The taxpayer was a Barbados-resident Canadian citizen who worked as a pilot for Air Canada. His pay was based predominantly on flight time. He calculated his income from employment performed in Canada on the following bases:
- 10% of the income earned on flights between Toronto and Vancouver, based on a purported 90% of flight time spent in U.S. airspace.
- A percentage on Canadian international flights based on the ratio of the time spent in Canadian airspace to the total time, flying or not, between embarking and disembarking in Canada. (The taxpayer claimed that he was responsible for managing his craft while out of Canada, and that sleep was a part of his obligations.)
- 0% of all other income, including training and disability payments.
McArthur J rejected the taxpayer's income allocations. Air Canada paid its pilots based on flight time, and therefore the Minister's allocation of the taxpayer's duties based on flight time was more reasonable than the taxpayer's allocation based on total time spent abroad. Affirming that finding, Mainville JA stated (at para. 25):
The appellant has failed to show why we should disregard the method set out in the collective agreement [between Air Canada and its pilots] in order to favour a method which is largely based on non-remunerated wait time and layover time.
The 90% allocation of Toronto-Vancouver flight time to US airspace was not credible. Lacking any better method, McArthur J adopted the allocations arrived at in Sutcliffe, which used Air Canada's average flight path and took the percentage of the path length in U.S airspace - 49% for Toronto to Vancouver, and 31% for the return trip. This method assumed a constant air speed and no deviation from the standard flight path, and the taxpayer cast doubt on both assumptions. However, no better method was established.
In affirming that, in accordance with Sutcliffe, the disability payments should be allocated in the same proportion as flight income, Mainville JA stated (at para. 33):
The fact that subparagraph 115(1)(a)(i) refers to incomes from duties or offices and employments performed by the non-resident persons in Canada does not exclude from the scope of that paragraph the benefits and amounts referred to under subsection 6(1) of the Act. Rather, the words "duties" and "performed" are simply used in this context to distinguish between incomes earned from offices or employments in Canada from those earned outside Canada.