The taxpayer included in computing income for the 2005 year employment insurance benefits - then following a settlement with the Commission de la santé et de la sécurité au travail ("CSST"), was required to reimburse those amounts in 2008, a year in which no amount was included in computing the taxpayer’s net income. Given that there could be no 2008 given the absence of income in that year, by administrative concession could the taxpayer deduct the repayment in 2005?
After agreeing that “if the taxpayer has no amounts to include in computing net income for the year, the taxpayer cannot claim a deduction under subdivision e,” the Directorate stated:
The deduction by virtue of subparagraph 60(n)(iv) must be taken in the year of the repayment while the deduction by virtue of paragraph 60(v.1) is taken in respect of a repayment payable on or before April 30 of the following year.
In this case … the applicable provision - permitting the deduction of amounts repaid in respect of employment insurance benefits - is paragraph 60(n)(iv). Since the taxpayer did not have any amounts to include in the taxpayer’s net income … the taxpayer cannot claim that deduction. In addition, there is no administrative concession available for claiming this deduction in 2005.