A hospital agreed with employees that, provided they resigned on a specified date corresponding to when they became eligible to start receiving pensions under the hospital's registered pension plan, they would in the interim receive periodic payments of a retirement allowance. During that interim period, the hospital deducted and remitted source deductions from such “retiring allowance” periodic payments as if the employees continued to be employed, and the employees continued to be responsible for making RPP contributions. To compensate the hospital for contributions it would continue to make to the registered pension plan, the agreement specified that the employees would reimburse the hospital for the cost of such contributions.
When it emerged that the Government of Quebec would pay such employer RPP contribution amounts, the hospital did not relinquish its entitlement to the refund payments and applied then to cover other costs, such as the employer share of Quebec pension plan and employment insurance amounts.
The Agency indicated that if such interim payments qualified as a retiring allowance, the employees would be entitled to a deduction therefor under s. 60(n)(i.1) (now s. 60(n)(iii).) If such periodic amounts constituted employment income (which the Agency generally considered to be the case if those amounts were handled by the employer in the same manner as employment income) then depending on the circumstances, the deduction to the employee under s. 8(1)(n) could be available.