http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/142694/index.do
Butler v. Canada (February 26, 2016 – 2016 FCA 65, Gauthier, Rennie, Gleason (author) JJ. A.).
Précis: Mr. Butler received a lump sum worker’s compensation award from the Nova Scotia Workers’ Compensation Board. The Minister assessed the Appellant for repayment of the old age security (“OAS”) in the amount of $3,269.00 on the basis that his income for 2012 under Part I.1 (OAS Clawback) included the payment from the Board. Mr. Butler appealed to the Tax Court where he was unsuccessful. He appealed that decision to the Federal Court of Appeal. The Court dismissed his appeal from the bench. There was no order as to costs.
Decision: Although the Court of Appeal was sympathetic, unfortunately for Mr. Butler the law was quite clear:
[10] In this regard, the policies of the provincial WSIB or WCBs do not determine whether non-economic loss compensation payments for pain and suffering constitute income within the meaning of the ITA. Likewise, the way in which a T5007 form is completed is not determinative. Rather, this matter is governed by paragraph 56(1)(v) of the ITA. This provision is sufficiently broad to encompass non-economic loss payments received by injured workers under provincial workers’ compensation legislation to compensate them for pain and suffering. Such payments are clearly “compensation” and also are received “in respect of an injury” or “in respect of a disability”, within the meaning of paragraph 56(1)(v) of the ITA. As Justice Dickson (as he then was) held in Nowegijick at page 39:
The words "in respect of” are, in my opinion, words of the widest possible scope. They import such meanings as "in relation to", "with reference to" or "in connection with". The phrase "in respect of" is probably the widest of any expression intended to convey some connection between two related subject matters.
[11] I also note that the result in this case is consistent with the result reached by the Tax Court in a previous case, involving payments for non-economic loss made to a worker under the Ontario workers’ compensation legislation: Larouche v. Canada (Human Resources and Social Development), 2007 T.C.C. 743, 2007 C.C.I. 743. There, the Tax Court held at paragraph 20 that:
Both the current legislation and the former Workers’ Compensation Act provide for compensation calculated on the basis of loss of earnings and non-economic losses. However, with regard to including, in computing income, compensation received under an employees’ or workers’ compensation law of Canada or a province in respect of an injury, a disability or death, paragraph 56(1)(v) of the [ITA] does not make any distinction in terms of the nature of the elements – be it loss of earnings or non-economic losses – included in computing this compensation. Therefore, the total amount must be included in the calculation of a taxpayer’s income.
[12] The payment received in this case therefore is compensation and was made in respect of a compensable injury or disability. The payment is unlike those mentioned in CRA’s T5007 Guide – Return of Benefits, as those payments are not compensatory, but, rather are more akin to repayment of expenses incurred or, in the case of interest, compensation flowing from delay in payment as opposed to flowing from an injury or disability.
[13] Thus, despite Mr. Butler’s able arguments, I believe this appeal must be dismissed as the Tax Court was correct in holding that the lump sum payment received by Mr. Butler constituted income. Given Mr. Butler’s personal circumstances, I would make no award of costs in respect of this appeal. I would also note that the present Judgment deals only with the interpretation of the ITA and should in no way be read as diminishing the nature and severity of the injuries suffered by Mr. Butler.