T-3558-75
The Queen (Plaintiff)
v.
Irene M. Cumming (Defendant)
Trial Division, Mahoney J.—Toronto, June 25;
Ottawa, June 29, 1976.
Income tax—Defendant receiving death benefit under
Canada Pension Plan payable to husband's estate—Reporting
as own income—Whether death benefit under Canada Pension
Plan a death benefit as defined by Income Tax Act—Canada
Pension Plan, R.S.C. 1970, c. C-5, ss. 44(1)(c), 55(1), 72—
Income Tax Act, S.C. 1970-71-72, c. 63, ss. 56(1)(a)(i)(B),(iii),
248 ( 1 )(a)(î)•
Defendant was sole executrix of her husband's estate. After
his death she received the death benefit under the Canada
Pension Plan payable to the estate, and deposited it in her own
account. The sum was reported in her own personal return as
income. The issue was whether the amount was a death benefit
as defined by the Income Tax Act.
Held, the appeal is allowed. The payment was to the estate,
not defendant. But it was "received" by the widow within the
meaning of section 248(1)(a) of the Income Tax Act. However,
it was not in "recognition" of deceased's service in an office or
employment according to the ordinary meaning of "recogni-
tion". The Act does not link the payor directly with the
employment, but it does link the payment with a recognition of
service in that employment. The sum was not a death benefit
within the meaning of section 248(1), but a benefit under the
Canada Pension Plan, and required to be included in the
recipient's income under 56(1)(a)(i)(B).
INCOME tax appeal.
COUNSEL:
C. H. Fryers for plaintiff.
D. W. Smith for defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Davies, Ward & Beck, Toronto, for
defendant.
The following are the reasons for judgment
rendered in English by
MAHONEY J.: The issue is whether a death
benefit under the Canada Pension Plan' is a death
benefit as defined by the Income-Tax Act 2 . The
former Act provides:
44. (1) Subject to this Part,
(c) a death benefit shall be paid to the estate of a deceased
contributor who has made contributions for not less than the
minimum qualifying period;
55. (1) A death benefit payable to the estate of a contribu
tor is a lump sum amount equal to
(a) 6 times the amount of the contributor's retirement pen
sion ... or
(b) 10% of the Year's Maximum Pensionable Earnings for
the year in which the contributor died,
whichever is the lesser.
72. (1) An application for a death benefit may be made on
behalf of the estate of a contributor by the executor, adminis
trator, heir or other legal representative having the ownership
or control of property comprised in the estate, or by any other
person to whom the benefit would, if the application were
approved, be payable under this Part.
(2) Where payment of a death benefit is approved, the
amount thereof shall be paid to the estate of the contributor in
a lump sum or, if less than such amount as may be prescribed
to such person or persons and in such manner as may be
prescribed.
Earl F. Cumming was a contributor to the
Canada Pension Plan (hereinafter called "CPP").
He had worked for the same employer for over 25
years prior to his death in 1973. He left a will
naming his wife, the defendant, sole executrix and
heir if she survived him for 30 days. She survived;
the will was not probated. She applied for the CPP
death benefit on behalf of the estate and a cheque
for $560 payable to "The Estate of Earl F. Cum
ming" was delivered to her in payment thereof.
She endorsed the cheque personally, without refer
ence in the endorsement to the estate or to her
capacity as executrix, and deposited the proceeds
in her own bank account. The $560 was not, of
course, reported as income in the personal return
filed for Earl F. Cumming for the portion of 1973
he lived. No return was ever filed for the estate as
such.
' R.S.C. 1970, c. C-5.
2 S.C. 1970-71-72, c. 63.
In her own personal return for 1973, the defend
ant reported the $560 as income and claimed an
offsetting deduction. The Income Tax Act
provides:
56. (1) Without restricting the generality of section 3, there
shall be included in computing the income of a taxpayer for a
taxation year,
(a) any amount received in the year as, on account or in lieu
of payment of, or in satisfaction of,
(i) a superannuation or pension benefit, including, without
limiting the generality of the foregoing,
(B) the amount of any benefit under the Canada Pen
sion Plan .. .
(iii) a death benefit,
248. (1) In this Act,
"death benefit" for a taxation year means the amount or
amounts received in the year by any person upon or after the
death of an employee in recognition of his service in an office
or employment minus
(a) where the amount or amounts were received by his
widow, the lesser of
(i) the amount or amounts so received, and
Section 248(1)(a)(ii) provides for a variety of
situations however it is undisputed that the $560
received was the lesser amount whatever calcula
tions might have pertained under subparagraph
(ii).
The payment was to the estate not to the
defendant. I do not, however, accept the plaintiff's
argument that the Income Tax Act demands such
a strict interpretation of the expression "received
by his widow" that a payment otherwise a death
benefit for the purposes of the Act, destined in fact
and in law to the widow, would lose its character
simply because it passed through the estate en
route to her. The $560 paid by the CPP was
"received" by the widow within the meaning of
section 248(1)(a).
To be a death benefit under the Income Tax Act
the payment must, inter cilia, have been in recogni-
tion of the deceased's service in an office or
employment. The ordinary meaning of the word
"recognition" in the phrase "in recognition of' is
The acknowledgment or admission of a kindness, service,
obligation or merit, or the expression of this in some way.'
acknowledgment of something done or given esp. by making
some return (a gift in—of a service) 4
The defendant is correct in stating that the Act
does not link the payor directly with the employ
ment but it does link the payment with a recogni
tion of service in that employment. It is true that
the deceased was a contributor to CPP because he
was employed; it is equally true that the CPP
death benefit became payable because he was a
contributor but to say that it was paid "in recogni
tion of his service in ... employment" is to do
considerable violence to the idea plainly conveyed
by those ordinary English words.
The death benefit payable under the Canada
Pension Plan is not a "death benefit" within the
meaning of section 248 (1) of the Income Tax Act.
It is, however, a benefit under the Canada Pension
Plan and is specifically required to be included in
its recipient's income by section 56(1)(a)(i)(B).
This is a case in which, regardless of the out
come, the defendant is entitled, by section 178(2),
to an order that she be paid "all reasonable and
proper costs". I am by no means satisfied that an
award of taxable costs would, in this case, satisfy
that requirement but understand that some agree
ment may be reached by the parties. The defend
ant will have leave to apply for a further order as
to costs if no agreement is reached.
The appeal is allowed with costs.
3 The Oxford English Dictionary.
4 Webster's Third New International Dictionary.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.