Lamarre Proulx T.C.J.:
1 These are appeals for the 1989, 1990, 1991 and 1992 taxation years.
2 The appellant was released from the Royal Canadian Mounted Police on December 2, 1988 as he had become disabled. Under paragraph 11(2)(b) of the Royal Canadian Mounted Police Superannuation Act (“RCMPSA”),as the appellant had ten or more years of pensionable service to his credit he was entitled to an immediate annuity. Under subsection 10(1) of that Act the amount depended on the number of years of pensionable service.
3 The annuities received from 1989 to 1992 amounted to $26,727, $25,959, $27,205 and $28,783 respectively. The pension payment application (filed by the appellant with his table 2A) indicated that the annuities were paid pursuant to paragraph 10(2)(b), now paragraph 11(2)(b), of the RCMPSA.
4 Under section 32 of the aforementioned RCMPSA (before 1985 this was section 27), a pension in accordance with the Pension Act shall be granted to any member of the RCMP who has suffered a disability in any case where the disease resulting in the disability arose out of, or was directly connected with, his service in the Force. On December 2, 1988 the appellant made an application for such a pension.
5 The Canadian Pension Commission tribunal rendered a decision on March 14, 1990, retroactive to December 3, 1988, awarding the appellant a right to a pension under subsection 32(1) of the RCMPSA.
6 In accordance with paragraph 81(1)(i) of the Income Tax Act (the “Act”), the Minister did not include the pension received under that section in calculating the appellant's income.
7 In connection with the annuities received under paragraph 11(2)(b) of the RCMPSA, the appellant referred to paragraph 14 of Interpretation Bulletin IT-397R, which reads as follows:
RCMP Pension or indemnity
14. Pursuant to paragraph 81(1)(i), pension payments, allowances and other compensation received in respect of an injury, disability or death arising directly out of, or directly connected with, the service of a member in the RCMP under the provisions of the Royal Canadian Mounted Police Pension Continuation Act or the Royal Canadian Mounted Police Superannuation Act, are not to be included in the recipient's income. This exemption does not extend to long service pensions which are subject to tax under subparagraph 56(1)(a)(i).
8 He maintained that the latter part of paragraph 14, which specifically states that the exemption mentioned in paragraph 81(1)(i) of the Act does not extend to long service pensions, does not apply to his case and that the annuities in question are not paid pursuant to section 11 of the RCMPSA, but entirely in accordance with section 32 of that Act.
9 It is quite clear that neither the facts nor the law supports this argument of the appellant. The appellant receives pensions in two different categories, one pursuant to paragraph 11(2)(b) of the RCMPSA for his service and to be included in calculating his income under subparagraph 56(1)(a)(i) of the Act, and the other under section 32 of the RCMPSA, which is not included in calculating his income under paragraph 81(1)(i) of the Act.
10 Also at issue are wage loss insurance benefits received under the RCMP's extended disability insurance plan. This plan is administered by Great West Life. The plan gives the contributor a monthly income equal to 75 percent of the gross monthly income at the time of release (Exhibit I-5, pamphlet explaining the plan). Any income derived from carrying on a professional activity and the various pension benefits are deducted from this income. The wage loss insurance benefits received by the appellant for the years in question amounted to $21,616, $19,683, $20,951 and $21,580.
11 The appellant contended that these benefits should be included pursuant to paragraph 56(1)(v) of the Act and should be deducted under subparagraph 110(1)(f)(ii) of the Act as if they were compensation received under a worker's compensation law.
12 Paragraph 56(1)(v) reads as follows:
(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
13 Subparagraph 110(1)(f)(ii) of the Act reads as follows:
(1) For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be deducted such of the following amounts as are applicable:- (f) 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
(ii) compensation received under an employee's or worker's 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,...
14 The appellant's argument that these benefits are compensation received under a worker's compensation law is based on the fact that in 1987 and 1988 the appellant was on extended disability leave. (His employment ceased as of December 3, 1988.) In a letter dated May 29, 1990 (filed by the appellant), the senior medical officer of C Division of the RCMP informed the addressee that the Pension Commission considered the appellant's illness to be an occupational disease and that he was entitled to have the compensation received treated for tax purposes as being received for an occupational disease during the period of sick leave. An administrative policy apparently existswhich allows salaries received during leave for duty-related illness to be treated as compensation received under a federal or provincial worker's compensation law in respect of an injury, disability or death and allows such salaries to be deducted under paragraph 110(1)(f) of the Act. This policy applies during sick leave but ceases when the member of the RCMP is released.
15 The appellant would like to have this administrative practice continue after his release.
16 My conclusion in this regard is that wage loss insurance benefits are not compensation paid under a federal or provincial worker's compensation law and that the appellant must include them in calculating his income under paragraph 6(1)(f) of the Act and that the exemption mentioned in subparagraph 110(1)(b)(ii) of the Act does not apply.
17 At the very end of his argument the appellant argued that he was also disputing the allocation of the $29,210 comprising the retirement allowance paid to him at the time he left the RCMP. This point was never raised previously, either in the notices of objection or in the notices of appeal. However, looking at the appellant's income tax return for 1989 I see that the accountant who prepared his amended tax return for that year requested a deduction of $21,695 as a registered retirement savings plan contribution. Accordingly, it would appear that the taxpayer exercised his transfer rights in respect of this retirement allowance; however, I cannot say anything more in this connection as the point was not argued.
18 The appeals are dismissed.
Email this Content