Judgments

Decision Information

Decision Content

T-648-83
The Queen (Plaintiff)
v.
Henry E. Hoffman (Defendant)
Trial Division, Rouleau J.—Toronto, April 18; Ottawa, October 15, 1985.
Income tax — Income calculation — Income from employ ment — Employee contributions to U.S. social security — Taxpayer American citizen, resident in Canada, employed by Canadian subsidiary of American company — Amounts with held pursuant to agreement between U.S. government and parent company — Taxpayer acquiesced to procedure — Case law not supporting proposition income to be in employee's actual possession before taxable — Sufficient if amount paid for employee's eventual benefit — Criteria established in Murphy (GA) v The Queen, [19801 CTC 386 (F.C.T.D.) applied — Defendant's silence constituting concurrence though not party to contract — Case law indicating employer contri butions from employee remuneration taxable benefit — Income Tax Act, S.C. 1970-71-72, c. 63, ss. 5(1), 56(2) — Social Security Act, 42 U.S.C. § 301 (1976).
Income tax — Income calculation — Deductions — Employee contributions to U.S. social security — Taxpayer employed by Canadian subsidiary of American company — Contributions to U.S. social security applied either as deduc tion or foreign tax credit from source of income in U.S. - Contribution to foreign social security plan not listed deduc tion in s. 8(1) — S. 8(1)(m) contributions to registered pension fund or plan not applying as social security payments not "registered pension fund or plan" — Contributions to foreign security plan not deductible under s. 8(1)(1), permitting deduc tion of contributions to Canada Pension Plan or provincial pension plan, as not expressly included by Parliament — Income Tax Act, S.C. 1970-71-72, c. 63, ss. 8(1)(1),(m),(2), 20(12) (as am. by S.C. 1977-78, c. 32, s. 5), 126(7)(c) (as am. by S.C. 1974-75-76, c. 26, s. 83; 1977-78, c. 32, s. 33; 1980-81-82-83, c. 140, s. 88), 146(5) (as am. by S.C. 1976-77, c. 4, s. 56), (5.2) (as am. idem), 248(1) — Social Security Act, 42 U.S.C. § 301 (1976).
The defendant is an American citizen, resident in Canada and employed by a Canadian subsidiary of an American com pany. Pursuant to an agreement with the U.S. Internal Reve nue, the employer withheld employee social security contribu tions. The plaintiff neither directed nor concurred in the payments of the withheld amounts, but he deducted them from his earnings. The Minister disallowed the deductions. The Tax Review Board held that the withheld amounts formed no part
of the defendant's income. Initially the plaintiff was unaware of the agreement between his employer and the U.S. government. Shortly after his arrival in Canada he questioned the head office about the deductions for contributions to social security in the U.S. He acquiesced to this procedure because it persisted throughout his years of employment in Canada. The defendant submits that the deductions were not taxable as income because they were never received by him pursuant to subsection 5(1) of the Income Tax Act. Furthermore, he argues that his contribu tions should be deductible as a contribution to an approved pension plan pursuant to section 8.
Held, the plaintiff's claim should be allowed and the decision of the Tax Review Board set aside.
If the proposition that income must be in the actual posses sion of the employee before it can be taxed is correct, then an employee's contributions to Canadian or provincial pension plans deducted at source are not income. Case law does not support this proposition. The Tax Review Board has held that it is sufficient to say that the amount of the salary was paid either to the employee or to his benefit or that it was paid to a third party under a federal or provincial statute. The deductions here were for the defendant's eventual benefit.
Murphy (GA) y The Queen, [1980] CTC 386 (F.C.T.D.) establishes four criteria that must be satisfied before subsection 56(2) will establish tax liability. Two of those criteria at issue are: whether the payments are pursuant to the direction of or with the concurrence of the taxpayer and whether the payments are for the taxpayer's benefit. Ministerial policy and case law indicate that the defendant's silence over the course of several years, as to the contractual arrangements between the U.S. parent company and the U.S. government constituted concur rence, notwithstanding that the defendant was not a party to the contract. An interpretation bulletin indicates that the direc tion or concurrence of the taxpayer may be implicit. Absence of privity is not the sole criterion assessable in the determination of concurrence. Of equal relevance is whether subsequent behaviour—the absence of objection—constitutes tacit accept ance of the contractual arrangement. The case law indicates that employer contributions from employee remuneration con stitute a taxable benefit of the employee. The cases cited do not consider whether an employee's pension contribution retained by his employer from his remuneration constitutes a taxable benefit in the hands of the employee.
