The taxpayer was found to be an employee of the RCMP during a 27-week instruction program at a "training academy" given that she had approximately four hours per week of work duties (e.g., front desk reception and guard duty), that most trainees, including her, became full-time constables following completion of the program and the "master servant" relationship that existed in the training program.
Out of a total allowance of $9,520, the RCMP deducted $2,482 for meals, $971 for lodging and $320 for various insurance coverage items. These deductions did not represent an allowance under s. 6(1)(b) because she had no discretion over their use, and they did not represent a benefit under s. 6(1)(a) since these expenses were incurred in the course of employment and were of virtually no benefit to her (in light of the rigorous conditions at the Academy) and instead were incurred by the RCMP for its own account and for its own benefit. Hershfield T.C.J. stated (at p. 2092) that:
"The taxability under paragraph 6(1)(a) of any benefit conferred is not the amount the employer determines as pay foregone but the value of the benefit as determined in accordance with principles applicable for the purposes of that paragraph."
and that:
"To include any value in income it must first be determined to be a benefit that benefits the employee as opposed to being primarily for the benefit of the employer."