The employees of the taxpayer earned vacation leave during a reference period running from May 1 to April 30 of each year. The Minister assessed on the basis that because premiums were required to be contributed by the taxpayer under statutory benefits legislation (and, in some cases, to a private pension plan and a private group insurance plan) only at the time the vacation pay was paid, the corresponding expense for such premiums was not incurred by the taxpayer until the year of payment of the vacation pay.
In finding that the premiums and contributions were deductible on an accrual basis, Desjardins J.A. found that there was an obligation for the premiums and contributions at the time the vacation leave was earned notwithstanding that the time at which premiums or contributions would be required to be paid was uncertain. In particular, the obligation was not one with a suspensive condition.