Lamarre,
J.T.C.C.
(orally):—This
is
an
appeal
under
the
informal
procedure
from
a
reassessment
issued
by
the
Minister
of
National
Revenue
(hereinafter
"the
Minister"),
in
respect
of
the
appellant's
1991
taxation
year.
In
reassessing
the
appellant,
the
Minister
included
family
allowance
benefits
of
$4,539
in
the
appellant's
income
for
the
1991
taxation
year.
The
facts
upon
which
the
Minister
relied
to
reassess
the
appellant
are
stated
in
paragraph
4
of
the
reply
to
the
notice
of
appeal,
which
will
be
an
integral
part
of
my
judgment.
At
the
beginning
of
the
hearing,
the
agent
for
the
appellant
advised
the
Court
that
the
appellant
was
not
present
but
that
he
agreed
with
the
facts
relied
upon
in
paragraph
4
of
the
reply,
with
the
exception
I
presume
of
subparagraph
(f)
which
relates
to
the
taxation
year
in
which
the
appellant
was
deemed
to
have
supported
the
children,
which
is
the
crux
of
the
matter.
The
issue
before
me
is
therefore
to
determine
if
the
amount
of
$4,539
that
was
received
in
1991
by
the
appellant's
spouse
and
paid
in
respect
of
entitlement
to
family
allowance
benefits
for
the
years
1988,
1989
and
1990
was
properly
included
in
the
appellant's
1991
income
by
the
Minister.
The
appellant
contends
the
payments
should
be
brought
into
income
in
the
year
in
respect
of
which
they
were
paid.
The
question
is
therefore:
In
these
circumstances,
when
should
the
family
allowance
payments
be
recognized
in
income?
The
inclusion
in
income
of
family
allowances
is
treated
in
subsection
56(5)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act"),
as
it
then
read
for
the
taxation
years
in
question.
The
relevant
portions
of
subsection
56(5)
read
as
this:
56
(5)
An
individual
who
is
deemed
by
subsection
(6)
or
(7)
to
have
supported
ina
particular
month
of
a
taxation
year
a
person
in
respect
of
whom
(a)
a
family
allowance
.
.
.
is
paid
for
the
particular
month
shall
include
in
computing
his
income
for
the
year
an
amount
equal
to
the
aggregate
of
all
amounts
each
of
which
is
the
amount
of
such
an
allowance
received
by
him
or
his
spouse
for
the
month
of
the
year
in
which
he
is
deemed
to
have
supported
the
person.
The
Minister's
contention
is
based
upon
the
argument
that
individuals
compute
their
income
on
a
cash
basis
and
therefore
an
individual
must
reflect
in
income
payments
actually
received.
Counsel
for
the
Minister
also
argued
that
subsection
56(5)
of
the
Act
was
mandatory
and
was
very
clear
and
that
there
was
no
need
to
look
to
the
intent
of
the
Act
as
was
suggested
by
the
agent
for
the
appellant,
and
therefore
the
amount
should
be
taxed
in
the
year
it
was
paid.
I
agree
with
counsel
for
the
Minister
that
under
the
first
proposition
made,
a
taxpayer
is
required
to
reflect
in
income
amounts
received
on
account
of
family
allowance
benefits.
However,
in
my
opinion,
it
does
not
assist
in
determining
in
which
taxation
year
the
benefits
must
be
attributed.
If
we
scrutinize
the
wording
of
subsection
56(5)
of
the
Act,
eliminating
the
unnecessary,
it
states
that:
An
individual
who
.
.
.
supported
in
a
particular
month
of
a
taxation
year
a
person
in
respect
of
whom
(a)
a
family
allowance
.
.
.
is
paid
for
the
particular
month
shall
include
in
computing
his
income
for
the
year
.
.
.
the
amount
of
such
an
allowance
received
by
him
or
his
spouse
for
a
month
of
the
year
in
which
he
is
deemed
to
have
supported
the
person.
[Emphasis
added.]
Reference
is
made
to
the
words
“for
the
year"
with
respect
to
computing
income.
It
is
in
the
year
that
the
amounts
must
be
reflected
in
income
and
in
my
opinion
“the
year"
must
be
a
reference
to
the
previously
mentioned
taxation
year
in
the
same
subsection,
which
is
my
understanding
would
be
the
taxation
year
in
which
the
individual
is
supporting
a
person
in
a
particular
month
of
said
taxation
year.
The
result,
in
my
view,
is
that
the
year
in
which
the
amount
received
as
a
family
allowance
is
to
be
reflected
in
income
is
the
year
which
contains
the
particular
month
in
respect
of
which
payment
was
received,
that
is
to
say
the
year
which
the
taxpayer
was
entitled
to
family
allowance.
And
I
do
not
see
how
under
subsections
56(6)
and
(7)
of
the
Act,
the
appellant
could
be
deemed
to
have
supported
the
children
in
the
1991
taxation
year.
The
very
reason
why
the
appellant's
spouse
finally
received
the
family
allowance
benefits
in
1991,
as
I
understand
it,
is
that
Health
and
Welfare
paid
retroactively
to
the
appellant's
spouse
the
benefits
she
was
entitled
to
receive
from
July
1988
through
1990.
In
my
opinion,
subsections
56(6)
and
(7)
were
drafted
to
establish
a
presumption
on
whose
parent
or
individual
should
include
the
family
allowance
benefits
in
his
income,
and
not
to
establish
a
presumption
on
the
year
in
which
such
benefits
should
be
taxed.
Furthermore,
I
note
that
subsection
56(5)
was
amended
in
1988,
applicable
to
the
1988
and
subsequent
taxation
years.
Subsection
56(5)
formerly
read
as
follows:
56
(5)
Subject
to
subsection
(6),
a
taxpayer
who
is
deemed
by
subsection
(7)
to
have
supported
a
child
in
a
taxation
year,
in
respect
of
whom
(a)
a
family
allowance
.
.
.
has
been
paid
in
a
taxation
year,
shall
include
in
computing
his
income
for
the
taxation
year
an
amount
equal
to
the
said
allowance.
Maybe
I
would
have
been
inclined
to
conclude
that
the
taxpayer
had
to
include
such
benefits
in
income
in
the
year
they
were
paid
and
received
under
the
former
subsection
56(5)
of
the
Act.
However,
in
light
of
the
wording
of
the
provision
as
it
read
during
the
taxation
years
under
issue,
and
possible
ambiguities
that
arise
therefrom,
I
feel
compelled
to
resolve
any
ambiguity
arising
from
the
interpretation
of
subsection
56(5)
of
the
Act,
in
favour
of
the
taxpayer.
(I
refer
on
this
point
to
the
decision
of
the
Supreme
Court
of
Canada
in
Fries
v.
The
Queen,
[1990]
2
S.C.R.
1322,
[1990]
2
C.T.C.
439,
90
D.T.C.
6662.)
Accordingly,
I
am
of
the
opinion
that
when
family
allowance
was
received,
subsection
56(5)
of
the
Act
required
it
to
be
reflected
in
income
in
the
year
in
which
the
appellant
or
his
spouse
was
entitled
to
such
payment,
that
is
to
say
in
the
years
1988,
1989
and
1990.
For
all
these
reasons,
the
appeal
is
allowed
without
costs.
Appeal
allowed.
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