The defendant argued that the contributions in question constitute non-business income within paragraph 126(7)(c) and thus were properly deducted pursuant to subsection 20(12). Policy and the case law indicate that U.S. social security contributions constitute an amount which may be used either as a deduction from income or as a foreign tax credit, or con sidered a non-business income within paragraph 126(7)(c) and subsection 20(12). However, the deduction or credit must be applied against income from sources in the United States.
The defendant argued that notwithstanding subsection 8(2), payments made to the U.S. social security system constitute an allowable deduction under subsection 8(1). The Income Tax Act must be applied strictly. Only such deductions as are explicitly provided for should be allowed. A contribution to a foreign social security plan is not a listed deduction in subsec tion 8(1) and that argues against its inclusion as a deduction from the defendant's income.
Pursuant to paragraph 8(1)(m) a taxpayer may deduct con tributions to a registered pension fund or plan, which is defined as a fund accepted for registration by the Minister. The Minis ter does not consider that employee social security payments constitute a deductible expense under paragraph 8(1)(m). The defendant's contributions to social security are not contribu tions to a "registered pension fund or plan" and are not deductible within paragraph 8(1)(m).
Subsection 146(5) stipulates that a taxpayer may deduct from his income premiums paid by him into a registered retirement savings plan. Subsection 146(5.2) stipulates that "pension fund or plan" does not include the Canada Pension Plan, a provincial plan or any similar plan of a foreign country. It has been argued that since subsection 146(5.2) likens similar plans of a foreign country to the Canada Pension Plan or a provincial pension plan, the contributions thereto being deduct ible pursuant to paragraph 8(1)(1), then contributions to a foreign social security plan are similarly deductible under paragraph 8(1)(l). If Parliament wanted to include as a deduc tion against employment income, contributions to a "similar plan of a country other than Canada", it would have done so. That Parliament expressly chose to include the phrase in respect of a provision concerned with the determination of maximum allowable deductibility limits of premium contribu tions, yet did not expressly do so in relation to paragraph 8(1)(l), indicates that contributions paid under social security are not allowable deductions under paragraph 8(1)(1).
CASES JUDICIALLY CONSIDERED
APPLIED:
Lucien Gingras v. M.N.R., decision dated March 26, 1973, Tax Review Board, not reported; Murphy (GA) y The Queen, [1980] CTC 386 (F.C.T.D.); Hartland v. Diggines, [1926] A.C. 289 (H.L.); Minister of National Revenue v. Bronfman, Allan, [1966] Ex.C.R. 172; [1965] C.T.C. 378; Fluet (J-P) v MNR, [1982] CTC 2319 (T.R.B.); Ledwidge v. M.N.R. (1971), 71 DTC 188 (T.A.B.); Stelfox (MJ) v MNR, [1985] 1 CTC 2065 (T.C.C.).
DISTINGUISHED:
Cliffe, R.R. v. M.N.R. (1957), 57 DTC 305 (T.A.B.); Minister of National Revenue v. Rousseau, Claude, [1961] Ex.C.R. 45; [1960] C.T.C. 336; The Queen v. Chrapko, G.R. (1984), 84 DTC 6544 (F.C.T.D.); Pazuk
v. M.N.R. (1955), 13 Tax A.B.C. 264; Norris, H.B. v. M.N.R. (1957), 17 Tax A.B.C. 257.
CONSIDERED:
Seley v. M.N.R. (1962), 62 DTC 565 (T.A.B.).
REFERRED TO:
Bruce v. Hatton (1921), 38 T.L.R. 323 (K.B.); Morin, J.-P. v. The Queen (1974), 75 DTC 5061 (F.C.T.D.); Salter v. Minister of National Revenue, [1947] C.T.C. 29 (Ex. Ct.).
COUNSEL:
H. Erlichman for plaintiff.
William I. Innes and Kevin C. Wark for
defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Stikeman, Elliott, Toronto, for defendant.
The following are the reasons for judgment rendered in English by
ROULEAU J.: The plaintiff brings this action against the defendant by way of trial de novo. The Tax Review Board having set aside the reassess ments by the Minister involving the defendant for the taxation years 1978 and 1979. The issue con cerns monies deducted at source from the defend ant's salary and paid to the U.S. social security system.
