Date: 19990823
Docket: 98-1144-IT-I
BETWEEN:
FRANK ARSENAULT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bell, J.T.C.C.
ISSUE:
[1] The issue is whether
(a) Workers' Compensation benefits in the sum of $39,609.61 were properly included in the Appellant's income for his 1996 taxation year, and
(b) the Appellant is required to repay benefits pursuant to the Employment Insurance Act ("Act") for that year in the amount of $3,082.50.
FACTS:
[2] The Appellant, an employee of Canadian National Railway, was injured in 1993, suffered partial disability and applied for unemployment insurance benefits. He testified that he received notice from Workers' Compensation that he could take a lump sum of $39,609.61 or monthly payments of $208.00 for life. He further testified that he went to the Unemployment Insurance office and asked whether by accepting the lump sum he'd be affected by the "UI" clawback. He said that he had been advised by the head of Unemployment Insurance at Jasper, Alberta that receipt of a lump sum payment would not affect his income.
[3] The Appellant acknowledged having received and reported the following sums in respect of his 1996 taxation year, namely:
Employment income $14,524.86
Employment insurance benefits $10,275.00
Interest income $ 62.04
Other income $ 393.16
Workers' Compensation benefits $39,609.61
Total income $64,864.67
[4] Revenue Canada assessed the Appellant for an amount determined under a formula described in the Notice of Appeal as being pursuant to the Act in the amount of $3,082.50 for the 1996 taxation year calculated as follows:
30% x lessor (sic) of: _________
(i) total benefits paid to the Appellant $10,275.00;or
(ii) net income before
deducting repayment = $63,344.95
minus
maximum yearly insurable
earnings of $39,00.00 x 1.25=$47,750.00 _________
$14,594.95
Repayment=30% x 10,275.00 - $ 3,082.50
[5] The inclusion of the previous amounts in the Appellant's income for 1996 is not in dispute. The Appellant states simply that he received incorrect advice from Revenue Canada, that being the foundation of his plea. Unfortunately, that cannot be of assistance to him. The presentation of the formula by Revenue Canada as above set forth is consistent with the provisions of section 145 of the Act, particularly subsections 1 and 4. They read as follows:
145(1) If a claimant's income for a taxation year exceeds 1.25 times the maximum yearly insurable earnings, the claimant shall repay to the Receiver General 30% of the lesser of
(a) the total benefits paid to the claimant in the taxation year; and
(b) the amount by which the claimant's income for the taxation year exceeds 1.25 times the maximum yearly insurable earnings.
...
[6] Looking at subsection 145(1) the meaning of the term "maximum yearly insurable earnings" becomes significant. Through a convoluted statutory path, described in section 190 and its references[1], under subsection 4(1) that term means the sum of $39,000 for 1996. Accordingly, I am in agreement with the conclusion reached by Revenue Canada as set forth above. Assuming that the Appellant was advised by an official of Revenue Canada in the fashion above described (and I have no reason to doubt that he was) it is unfortunate that he made the selection which triggered a repayment of benefits. However, this, once more, indicates the folly of relying upon advice from an official of Revenue Canada which will be quick to state that the Crown is not bound by the acts of her servants.
[7] Accordingly, the appeal is dismissed.
Signed at Ottawa, Canada this 23rd day of August, 1999.
"R.D. Bell"
J.T.C.C.