Michel Mathieu (Appellant) v. Her Majesty the Queen (Respondent)

Court: Tax Court of Canada

Date: June 27, 2014

Neutral Citation: 2014 CCI 207

Court File Number: 2010-1972(IT)G

Inclusions in income — Stock option benefits — Whether taxpayer at arm’s length with his corporate employer from whom he acquired and took up stock option benefits — If taxpayer and his employer not at arm’s length, whether stock option benefits in issue required to be included in taxpayer’s income under general employee benefit provisions of paragraph 6(1)(a) of the ITA

Before: Paris J

Mathieu v. The Queen. Tax Court of Canada (French Text), June 27, 2014. Neutral Cite: 2014 CCI 207.

Court File No. 2010-1972(IT)G. Paris J. Inclusions in income — Stock option benefits — Whether taxpayer at arm’s length with his corporate employer from whom he acquired and took up stock option benefits — If taxpayer and his employer not at arm’s length, whether stock option benefits in issue required to be included in taxpayer’s income under general employee benefit provisions of paragraph 6(1)(a) of the ITA — In reassessing the taxpayer for 2004, 2005, and 2006, the Minister assumed that the taxpayer’s relationship with his corporate employer Forages Garant was not at arm’s length, and denied him the stock option deduction in paragraph 110(1)(d) of the Act, relating to the stock options that he had acquired from Forages Garant. In allowing the taxpayer’s appeal, the TCC concluded, in part, that: (a) although separated, the taxpayer and his wife were not divorced, and hence were still “connected…by marriage” within the meaning of paragraph 251(2)(a) of the ITA; (b) as a result, because of the inter-relationships of the various shareholders of Forages Garant, including the taxpayer and his wife, the taxpayer was not at arm’s length with Forages Garant; (c) the parties agreed that this meant that no stock option benefit could be included in the taxpayer’s income under paragraph 7(1)(b) of the ITA; and (d) despite the Minister’s argument to the contrary, no stock option benefit could be included as a “benefit” in the taxpayer’s income under the general employee benefit provisions of paragraph 6(1)(a) of the ITA either, because of the specific language in paragraph 7(3)(a) of the ITA making paragraph 6(1)(a) inapplicable in this case. — ITA ss. 6(1)(a), 7(1), 7(3), 251(1), 251(2), 251(4), 251(6), 110(1)(d).