Words and Phrases - "pursuant to"


Vohra v. The King, 2022 TCC 165 (Informal Procedure)

support payments could be considered to be made pursuant to terms of a written separation agreement which had expired

The taxpayer and his wife separated in 2010 and on March 6, 2011, entered into separation agreement without legal counsel. Although the spousal support (set at $3,500 a month) was stipulated to end in December 2014, such support continued to be paid by the taxpayer thereafter and was included by her in her income. The Minister denied the taxpayer’s claimed deduction of $42,000 for the 2018 taxation year on the basis that the payments were made without a written separation agreement being in place. The taxpayer argued that an implied contract continued to exist after 2014, referring (at para. 13) to a statement in Chitty on Contracts that there may “be an implied contract when the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired and a written agreement.”

In rejecting this submission, MacPhee J stated (at para. 19):

An implied contract … does not meet the requirements of the Act in order to make a deduction of support payments.

In nonetheless allowing the taxpayer’s appeal, MacPhee J stated (at paras. 20-22):

There is no question that the contract the parties relied upon was flawed. Yet it was an agreement in writing, setting out the support payments.

The parties continued through the 2018 taxation year to consider themselves bound by their 2011 separation agreement. …

… I am guided by the plain meaning of the words of the Act … . I have concluded that the payments were made pursuant to the terms of a written agreement.

Words and Phrases
pursuant to

13 September 2012 Internal T.I. 2012-0442671I7 F - Dédommagement pour la perte de bénéfices

damages received by former employees of insolvent company for cancellation of their life insurance coverage were received in lieu of remuneration for their employment services

The former employees and retirees of a bankrupt corporation (the "Employer") received a lump for the cancellation of their rights in a group insurance plan and respecting legal costs incurred to recover the lump sum. The lump sum received for the Plan cancellation included compensation for the loss of medical and dental coverage and hospitalization coverage for themselves and their dependents (respecting the "Medical Plan"), as well as the loss of life insurance coverage (the "Coverage"). Damages also were claimed for the amounts owing under the Employment Standards Act (the "Dismissal Amount").

After finding that the portion of the lump sum allocable to the termination of the Medical Plan was taxable, and in going on to find that that portion allocable to the lost Coverage was taxable to the recipients under s. 6(3), the Directorate stated:

[T]he portion of the lump sum that relates to the Coverage is a reasonable substitute paid in lieu of the employer's obligation to provide the Coverage

and went on to note that the meaning of “in lieu of” was not narrowed by the French version. Furthermore, that amount

was paid "by reason" or "in consequence of" an obligation imposed by the employment contract …[and t]herefore … "arises" from the employment contract.

Finally, it did not matter that the payer was the trustee, as it was deemed by s. 128(1)(a) to be an agent of the Employer – and it was “not unreasonable to conclude that the portion of the lump sum related to the Coverage is also an amount received as damages for services that the Objectors have rendered to the Employer.”

Words and Phrases
in lieu of arises pursuant to
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) - Subparagraph 6(1)(a)(i) damages received after 2011 by employees of an insolvent company for cancellation of their medical plan have become taxable 318
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Death Benefit damages received for loss of life insurance coverage were not rendered a death benefit under the surrogatum principle 319
Tax Topics - Income Tax Act - Section 8 - Subsection 8(1) - Paragraph 8(1)(b) legal fees paid to recover damages for employer cancellation of insurance coverage, and medical plan, qualified and did not qualify, respectively 353

Tsiaprailis v. Canada, 2005 DTC 5119, 2005 SCC 8, [2005] 1 S.C.R. 113

payment in settlement of disability arrears was taxable under surrogatum principle as being "pursuant to" the plan

The taxpayer received a lump sum payment of $105,000 in settlement of her claim for wrongful termination of her long-term disability benefits. Although the portion of the settlement that was in respect of future disability benefits was not paid "pursuant to" the plan because there was no obligation on the part of the insurer to make a lump sum payment under the terms of the plan (para. 11), under the surrogatum principle, the portion of the lump sum payment that was intended to replace past disability payments was taxable to her under s. 6(1)(f). Charron J stated (at para. 15):

The determinative questions are: (1) what was the payment intended to replace? And ... (2) would the replaced amount have been taxable in the recipient’s hands? ... [I]t cannot be disputed on the evidence that part of the settlement monies was intended to replace past disability payments. It is also not disputed that such payments, had they been paid to Ms. Tsiaprailis, would have been taxable.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 68 general authority to allocate global amounts without reference to s. 68 54