Mahoney, J:—The issue is the deductibility from its taxable income of certain life insurance premiums paid by the plaintiff in its 1974 and 1975 taxation years. The amounts in issue are $1,595 and $5,899.50 respectively. The policies insured the lives of Gordon Roberts, William Henderson and David Roberts. The deductions were disallowed on the ground that the premiums were not paid for the purpose of gaining or producing income from the plaintiff’s business.
The plaintiff carries on business, based in Lethbridge, Alberta, as a retail distributor of fertilizer. Gordon Roberts is its president, a director and full time employee. David Roberts is a director and full time employee. William Henderson is secretary-treasurer and a director and, through the vehicle of another company, which employs him, he provides management services to the plaintiff. Henderson also provides management services to a number of other businesses; he is not, directly or indirectly, by any means engaged full time in the plaintiff’s affairs.
At all material times, 97% of the plaintiff’s outstanding shares were owned by BYF Holdings Limited, (hereafter “BYF”). A majority of the issued and outstanding common shares of BYF were, at all material times, owned by Henderson and the two Roberts. On October 1, 1973, they entered into a standard shareholder’s buy-sell agreement whereby each gave the others a right of first refusal should he wish to sell his shares and the survivors bound themselves to buy the shares of a deceased shareholder. The share certificates were deposited with their solicitor. The agreement made no reference to life insurance.
The policies in issue were applied for and, effective November 1, 1973, policies on the lives of Gordon Roberts and Henderson issued. The applicant and beneficiary was the solicitor. David Roberts had some medical problems and, in the result, policies on his life did not issue until mid-1975. His estate was named beneficiary of one policy and Henderson and Gordon Roberts were joint beneficiaries of the other. Henderson, the only one of the three to testify, said that it had been intended the policies on David Roberts’ life also be payable to the solicitor.
There is no doubt that the purpose of the policies was to fund the BYF shareholders’ buy-sell agreement. There is a group policy maintained by the plaintiff in which the two Roberts and Henderson participate along with other employees. They are the only persons on whose lives the plaintiff has purchased insurance other than the group policy.
The plaintiff’s position is that the provision of life insurance is an accepted element of an executive compensation package and the benefit conferred on the individuals, for which they have personally been assessed to tax, is a benefit conferred in their capacities as employes and, therefore, from the plaintiff’s point of view, an outlay to earn income. The plaintiff simply has not discharged the onus on it to prove, on a balance of prob- abilities, that, in paying the premiums on these life insurance policies, the plaintiff was remunerating the Roberts and Henderson in their capacity as employees, assuming for the purpose that Henderson is an employee.
An amended statement of defense was filed at the hearing. Its effect was to admit the deductibility of certain premiums paid on the group policy for coverage of the Roberts and Henderson in excess of $25,000. To that extent the reassessment must be referred back to the Minister. Otherwise, the action will be dismissed with costs.