2(1) of the Insurable Earning and Collection of Premiums Regulations (the "Regulations")in rendering his decision.

[4] Subsection 2(1) of the Regulations reads in part as follows:

"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 the total of all amounts, whether wholly or partly pecuniary, received or enjoyed by the person that are paid to the person by the person's employer in respect of such employment."

[5] Subsection 2(3) of the Regulations reads in part as follows:

"(3) For the purposes of subsections (1) and (2), "earnings" does not include

(a) any benefit in kind, except an amount that is the value of board and lodging enjoyed by a person in a pay period in respect of the employment if cash remuneration is paid to the person by the person's employer in respect of the pay period;

..."

[6] In arriving at his decision, the Minister relied on the following allegations of fact, which were admitted or denied.

"a) The Appellant was incorporated. (admitted)

b) The Appellant was carrying on business under the name of Climan Transportation Services Reg's. (admitted)

c) The Appellant employed the worker as a truck driver. (admitted)

d) The worker was mostly called on to drive trucks in the United States of America. (admitted)

e) The Appellant issued the worker a T4 for taxation year 1998 stating the amount of $17,745.33 as employment income. (admitted)

f) The Appellant's payroll records for year 1998 show:

Taxable income: $17,202.11

Non taxable expenses: 4,749.60

Gross income: $21,951.71 (admitted)

g) The amount of $4,749.60, paid to the worker, was a travel allowance to cover the worker's travelling expenses such as meals. (admitted)

h) That travel allowance was paid in addition to the worker's salary without the worker having to account for. (denied)

i) That travel allowance was part of the insurable earning of the worker for the relevant period." (denied)

[7] The Appellant was carrying on business under the name of Climan Transportation Services Reg's. Richard Lamontagne was employed as a truck driver during the period in question performing his duties continuously and extensively driving trucks in the United States.

[8] The Worker was allowed $33.00 per day in addition to his regular salary to cover such expenses as meals, showers, laundry, telephone calls, etc. This allowance was given without the Worker supplying vouchers for such expenses and whether he spent the daily sum or not; other expenses incurred by the Worker were reimbursed by the Appellant on the presentation of the appropriate vouchers.

[9] The Appellant issued the Worker a T4 slip for the 1998 taxation year indicating the amount of $17,202.11 as employment income. The Appellant's payroll records for the year 1998 show that an additional amount of $4,749.60 was given to the Worker for expenses incurred, that is the $33.00 per diem (Exhibit A-2) which was given without supplying the appropriate vouchers.

[10] The matter to be decided is whether the travel allowance was part of the insurable earnings of the Worker for the relevant period.

[11] The Respondent relied on subsection 2(1) of the Regulations to include the travel allowance of $4,749.60 as insurable earnings for the period in question.

[12] Subsection 2(1) of the Regulations was amended on December 17, 1997 to include gratuities as insurable earnings. This amendment does not affect the purpose of the definition "insurable earnings" as defined in the Regulations dated December 19, 1996. The consequence of including gratuities as insurable earnings increases the amount used in the calculation of unemployment insurance benefits and gives the employee a possibility of obtaining higher unemployment insurance benefits in the event of a job loss.

[13] Subsection 2(1) of the amended Regulations reads as follows:

"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."

However, paragraph 2(3)(a) of the Regulations still applies in the present matter.

[14] The approach taken by counsel for the Appellant is to give a general definition of "insurable earnings". They referred to jurisprudence and particularly to the Income Tax Act to define "insurable earnings".

[15] The essence of the argument is that the employer pays the employee a certain amount of money in return for the services provided which is the usual explanation given in previous decisions in determining earnings or remuneration. By applying the general interpretation of insurable earnings, it is reasonable to conclude that a travel allowance of $33.00 per day, should not be included in insurable earnings.

[16] The Respondent advances the notion that the meaning of a definition as written by a law or regulation should be accepted as such if it is clear and unequivocal. There is no need in the circumstances to refer to a common definition or other legislation to interpret the intent of the law or regulation.

[17] For the purposes of subsections 2(1) and 2(2), "earnings" does not include:

"2(3) ...

(a) any benefit in kind, except an amount that is the value of board and lodging enjoyed by a person in a pay period in respect of the employment if cash remuneration is paid to the person by the person's employer in respect of the pay period;"

[18] In the case of Canadian Pacific Ltd. v. the Attorney General of Canada, [1986] 1 S.C.R. 678, La Forest J. at pages 687 - 688 expresses himself as follows:

"However that may be, the meaning of the word earnings is not restricted to the situations falling squarely within the opening words of s. 3(1). The various paragraphs of the provision enumerate a whole series of benefits that accrue to the employee by reason of his employment. These paragraphs serve to clarify or to add to what is comprised in the opening words. This approach is supported by numerous cases, the effect of which is summarized in the following passage from Maxwell on Interpretation of Statutes (12th ed. 1969) at p. 270:

Sometimes, it is provided that a word shall "mean" what the definition section says it shall mean: in this case, the word is restricted to the scope indicated in the definition section. Sometimes, however, the word "include" is used "in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include." In other words, the word in respect of which "includes" is used bears both its extended statutory meaning and "its ordinary, popular, and natural sense whenever that would be properly applicable."

[19] A definition in a certain legislation may have a restrictive or extensive meaning.

[20] In the matter at hand, paragraph 2(3)(a) of the Regulations, has an extensive meaning by not excluding a travel allowance as insurable earnings.

[21] The travel allowance of $33.00 per day, allocated to the Worker without submitting vouchers, is part of the conditions of the employment. The travel allowance is included on each pay day when required in the general earnings relating to the employment.

[22] There is no need to refer to other legislation or previous decisions if the statute is clear and unequivocal which in fact is the case in this matter.

[23] The worker did hold insurable employment during the period in question and the insurable earnings are established at $21,951.71 within the meaning of the Regulations.

[24] The appeal is dismissed.

Signed at Ottawa, Canada, this 28th day of June 2000.

"J.F. Somers"

D.J.T.C.C.

Jurisprudence consulted:

Philroy Farquharson v. the Queen, [1986] 1 S.C.R. 703

M.N.R. v. Alexander Visan, [1983] 1 F.C. 820

Hutton v. Canada (Minister of National Revenue – M.N.R.) [1999] T.C.J. No. 655

Université Laval c. Canada (ministre du Revenu national – M.R.N.) [2000] A.C.I. no 99

Guimond c. Canada (minitre du Revenu national – M.R.N.) [1986] A.C.I. no 143