Section 38
Subsection 38(4)
Paragraph 38(4)(a)
Cases
Freitas v. Canada, 2018 FCA 110
The taxpayer, a retired Deloitte partner, was assessed by CRA in 2009 to impose a CPP contribution obligation on an amount of income that was distributed to him under ITA s. 96(1.1). CRA denied the taxpayer’s request four years later for a refund of this amount on the grounds that this request had not been made within the required three-year period. Webb JA stated (at para. 33):
It should be noted that the Minister has the discretion to refund excess CPP contributions under paragraph 38(4)(a) of the CPP… .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.2) | s. 152(4.2) inapplicable where reassessment, albeit in response to refund request, increased taxpayer’s liability | 458 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) | a statute-barred reassessment was valid for the purpose of being objected to and vacated on substantive grounds | 222 |
| Tax Topics - Other Legislation/Constitution - Federal - Canada Pension Plan - Section 14 | s. 96(1.1) income was not from carrying on business | 229 |
| Tax Topics - Income Tax Act - Section 96 | Backman statements applied to common law partnerships | 204 |
Section 8
Subsection 8(1)
See Also
Andrew Peller Limited v. M.N.R., 2016 DTC 1009 [at 2553], 2015 TCC 329
The taxpayer ran several restaurant businesses in which it redistributed its employees' tips under a tip-sharing arrangement. Campbell J found that these were amounts paid by the employer for the purposes of the Income Tax Act and for CPP and EI calculations. Canadian Pacific was dispositive. In concluding that the taxpayer had “paid” the gratuities to its front line staff, Campbell J stated (at para 49):
[T]he Appellant, during the relevant period, not only ended up with possession of all gratuity and tip amounts… but exerted considerable control over those amounts, engaging in the redistribution of those amounts within the broad definition of “paid” as contemplated in the [Insurable Earnings and Collection of Premiums Regulations].
| Other locations for this summary | |
|---|---|
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | restaurant tips are remuneration from an employer |
| Tax Topics - Other Legislation/Constitution - Federal - Employment Insurance Act - Section 82 - Subsection 82(1) | restaurant tips are remuneration from an employer |
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Specific v. General Provisions | use of "gratuities" in a specific provision did not imply that another kind of gratuity could not be caught under a general provision | 246 |
Section 14
Cases
Freitas v. Canada, 2018 FCA 110
The taxpayer, a retired Deloitte partner, was assessed by CRA in 2009 to impose a CPP contribution obligation on an amount of income that was distributed to him under ITA s. 96(1.1) in accordance with the terms of the partnership agreement. Webb JA found that the s. 96(1.1) distribution did not satisfy the applicable requirement in s. 14 of the CPP Act that it be “his income for the year from all businesses … carried on by him” (he instead was retired). He stated (at para. 30):
The deeming rule in subsection 96(1.1) … only provides that Mr. Freitas is deemed to be a member of the partnership for the purposes of subsection 96(1) and sections 34.1, 34.2, 101, 103, and 249.1… . Similarly, subsection 96(1.6) …only deems him to be carrying on business for the purposes of subsection 96(2.3), sections 34.1 and 150 and (subject to subsection 34.2(18)) section 34.2… . Neither of these provisions deems him to be a member of the partnership or to be carrying on business for the purposes of the CPP. Since there is no other provision that would deem him to be a member of the partnership or to be carrying on business for the purposes of the CPP, he would not be a member of the partnership in 2008 for the purposes of the CPP and he would not be carrying on a business in 2008 for the purposes of section 14 of the CPP.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.2) | s. 152(4.2) inapplicable where reassessment, albeit in response to refund request, increased taxpayer’s liability | 458 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) | a statute-barred reassessment was valid for the purpose of being objected to and vacated on substantive grounds | 222 |
| Tax Topics - Other Legislation/Constitution - Federal - Canada Pension Plan - Section 38 - Subsection 38(4) - Paragraph 38(4)(a) | CRA has discretion to refund excess contributions | 99 |
| Tax Topics - Income Tax Act - Section 96 | Backman statements applied to common law partnerships | 204 |
See Also
Freitas v. The Queen, 2017 TCC 46 (Informal Procedure), rev'd in part 2018 FCA 110
A retired Deloitte partner received an opinion from his firm that professional income allocated to him under ITA s. 96(1.1) was a retiring allowance and thus excluded from being subject to CPP contributions, and also relied on the CRA opinion in 9527946 that:
Income allocated pursuant to subsection 96(1.1)… for the purposes of the CPP provision is not considered to be from a business carried on by the retired partner and consequently such a partner is not required to contribute to CPP solely as result of receiving such income.
Campbell J concluded that both opinions were incorrect, finding that a s. 96(1.1) allocation of professional income was business income and included in his contribution base under s. 14.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retiring Allowance | s. 96(1.1) allocation of income from an accounting firm was business income rather than a retiring allowance | 233 |