The defendant is a citizen of the U.S.A. and a resident of Canada. He was first employed by the Firestone Tire and Rubber Company and was working in the United States until August 1, 1967 when he was transferred by Firestone to one of its Canadian subsidiaries, Firestone Textiles Com pany.
In March, 1955, prior to the defendant joining the firm, Firestone Tire and Rubber Company entered into an agreement with the U.S. Internal Revenue. It provided for obligatory contributions by all employees of the company under the Social Security Act [42 U.S.C. § 301 (1976)]. It also extended to employees who performed services in foreign affiliates who remained U.S. citizens, and
were non-residents. Pursuant to this agreement, in the taxation years 1978 and 1979, the company withheld $1,209.63 and $1,645.10 from the tax payer's salary and forwarded it to the U.S. govern ment. Though he neither directed nor concurred in the payments of the withheld amounts, he never theless deducted them from his earnings for the years 1978 and 1979.
By notices of reassessment dated March, 1984, the plaintiff reassessed the defendant for the 1978 and 1979 taxation years disallowing the deductions of the withheld amounts. In 1982 the Tax Review Board allowed the defendant's appeal and held that the withheld amounts formed no part of the defendant's income from employment for the 1978 and 1979 taxation years.
The evidence indicates that initially the defend ant was not aware of the agreement between his principals and the U.S. government. Shortly after his arrival in Canada, in 1967, he questioned the head office about the amounts being deducted for contributions to social security in the U.S. He undoubtedly acquiesced to this procedure because it persisted throughout his years of employment in Canada. A letter dated September 7, 1982, was forwarded by Firestone's head office to Mr. Hoff- man confirming that they had entered into this agreement in 1955 and that, as an American citi zen working for a foreign subsidiary of an Ameri- can employer, he was covered under this agree ment and had no choice but to contribute.
The defendant submits that he is not taxable with respect to the withheld amounts, as income, for the years in question because they were never received by him. This within the meaning of sub section 5(1) of the Act [Income Tax Act, R.S.C. 1952, c. 148 (as am. by S.C. 1970-71-72, c. 63, s. 1)] ; that income must be received before it can be taxed; that the amounts were withheld without his direction or concurrence; further, that section 8 of the Income Tax Act provides for the monies that a taxpayer may deduct before calculating his net income; and that his contribution is one that
should be considered in the same class as an approved pension plan.
It should be noted that the defendant was being paid by Firestone Canada Inc., a Canadian corpo ration, and the monies deducted were then for warded to the U.S. for contribution to social security.
Issues:
A) Whether contributions deducted by defendant's employer, pursuant to an agreement entered into between the parent corporation of the defendant's employer and the United States government, con stitute income received within the meaning of sub section 5(1) of the Income Tax Act.
B) Whether those amounts, if income received by the defendant, qualify as a deductible expense in computing the taxpayer's income for a taxation year within the meaning of subsections 8(1) and 8(2) of the Income Tax Act.
Issue A
Receipt of income within the meaning of subsec tion 5(1) of the Income Tax Act
Defendant relies on Cliffe, R.R. v. M.N.R. (1957), 57 DTC 305 (T.A.B.); Minister of Na tional Revenue v. Rousseau, Claude, [1961] Ex. C.R. 45; [1960] C.T.C. 336 and The Queen v. Chrapko, G.R. (1984), 84 DTC 6544 (F.C.T.D.) for the proposition that monies not actually "received" do not constitute "received" income within the meaning of subsection 5(1) of the Income Tax Act (I.T.A.).
In Cliffe (supra) and Rousseau (supra), the issue to be decided was not whether certain speci fied sums had to be in the actual physical posses sion of the taxpayer before those amounts could be construed as income "received", but whether the word "received" within the meaning of subsection 5(1) of the I.T.A. incorporates the words "received" and "receivable".
In Chrapko (supra) the determination of wheth er weekly wages received by a parimutual cashier constituted income in the hands of the taxpayer was dependent upon the degree to which he com-
plied with the terms of a contractually established condition precedent: the contract of employment provided that overpayments on winning tickets were to be deducted from employee's weekly wages. There existed a legally binding require ment; a cashier's total weekly shortages were to be deducted from his total weekly wages. It had to be determined whether monies received by the cash ier, before shortages were deducted, constituted his weekly income. The Tax Review Board and the Federal Court expressly refused to apply subsec tion 56(2) of the I.T.A. and found that the cash shortages deducted from the cashier's salary were not his property to begin with.
