Lamarre Proulx T.C.J.:
1 The appellant is appealing the assessment by the Minister of National Revenue (the “Minister”) for the 1992 taxation year, under the informal procedure.
2 The issue is whether the appellant is entitled to deduct a certain amount, in calculating his income pursuant to paragraph 110(1)(f) of the Income Tax Act (the “Act”), which was allegedly paid as “compensation received under an employee's or workers' compensation law of Canada or a province in respect of an injury or disability”.
3 Section 110(1)(f) of the Act reads as follows:
110(1)(f) Deductions for payments. -- any social assistance payment made on the basis of a means, needs or income test and included by reason of clause 56(1)(a)(i)(A) or paragraph 56(1)(u) in computing the taxpayer's income for the year or any amount that is(i) an amount exempt from income tax in Canada by reason of a provision contained in a tax convention or agreement with another country that has the force of law in Canada, or
(ii) compensation received under an employees' or workers' compensation law of Canada or a province in respect of an injury, disability or death, except any such compensation received by a person as the employer or former employer of the person in respect of whose injury, disability or death the compensation was paid,
(iii) income from employment with a prescribed international organization;
4 The appellant was a member of the Royal Canadian Mounted Police (the “R.C.M.P.”). In early 1992 he was put on paid leave. The appellant maintained that his employer wrongly refused to give him a certificate that he was on sick leave because of an illness related to his duties with the R.C.M.P. and therefore did not allow him to benefit from the administrative practice adopted by the Government of Canada for members of the R.C.M.P.
5 The facts on which the Minister relied in arriving at his assessment are described in Paragraph 10 of the Reply to the Notice of Appeal (the “Reply”) and are as follows:
[TRANSLATION](a) during the 1992 taxation year the appellant received employment income of $63,968.58;
(b) despite his request to the appellant the Minister received no letter of approval from a provincial or federal workers' compensation agency to indicate that the appellant received compensation under an employees' or workers' compensation law of Canada or a province in respect of an injury, disability or death;
(c) despite his request the Minister received no confirmation from the appellant's employer that the appellant had received compensation under an employees' or workers' compensation law of Canada or a province in respect of an injury, disability or death;
(d) during the 1992 taxation year the appellant received no compensation under an employees' or workers' compensation law of Canada or a province in respect of an injury, disability or death.
6 Did the appellant receive compensation under an employees' or workers' compensation law of Canada or a province for an injury or disability in 1992?
7 The Government Employees Compensation Act, R.S.C. 1985, c. G-5, is the federal statute governing workers' compensation. Section 4 of that Act provides that compensation is paid to employees caused personal injury by an accident arising out of or in the course of their employment or disabled by reason of an industrial disease due to the nature of their employment. The section further provides that the compensation is determined by the competent provincial board in the province where the employee is usually employed.
8 However, section 3 of the same federal legislation provides that it does not apply to members of the regular force of the Canadian Forces or of the R.C.M.P.
9 Apparently in order to make up for this exclusion, paragraph N.12. of the R.C.M.P. Administration Manual (the “Manual”, a copy of which was filed as Exhibit I-3), entitled “Tax Treatment - Salary Received When on Sick Leave Due to a Duty-Related Illness/Injury”, provides, in N.12.a.1:
A member who is on sick leave due to a duty-related illness/injury is entitled to deduct from income an amount equal to that which would have been received from the Workers' Compensation Board/Commission.
10 The legislative source for this statement is not given. The Manual goes on to explain the procedure to be followed. A member who is on sick leave because of a duty-related illness must obtain from the A.P. (Administration and Personnel) officer a letter of certification which he must attach to his tax return. Before issuing a certificate the A.P. officer must ensure that the connection to the duties is clearly established. In all cases he or she must consult the R.C.M.P. senior physician or the attending physician.
11 In the instant case, according to the professional opinion received from the senior physician, the illness was due to the fact that the appellant was suspended on December 20, 1991, and the appellant's illness could not be regarded as an industrial disease.
