Federal Court of Appeal Interprets Term “Fixed or Ascertainable” for CPP Purposes
Date: January 25, 2012
On November 16, 2011, the Federal Court of Appeal (“FCA”) released its decision in Minister of National Revenue v. Her Majesty the Queen in Right of Ontario (“HMQ”). The FCAs decision overturns the January 17, 2011 decision of the Tax Court of Canada (“Tax Court”) in which it had held that per diem amounts paid to members of Ontarios Judicial Appointments Advisory Committee (“JAAC”) were not fixed or ascertainable, and not pensionable or subject to Canada Pension Plan (“CPP”) contributions.
The facts in HMQ and the Tax Courts decision are discussed in our FTR Now of March 8, 2011. In this FTR Now, we briefly summarize the facts and the issue that was before the FCA, and the FCAs decision.
The Minister of National Revenue (“MNR”) determined that the per diems paid to JAAC members were pensionable and subject to CPP contributions. The MNRs decision was appealed to the Tax Court.
JAAC members had provided services in their capacity as office-holders, not as employees, and under the CPP amounts that are paid to office-holders are only pensionable and subject to CPP contributions if they are either fixed or ascertainable. The Tax Court concluded that for an amount paid to an office-holder to be fixed or ascertainable for purposes of the CPP, the payor and payee must be able to calculate, with a reasonable degree of certainty, the amounts that will be paid before the term of office begins. In this case the total amount of per diems paid to JAAC members could not reasonably be known in advance, and therefore, was not fixed or ascertainable. As such, the per diem payments were not pensionable or subject to CPP contributions.
The MNR appealed the Tax Courts decision to the FCA.
The FCA held that there is nothing in the CPP requiring that the phrase “fixed or ascertainable” be interpreted as an advance determination of the total remuneration received by the office-holder for a particular year. While an advance determination of the amount of remuneration received in a year would meet the test for being “fixed or ascertainable,” an advance determination is not necessary.
Leave to appeal to the Supreme Court of Canada has not been sought. The companion case to HMQ, Real Estate Council of Alberta v. The Minister of National Revenue (“RECA”), had also been appealed to the FCA but as of the date of this FTR Now has not yet been heard.
We will monitor the appeal in the RECA case, but at this time the direction from the FCA is that remuneration paid to office-holders is to be considered pensionable and subject to CPP contributions if it is fixed or ascertainable, regardless of whether the amount can be determined in advance.
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