In this case, the defendant does not dispute the ownership of the amounts contributed to the U.S. government in the 1978 and 1979 taxation years. Nor can he argue that he will not eventually derive a benefit from these monies. He does argue that he did not receive the sums deducted from his salary.
If the proposition that income must be in the actual possession of the employee before it can be taxed is correct, then I would have to conclude that an employee's contributions to Canadian or provincial pension plans, deducted at source by the employer, are not income in the hands of the employee. Jurisprudence does not support this proposition.
In Lucien Gingras v. M.N.R. [unreported deci sion dated March 26, 1973] the Tax Review Board noted (at pages 4 - 5):
[TRANSLATION] The expression "touché" (received) does not necessarily mean that the full amount of the salary must be physically received by the payee or be deposited in full in his bank account.
According to the interpretation of section 5 it is sufficient to say that the amount of the salary was paid by the employer either to the employee himself or to his benefit, or that it was handed over to a third party under a federal or provincial statute.
The fact that defendant's employer deducted at source employee's social security contributions in the 1978 and 1979 taxation years does not support the proposition that he received income net of the withheld amounts. The amounts deducted and for warded were for his eventual benefit.
Construction receipt pursuant to subsection 56(2) of the Income Tax Act
In Murphy (GA) y The Queen, [ 1980] CTC 386 (F.C.T.D.), Mr. Justice Cattanach listed four essential ingredients that have to be satisfied before subsection 56(2) will establish tax liability in the hands of the taxpayer (at pages 389-390):
(1) that there must be a payment or transfer of property to a person other than the taxpayer;
(2) that the payment or transfer is pursuant to the direction of or with the concurrence of the taxpayer;
(3) that the payment or transfer be for the taxpayer's own benefit or for the benefit of some other person on whom the taxpayer wished to have the benefit conferred, and
(4) that the payment or transfer would have been included in computing the taxpayer's income if it had been received by him instead of the other person.
At issue is whether conditions (2) and (3) are applicable to the defendant.
Transferred without direction or concurrence
Defendant argues that he did not consent, concur nor direct that payment of the withheld amounts be transferred to the U.S. government. According to him, the obligation to pay the with held amounts was established pursuant to a con tract to which he was not a party. However, the defendant did abstain from objecting to the con tractual arrangement for several years.
Ministerial policy and jurisprudence indicate that defendant's silence, over the course of several years, as to the contractual arrangement between Firestone Tire and Rubber Co. and the U.S. gov ernment constituted concurrence in the transfer of the withheld amounts, notwithstanding the fact that the defendant was not a party to the contract.
Interpretation Bulletin No. IT-335 notes that the direction or concurrence of the taxpayer may be implicit. In Hartland v. Diggines, [1926] A.C. 289 (H.L.) it was held that, notwithstanding the fact that neither verbal nor written agreement had been entered into between employee and his employer, wherein the employer paid income tax on the employee's salary, payment constituted income received in the hands of the employee. Viscount Cave L.C. noted (at page 291):
But it is said—and this is the main argument used on behalf of the appellant—that the sum is not an emolument, because it was not paid to the appellant or at his request, although in fact it was paid regularly over a series of years. I do not agree with
that argument. There was that continuity in payment to which reference was made in the case of Blakiston v. Cooper, and the effect of the payment was in practice and in fact to relieve the appellant year after year from his liability for the payment of the tax.
In Minister of National Revenue v. Bronfman, Allan, [1966] Ex.C.R. 172; [1965] C.T.C. 378 the Directors of a company bestowed gifts upon rela tives and former employees in the amount of $97,000 in the absence of shareholder authoriza tion. It was held that such gifts constituted income in the hands of the Directors pursuant to subsec tion 16(1) [56(2)] of the I.T.A. (R.S.C. 1952, c. 148). However all the shareholders of the company were to share, proportionately to their individual holdings, the tax liability imposed by subsection 16(1). By their failure to object to the corporate gifts at shareholder meetings, the shareholders had concurred in their Directors' generosity. Mr. Jus tice Dumoulin noted (at page 179 Ex.C.R.; 385 C.T.C.):
Shareholders possessing voting rights could have, had they so wished, objected to and voted down at annual or specially convened meetings their directors' generosities. And, of course, they also might have resorted to the radical remedy of voting out of office the entire Board and elected a more thrifty slate of directors. Their abstention or indifference, unbrokenly main tained, becomes tantamount to an approval of their administra tors' gift distributing policies, and they should, with the latter, have shared proportionately to their individual holdings, the burden of taxation decreed by s. 16(1). [Emphasis added.]
