Date: 19981001
Docket: 98-347-IT-I
BETWEEN:
MERRILL M. GORDON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
McArthur, J.T.C.C.
[1] This appeal is from assessments by the Minister of National Revenue (the "Minister") wherein the Minister added to the Appellant's income $2,086.60 and $760.50 in 1995 and 1996 respectively. These amounts were the value attached to a complimentary parks pass given to the Appellant by the City of Burnaby, British Columbia.
[2] Upon the conclusion of the trial, I indicated that I agreed with the Respondent's position that the Appellant was an employee. After further thought, I have changed that opinion and find in favour of the Appellant for the reasons that follow.
[3] For a one year period in the early 1970's, the Appellant served as an alderman for the City of Burnaby, for which he was remunerated. After that time, he held many volunteer positions and to his credit has provided his talents, without compensation in several worthwhile endeavours towards the benefit of the City of Burnaby. As a direct result of his having been an alderman, the City of Burnaby has given him a complimentary pass that has permitted him, with a guest, to play golf on three of Burnaby's golf courses.
[3] The Respondent has reduced the assessed amounts to $495 in 1995 and $682 in 1996.
[4] The Appellant is a 69 year old pensioner with limited financial resources. As stated, he has served the City of Burnaby for one year as a paid alderman and without compensation for 40 years as a volunteer that included work such as:
- A library trustee and founding member of the Library Trustees Association of B.C. - 4 years
- Fundraising Chair, 1973 B.C. Summer Games - 6 months
- Parks Commissioner - 6 years
- Burnaby Advisor Planning Commission - 4years
- Director of New Vista Home for Seniors - 4 years
- Founder and Director of Burnaby Youth Soccer - 2 years
- Founder and Director Cliff Ave. Youth Soccer - 42 years
- Volunteer Chair, Burnaby Arts Centre Capital Campaign raising $2.3 million for the Shadbolt Arts Centre. Full time non paid work
- 3 years
- Chair of the Burnaby Mental Health Committee - 5 years
- Founding member Burnaby Mountain Preservation Society which saw 880 acres of land returned from SFU to Burnaby as park space
- 5 years.
[5] The Minister considered the value of the golf pass as a retiring allowance pursuant to paragraph 56(1)(a) of the Income Tax Act (the "Act") or, in the alternative, the Minister submits that the Appellant received the amounts as employment income pursuant to paragraph 6(1)(a) and subsection 6(3) of the Act.
[6] The Appellant submits that it was not a retirement allowance and that he was never an employee of the City of Burnaby.
[7] Subsection 56(1) of the Act reads in part as follows:
"Amounts to be included in income for year – Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
(a) pension benefits, unemployment insurance benefits, etc. – any amount received by the taxpayer in the year as, on account or in lieu of payment of, or in satisfaction of,
...
(ii) a retiring allowance, other than an amount received out of or under an employee benefit plan, a retirement compensation arrangement or a salary deferral arrangement,
..."
[8] It was the Appellant's uncontradicted evidence that he received the recreational pass because he served as alderman about 25 years prior to the relevant taxation years.
[9] The Respondent's primary submission was that the Appellant received a retiring allowance pursuant to paragraph 56(1)(a).
[10] "Retiring allowance" is defined in subsection 248(1) of the Act as an amount received on or after retirement of a taxpayer from an office or employment in recognition of the taxpayer's long service.
[11] "Employment" is defined as the position of an individual in the service of some other person (including Her Majesty or a foreign state or sovereign) and "servant" or "employee" means a person holding such a position.
[12] "Office" is defined in section 248 as a position of an individual entitling the individual to a fixed or ascertainable stipend or remuneration and includes a judicial office, the office of a minister of the Crown, the office of a member of the Senate or House of Commons of Canada, a member of a legislative assembly or a member of a legislative or executive council and any other office, the incumbent of which is elected by popular vote or is elected or appointed in a representative capacity and also includes the position of a corporation director, and "officer" means a person holding such an office.
[13] In order for the benefit amount to be considered a "retiring allowance", the Appellant must have received it in the year in lieu of payment of or in satisfaction of a retiring allowance. The Appellant received the benefit amount for having served as an alderman in about 1970. This is not an amount "after retirement of a taxpayer from an office or employment in recognition of the taxpayer's long service"; he served as alderman for one year. He was an elected member of City Council, an independent representative of the people and not an employee.
[14] I find that the Appellant's volunteer services do not meet the definitions of "office or employment". He was not a servant or employee. He generously donated his time to benefit his community. There was no evidence that he was an individual holding a position in the service of some other person. To find differently would lead to a conclusion that surely was not intended in the meaning of subsection 56(1). Applying the tests found in Wiebe Door Services Ltd. v. M.N.R. [1986] 3 C.F. 553, I have no difficulty in concluding that the Appellant was not an employee.
[15] Having found that the Appellant was not an employee of the City of Burnaby during 1995 and 1996, he did not receive the amounts as employment income pursuant to paragraph 6(1)(a) and subsection 6(3) of the Act. Therefore, the appeal is allowed.
Signed at Ottawa, Canada, this 1st day of October 1998.
"C.H. McArthur"
J.T.C.C.