Sums totalling $11,125 which the taxpayer was required to pay to his former employer (BMO Nesbitt) pursuant to settlement of an action brought against him by BMO Nesbitt based on a clause in his employment agreement that required him to reimburse BMO Nesbitt for $25,000 in training costs upon the taxpayer shifting employment to a competing investment dealer within specified periods of time, were deductible by him under s. 8(1)(f). Training costs incurred to maintain, update or upgrade an already existing skill or qualification (including trading on the BMO Nesbitt software, training in relation to the investment products available and training on portfolio and management techniques) were not capital in nature; and given that the Crown had not made any assumptions of fact as to what portion of the reimbursement amounts were on account of capital, and had not lead any evidence on such allocation, the Crown had failed to satisfy the onus of proof on it and the deduction of the amounts could not be denied on this basis.
Furthermore, in finding the settlement amounts (together with related legal fees) satisfied the test of being expended to earn commission income from the successor employer (TD Waterhouse), Webb J. stated (at para. 22):
"He could not have earned the commission income with TD Waterhouse unless he left the employment of BMO Nesbitt Burns and since leaving the employment of BMO Nesbitt Burns resulted in the obligation to reimburse BMO Nesbitt Burns for the training costs under the Agreement, these amounts paid under the Agreement were made for the purpose of earning the commission income that the Appellant earned from TD Waterhouse. The legal fees that were incurred were directly related to this expenditure and were incurred to presumably reduce the amount that the Appellant would have to pay under the Agreement and therefore were also made for the purpose of earning the commission income from TD Waterhouse."