The
Chairman:—The
appeal
of
George
R
Hale
from
an
income
tax
assessment
in
respect
of
the
1974
taxation
year
was
heard
in
Ottawa
on
May
3,
1976.
The
issue
in
this
appeal
is
whether
an
amount
of
$15,609.30
received
by
the
appellant
in
the
1974
taxation
year
but
payable
on
December
28,
1973
was
properly
included
in
the
appellant’s
1974
income.
The
appellant
who
had
served
with
the
Canadian
Armed
Forces
continuously
for
34
years
was
to
have
been
compulsorily
retired
from
the
services
on
February
12,
1974.
On
the
advice
of
the
Department
of
National
Defence
Retirements
Section
staff
the
appellant,
pursuant
to
certain
changes
in
the
Income
Tax
Act,
elected
to
retire
before
his
compulsory
retirement
age
and
prior
to
January
1,
1974,
so
as
to
benefit
from
tax
relief
to
which
he
was
then
entitled
by
the
amendments
to
the
Act.
I
am
satisfied
on
the
basis
of
the
evidence
that
the
appellant
did
all
he
could
be
expected
to
do
in
order
to
have
his
retirement
take
effect
and
his
severance
pay
paid
on
December
28,
1973.
Form
CF121,
dated
December
28,
1973,
control
#7034,
a
requisition
for
a
cheque
in
the
amount
of
$15,609.30
as
gross
severance
pay
(on
file),
stipulates
that
an
income
tax
at
the
rate
of
15%
in
the
amount
of
$2,341.40
was
withheld
and
that
the
balance
of
the
severance
pay
cheque
in
the
amount
of
$13,267.90
is
indicated
as
having
been
released
on
December
28,
1973.
In
a
letter
signed
by
Colonel
H
H
Richardson,
Director
of
Pay
Services,
(also
on
file)
it
is
stated
that
the
appellant
retired
from
the
Canadian
Forces
on
December
28,
1973;
that
an
amount
of
$15,609.30
in
severance
pay
was
payable
on
December
28,
1973.
However,
owing
to
an
administrative
delay
in
Supply
and
Services
Canada,
the
appellant’s
severance
pay
cheque,
which
was
requisitioned
by
the
Department
of
National
Defence
on
December
28,
1973,
was
not
received
by
the
appellant
before
January
7,
1974.
As
a
result
the
transitional
averaging
provision
provided
for
under
the
Income
Tax
Application
Rules,
1971
was
not
applicable
to
the
appellant.
The
appellant,
representing
himself,
readily
admitted
that
the
amount
of
severance
pay
received
by
him
was
taxable
but
he
contended
that
because
of
an
administrative
delay
in
processing
his
severance
pay
cheque,
over
which
the
appellant
had
no
control
and
for
which
he
was
in
no
way
responsible,
he
lost
the
tax
benefit
to
which
he
would
have
normally
been
entitled
and
also
lost
seven
weeks
of
military
service
with
a
proportional
reduction
in
his
pension
benefits.
Counsel
for
the
respondent
clearly
established
that
the
appellant
received
his
severance
pay
cheque
in
January
1974
and
correctly
pointed
out
that
it
is
established
law
that
income
is
taxable
in
the
year
in
which
it
is
received,
and
that
the
Minister
did
not
err
in
including
the
appellant’s
severance
pay
in
the
1974
taxation
year.
It
is
nevertheless
also
very
clear
from
the
facts
that
the
appellant
is
the
victim
of
an
administrative
delay
for
which
he
is
now,
by
statute,
obliged
to
pay
more
taxes
and
suffer
financial
losses
which
he
would
not
have
otherwise
incurred,
and
was
made
to
lose,
through
no
fault
of
his
own,
tax
benefits
to
which
he
was
surely
entitled.
However
unfair
the
application
of
section
3,
subsection
5(1)
and
subparagraph
56(1)(a)(ii)
may
be
in
the
circumstances
and
whatever
recourse
the
appellant
may
have
in
other
courts
of
this
country,
there
is
no
equity
in
tax
law,
and
the
Tax
Review
Board
can
only
confirm
that
the
appellant
received
his
severance
pay
in
the
1974
taxation
year
and
that
the
Act
clearly
states
that
income
which
includes
severance
pay
is
taxable
in
the
year
in
which
it
is
received,
and
not
in
the
year
in
which
it
became
payable.
The
Board
has
no
alternative
but
to
dismiss
the
appeal.
Appeal
dismissed.
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