Thus mere absence of privity is not the sole criteri on assessable in the determination of concurrence. Of equal relevance is whether subsequent behavi- our—the absence of objection—constitutes tacit acceptance of the contractual arrangement.
Whether withheld amounts constitute taxable ben efits when payment made without the concurrence of the taxpayer
Defendant cites Pazuk v. M.N.R. (1955), 13 Tax A.B.C. 264 and Norris, H.B. v. M.N.R. (1957), 17 Tax A.B.C. 257 as authority for the proposition that defendant's social security contri butions do not constitute a taxable benefit.
In fact those cases turned on the issue of wheth er an employer's contribution to a pension or
superannuation fund constituted a taxable benefit in the hands of the taxpayer. They did not consider the issue, presently in dispute, of whether an employee's pension contribution retained by his employer from his remuneration constitutes a tax able benefit in the hands of the employee.
Jurisprudence indicates that employer contribu tions from employee remuneration constitute a taxable benefit of the employee (Bruce v. Hatton (1921), 38 T.L.R. 323 (K.B.); Morin, J.-P. v. The Queen (1974), 75 DTC 5061 (F.C.T.D.); Salter v. Minister of National Revenue, [1947] C.T.C. 29 (Ex. Ct.)).
Issue B
Section 8: Deductibility of amounts paid to the U.S. government under social security (U.S.)
1) Non-Business Income Tax
Defendant has argued that the amounts of $1,209.63 and $1,645.10 for the 1978 and 1979 taxation years respectively, paid to the U.S. gov ernment as contributions under social security, constitute non-business income within the meaning of paragraph 126(7)(c) [as am. by S.C. 1974-75- 76, c. 26, s. 83; 1977-78, c. 32, s. 33] of the I.T.A. and thus were properly deducted pursuant to sub section 20(12) [as am. by S.C. 1977-78, c. 32, s. 5] of the I.T.A.
Ministerial administrative policy and the case law indicate that U.S. social security contributions constitute an amount which may be used either as a deduction from income or as foreign tax credit, or considered a non-business income within the meaning of paragraph 126(7)(c) and subsection 20(12) of the I.T.A. However, the income tax deduction or tax credit must be applied against income from sources in the United States.
Interpretation Bulletin No. IT-122R indicates that:
Normally, a United States citizen who is neither a resident of the United States nor employed by a United States resident is neither required nor permitted to pay tax under the Social
Security Act. An exception occurs, however, when a corpora tion resident in the United States elects to pay the full tax on behalf of United States citizens resident in Canada who are employees of a Canadian corporation which is a subsidiary of the United States corporation. Where part of the tax is with held from the salary of such an employee by the Canadian subsidiary, the amount so withheld should be regarded as an income tax paid to the United States, in respect of which a foreign tax credit will be allowable if the employee has income in the year from sources in the United States.
Interpretation Bulletin No. IT-122R reflects the decision rendered in Seley v. M.N.R. (1962), 62 DTC 565 (T.A.B.) wherein it was held that a taxpayer's contributions did constitute an income or profits tax levied in the U.S. and therefore formed an integral part of the foreign tax credit which credit could be applied against taxpayer's income earned from a foreign source.
Paragraph 126(7)(c) was amended by S.C. 1980-81-82-83, c. 140, s. 88 with the addition of subparagraph 126(7)(c)(iv). By that subparagraph Parliament has expressly excluded from the defini tion of Non-Business Income, any income payable to a foreign country solely because: a) the taxpayer was a citizen of that country, and, b) such taxes could be reasonably attributable to income from a source within Canada.
It was argued that the exclusionary stipulation enunciated in subparagraph 126(7)(c)(iv) was not a provision of paragraph 126(7)(c) in the taxation years 1978 and 1979; that the absence of the relevant subparagraph permits defendant to apply his contributions as a Non-Business Income against his employment income earned in Canada; otherwise, that I should conclude that, notwith standing subsection 8(2) of the I.T.A., payments made to the U.S. social security system constitute an allowable deduction within the meaning of subsection 8(1) of the I.T.A.