12 If a member does not agree with the A.P. officer's decision and if the illness may subsequently result in a claim under the Pension Act, he can ask the Canadian Pension Commission for an advance ruling on his rights. The Manual informs R.C.M.P. members that such an application to the Canadian Pension Commission for a ruling must not be made in the case of a temporary illness or injury. The administrative policy does not appear to provide for any review process in that case.
13 The appellant did not make an application to the Canadian Pension Commission because he said his illness was temporary and there were other reasons personal to himself.
14 The policy described above appears to have started in 1989. Exhibit I-2 is a Bulletin from the R.C.M.P. personnel management dated May 12, 1989 which informs members of the R.C.M.P. of the following:
a. The Department of Finance Canada has advised that members of the R.C.M.P. are now entitled to deduct, from income, an amount equal to that which would have been received from Workers' Compensation Board when on sick leave due to a duty related illness/injury.
b. In order to qualify for the deduction, a member must meet the workers' compensation rules in the province where he/she is usually employed.
15 Another bulletin (forming part of the bundle of documents filed by the appellant) issued by the same body mentions an Income Tax Refunds Remission Order, P.C. 1992-658, of April 2, 1992, regarding tax overpayments made for 1980 to 1984. This Order is registered as No. TR/92-71, April 22, 1992. The Order concerns the remission of tax overpayments for 1980 to 1984 which were statute-barred. It is not an order approving the principle that amounts received by a member of the R.C.M.P. as salary during sick leave should be regarded as received as compensation under an employees' or workers' compensation law of Canada or of a province, nor is it a general Order on the remission of tax to government officials excluded from the scope of the Government Employees Compensation Act, cited above.
16 An order made pursuant to s. 23 of the Financial Administration Act, R.S.C. 1985, c. F-11, may provide for the remission of tax, such as for example certain orders made in respect of Indians, including P.C. 1989-740, April 28, 1989, TR/89-128, May 10, 1989, Indian Statute-Barred Income Tax Assessment Remission Order and P.C. 1985-2446, August 7, 1985, TR/85-144, 21/8/85, Indian Remission Order. This Court's jurisdiction over such remission orders is not clear: see in this regard Pachanos v. Minister of National Revenue (1990), 90 D.T.C. 1668 (T.C.C.); but at least there was in that case a legal basis which I did not find in the instant appeal.
17 The Court was shown Exhibits I-2 and I-3, which are administrative policy documents, and reference was made to a administrative practice described in those exhibits, but there was no submission or argument regarding a legislative connection of any kind between this administrative policy and s. 110(1)(f) of the Act. The compensation which is the subject of s. 110(1)(f) of the Act is that which is received under a workers' compensation law of Canada or of a province, that is, in accordance with a system providing for the determination of compensation, a claim process and an appeal process. The order mentioned above relates only to 1980 to 1984 and only in general, without mentioning the application of s. 110(1)(f) of the Act to the salaries received by members of the R.C.M.P. No mention was made of any other relevant order, statute or regulation.
18 I therefore cannot see the legal basis for the administrative practice at issue in the instant case, asserting that a member of the R.C.M.P. is entitled to deduct from his income an amount equal to that which would have been received from a workers' compensation board when on sick leave due to a duty-related illness, pursuant to s. 110(1)(f) of the Act.
19 I refer to a judgment of the Manitoba Court of Appeal in R. v. Catagas (1978), 81 D.L.R. (3d) 396 (Man. C.A.), which analysed the power of the executive to administer legislation. It is clearly stated in that judgment that the government cannot alter the effect of legislation without the consent of Parliament. This is a well-known principle and I prefer to think that the administrative policy in question has a legal basis. Neither party indicated what this was in the instant case.
20 The appellant is not entitled to the deduction because the compensation in question was not received by him pursuant to workers' compensation legislation. Accordingly, referring to the wording of s. 110(1)(f) of the Act and the facts on which the Minister relied in arriving at his assessment, I conclude based on that legislation and on those facts that the appellant was correctly assessed in fact and in law for 1992.
21 The appeal is dismissed.
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