Principal Issues: The correspondent urged the Minister to re-consider the allegations of fishers that they improperly paid tax on the payments received from the Department of Fisheries and Oceans under the Atlantic Groundfish Licence Retirement Program.
Position: The correspondent was advised that the Tax Court of Canada has confirmed that the payments were taxable.
July 22, 2008
XXXXXXXXXX
Dear XXXXXXXXXX :
The office of the Right Honourable Stephen Harper, Prime Minister of Canada, forwarded to me a copy of your correspondence concerning the taxable treatment of payments received from the Department of Fisheries and Oceans under the Atlantic Groundfish Licence Retirement Program.
I understand the complexities faced by many regarding taxation under the 1999 Program. In 2000, the Minister of Finance at the time presented two amendments to the taxation of capital gains, which resulted in three different capital gains rates for that year. Through consultations with my colleagues from Newfoundland and Labrador, I understand that some recipients of the payments are of the view that income tax was incorrectly or improperly applied on the payments received from the Department of Fisheries and Oceans in respect of the licences. There have also been numerous assertions reported in the media that many fishers paid no tax on their payments. I can assure you that this is not the case.
While I can appreciate your preference to minimize taxes, I must advise that the Tax Court of Canada has rendered its decision on the tax treatment of such payments in a case called "Ross Winsor v. Her Majesty the Queen." In the Winsor case, the Tax Court determined that the payments are, in fact, taxable under the provisions of the Income Tax Act. That decision applies to any pending similar or identical objections related to payments received under the Program. It is apparent that the circumstances you describe are sufficiently similar to those considered in the Winsor case to support the conclusion that tax was properly paid.
I trust that the information provided clarifies the position of the Canada Revenue Agency on this matter.
Sincerely,
The Honourable Gordon O'Connor, P.C., M.P.
Renée Shields
(613) 957-2049
2008-027465
April 22, 2008