Federal Court of Appeal Decisions

     A-423-96

CORAM:      HUGESSEN J.A.

     STRAYER J.A.

     McDONALD J.A.

     IN RE The Income Tax Act

B E T W E E N :

     THE ATTORNEY GENERAL OF CANADA

     Applicant

     - and -

     ALAN R. FRASER

     Respondent

     Heard at Ottawa, Ontario, Wednesday, May 21, 1997.

     Judgment rendered from the Bench, May 21, 1997.

REASONS FOR JUDGMENT OF THE COURT

DELIVERED BY:      HUGESSEN J.A.

     A-423-96

CORAM:      HUGESSEN J.A.

     STRAYER J.A.

     McDONALD J.A.

     IN RE The Income Tax Act

B E T W E E N :

     THE ATTORNEY GENERAL OF CANADA

     Applicant

     - and -

     ALAN R. FRASER

     Respondent

     REASONS FOR JUDGMENT OF THE COURT

     (Delivered from the Bench at Ottawa, Ontario,

     Wednesday, May 21, 1997)

HUGESSEN J.A.

     This is an application for judicial review of a decision of the Tax Court of Canada which allowed the taxpayer's appeal of a reassessment by the Minister claiming an amount allegedly refunded in excess of what the taxpayer was entitled to.

     The taxpayer was off work for six months due to injury. Pursuant to the applicable terms of the collective agreement, the employer continued to pay him his full net salary. The employer deducted applicable deductions for income tax based on what the taxpayer's salary would have been and remitted them to the Minister. The taxpayer was entitled to workers' compensation which was in fact paid to the employer who, after the year end, recalculated the source deductions and requested the Minister to reimburse an alleged overpayment thereof. The Minister, without consulting the taxpayer, accepted the employer's position that part of what had been paid to the taxpayer was not "salary wages or other remuneration" but rather an advance on the workers' compensation payments. He accordingly reimbursed the employer and, in due course, reassessed the taxpayer by reducing the amount of the credit for source deductions.

     It is not disputed that the amounts claimed as source deductions by the taxpayer in his return were in fact deducted and remitted by the employer. Those remittances were, by the terms of subsection 153(3), "deemed to have been received at that time by" the taxpayer. The Minister's subsequent decision to accept the employer's interpretation of the collective agreement was, in effect, a decision to pay the employer money which belonged to the taxpayer. The latter's view of the proper interpretation of the collective agreement is different from that advanced by the employer. In our view, this dispute between the taxpayer and his employer is not one which the Minister had jurisdiction to resolve. While we do not agree with all the reasons given by the Tax Court judge, we can take no exception with her conclusion in the following terms:

The assessment of April 11, 1994 is referred back to the Minister for reconsideration and reassessment on the basis that in computing the income tax to be paid for the 1992 taxation year, he should take into account that an amount of $12,135.42 (which was the amount credited in the November 22, 1993 assessment and accepted by the appellant at that time ) has already been deducted at source in 1992.

(Application record, Reasons for Judgment, page 129)

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     The application will be dismissed. The respondent shall have costs pursuant to section 18.25 of the Tax Court of Canada Act¹.

     "James K. Hugessen"

     J.A.

     FEDERAL COURT OF APPEAL

     A-423-96

     IN RE The Income Tax Act

B E T W E E N :

     THE ATTORNEY GENERAL OF CANADA

     Applicant

     - and -

     ALAN R. FRASER

     Respondent

     REASONS FOR JUDGMENT OF THE COURT

__________________

¹      R.S.C. 1985, c. T-2