John
B
Goetz:—This
is
an
appeal
from
an
assessment
of
income
tax
for
the
1977
taxation
year.
In
computing
Mr
Schuett’s
income
for
the
year,
the
respondent
included
the
sum
of
$26,267.76
paid
to
Mr
Schuett
by
the
Canada
Life
Assurance
Company.
The
respondent
relied
on
paragraph
6(1
)(f)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended,
as
authority
for
the
inclusion.
It
was
common
ground
that:
(a)
the
amount
in
question
was
paid
under
an
insurance
program
designed
to
replace
income
lost
due
to
disability;
and
(b)
the
premiums
under
the
plan
as
to
50%
by
the
appellant’s
employer
and
as
to
50%
by
the
appellant.
The
appellant’s
position
was
that
because
Mr
Schuett
had
paid
50%
of
the
premiums
from
after
tax
income,
only
50%
of
the
benefits
could
be
included
in
income.
That
position
was
expressed
in
the
notice
of
appeal
as
follows:
Grounds
For
Appeal
1.
The
wording
of
the
Act
(paragraph
6(1)(f))
deals
with
two
specific
instances:
(a)
If
the
employee
pays
all
the
premiums
then
the
benefit
is
non-taxable
as
it
falls
outside
the
Act.
(b)
If
the
employer
pays
all
the
premiums
then
the
benefit
is
taxable.
2.
With
respect
to
a
shared
premium,
the
Act
says
nothing.
3.
It
is
our
contention
that
the
intent
of
the
Act
is
to
include
as
income
that
portion
of
the
benefit
that
arises
from
the
employer’s
contribution
to
the
shared
premium.
In
other
words,
if
the
employer
pays
50%
of
the
premium
then
50%
of
the
benefit
is
taxable.
Unfortunately,
that
position
is
not
borne
out
by
paragraph
6(1)(f)
of
the
Act
which
reads
as
follows:
(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:
(f)
the
aggregate
of
amounts
received
by
him
in
the
year
that
were
payable
to
him
on
a
periodic
basis
in
respect
of
the
loss
of
all
or
any
part
of
his
income
from
an
office
or
employment,
pursuant
to
(i)
a
sickness
or
accident
insurance
plan,
(ii)
a
disability
insurance
plan,
or
(iii)
an
income
maintenance
insurance
plan
to
or
under
which
his
employer
has
made
a
contribution
not
exceeding
the
amount,
if
any,
by
which
(iv)
the
aggregate
of
all
such
amounts
received
by
him
pursuant
to
the
plan
before
the
end
of
the
year
and
(A)
where
there
was
a
preceding
taxation
year
ending
after
1971
in
which
any
such
amount
was,
by
virtue
of
this
paragraph,
included
in
computing
his
income,
after
the
last
such
year,
and
(B)
in
any
other
case,
after
1971,
exceeds
(v)
the
aggregate
of
the
contributions
made
by
the
taxpayer
under
the
plan
before
the
end
of
the
year
and
(A)
where
there
was
a
preceding
taxation
year
described
in
subparagraph
(iv),
after
the
last
such
year,
and
(B)
in
any
other
case,
after
1967.
(Italics
mine).
The
intention
of
the
Act
is
to
be
derived
from
the
words
used
by
Parliament.
It
is
plain
that
it
was
the
intention
of
Parliament
that
any
contribution
by
the
employer
has
the
effect
of
“contaminating”
the
plan.
Once
it
is
found
that
the
employer
has
made
a
contribution,
the
proportion
in
which
contributions
are
made
by
employer
and
employee
ceases
to
have
relevance.
The
scheme
of
the
Act
is
then
to
tax
all
benefits
received
subject
to
the
limitation
found
by
application
of
subparagraphs
(iv)
and
(v)
formula.
The
appeal
must
therefore
be
dismissed.
Appeal
dismissed.
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