I disagree. In Fluet (J-P) y MNR, [1982] CTC 2319 the Tax Review Board commented on apply ing a liberal interpretation to the tax exemptions enumerated in subsections 8(1) and 8(2) of the I.T.A. It noted the following at page 2323 of the decision:
The income earned is therefore taxable whether the fine is paid directly by the employee or is deducted from his salary. Can the fine, however, be allowed as a deduction?
4.03.3 In view of the fact that all the deductions allowed against income from an office or employment are set out in section 8 of the Act and that no provision is made therein for the payment of a fine to one's employer, the deduction cannot be allowed.
The Tax Review Board, like any other tribunal in this country, must interpret the Income Tax Act strictly, since the Act falls within the realm of public law.
The need for strict interpretation obliges the tribunal to allow only such deductions as are explicitly provided for; moreover, the words used in the legislation must be interpreted according to their dictionary meaning unless they are defined in the Act.
In the instant case, the Act contains no provision, either general or particular, that would enable the Board to allow the deduction claimed. Unfortunately for the appellant, the appeal must be dismissed. [Emphasis added.]
The fact that a contribution to a foreign social security plan is not among the listed deductions in subsection 8(1) of the I.T.A. argues against its inclusion as a deduction to be applied against the defendant's income.
2) Listed Section 8 Exemptions
i) Paragraph 8(1)(m): Contribution to a Regis tered Pension Plan
A taxpayer may deduct, in computing his income for a taxation year from an office or employment, amounts contributed by him to a registered pension fund or plan. Subsection 248(1) of the I.T.A. defines a registered pension fund or plan to mean a fund "accepted by the Minister for registration for the purposes of this Act in respect of its constitution and operations for the taxation year under consideration."
Information Circular No. 72-13R7 discusses the administrative rules with respect to employees' pension plans, including registration. The circular indicates that the Minister of National Revenue does not consider that employee social security payments made pursuant to social security consti tute a deductible expense within the meaning of paragraph 8(1)(m).
In Ledwidge v. M.N.R. (1971), 71 DTC 188, the Tax Appeal Board held that contributions
made by a former citizen of France, now resident in Canada, to a pension plan of the French govern ment did not constitute a deductible contribution on the ground that such amount was not a contri bution to a "registered pension fund or plan" within the meaning of the I.T.A.
Thus defendant's contributions under social security do not constitute amounts deductible within the meaning of paragraph 8(1)(m).
ii) Paragraph 8(1)(1)
Subsection 146(5) [as am. by S.C. 1976-77, c. 4, s. 56] of the I.T.A. stipulates that a taxpayer may deduct from his income premiums paid by him into a registered retirement savings plan. However, the amount deductible is limited by, inter alia, the taxpayer's contribution to another pension fund or plan. Subsection 146(5.2) [as am. idem] of the I.T.A. stipulates that the term "pension fund or plan" does not include the Canada Pension Plan, a provincial plan or any similar plan of a foreign country.
In Stelfox (MJ) v. MNR, [1985] 1 CTC 2065 taxpayer argued that since subsection 146(5.2) likens "similar plans of a foreign country" to the Canada Pension Plan or a provincial pension plan—the contributions thereto being deductible pursuant to paragraph 8(1)(l) of the I.T.A.—then contributions made by the taxpayer to the British Department of Health and Social Security are similarly deductible under paragraph 8(1)(l) of the I.T.A. The Tax Court of Canada rejected this argument noting (at page 2067) that:
It seemed quite clear that there was no provision for the specific deduction of this amount.... [Original emphasis.]
If Parliament wanted to include, as a deduction against employment income, contributions made to a "similar plan of a country other than Canada", it would have done so. That Parliament expressly chose to include the phrase in respect of a provi sion concerned with the determination of max imum allowable deductibility limits of premium contributions, yet did not expressly do so in rela tion to paragraph 8(1)(l), indicates that contribu-
tions paid under social security are not allowable deductions within the meaning of paragraph 8(1)(1).
The plaintiff's claim is hereby allowed and the decision of the Tax Review Board dated November 8, 1982 is hereby set aside and varied.
The reassessment made by the Minister of Na tional Revenue in respect to the defendant's 1978 and 1979 taxation years is hereby restored.
Costs to the plaintiff.
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