Executive Summary: Key Legal and Evidentiary Issues

• Whether a $58,436 payment for lost wages, received in 2017 pursuant to a settlement following a wrongful dismissal ruling, constitutes a "retiring allowance" under subparagraph 56(1)(a)(ii) and section 248 of the Income Tax Act rather than salary.
• Whether the Minister of Employment and Social Development was required to allocate the lost wage portion of the $69,144 lump sum across the years 2012, 2013, and 2014 (to which the salary related) for purposes of calculating eligibility for the Guaranteed Income Supplement under the Old Age Security Act.
• Tax Court of Canada's jurisdiction under subsection 12(1) of the Tax Court of Canada Act and whether it extended to "harmonizing" the tax consequences of the $69,144 payment under the Old Age Security Act, the Income Tax Act, and the Employment Insurance Act in a single appeal.
• Treatment of the $10,708 interest component of the lump sum and its inclusion in 2017 income under subsection 5(1) and paragraph 12(1)(c) of the Income Tax Act.
• Relevance of the $11,522 employment insurance benefit repayment claimed by the Employment Insurance Commission to the Guaranteed Income Supplement determination.
• Applicable appellate standard of review under Housen v. Nikolaisen, 2002 SCC 33, requiring demonstration of an error of law or a palpable and overriding error.

Background and facts Mr. Vincent Bousquet appealed to the Federal Court of Appeal from a decision of the Tax Court of Canada in Bousquet v. Ministre de l'Emploi et du Développement social (March 14, 2025), Ottawa 2024-1983 (OAS) (TCC). The dispute arose from a 2016 ruling by the Tribunal administratif du travail du Québec, which ordered Mr. Bousquet's former employer to pay him $69,144 following his unjustified dismissal. That amount comprised $58,436 in lost salary and $10,708 in interest, covering the years 2012, 2013, and 2014 (Bousquet c. Produits pétroliers des Draveurs inc., 2016 QCTAT 4807 at paras. 88, 98–100). Both parties sought administrative review of the decision, but on April 7, 2017, just before the review hearing, they reached an agreement under which the former employer undertook to remit the $69,144 to Mr. Bousquet — the amount originally ordered by the Tribunal. The employer fulfilled this obligation the same day.

Receipt of the $69,144 substantially increased Mr. Bousquet's income for 2017. As a result, the Minister of Employment and Social Development determined that Mr. Bousquet was not entitled to the Guaranteed Income Supplement under the Old Age Security Act (R.S.C. 1985, c. O-9) for the period from July 2018 to June 2019, because his 2017 income, combined with that of his spouse, exceeded the maximum eligibility threshold (Service Canada letter of September 24, 2018). Mr. Bousquet asked the Minister to allocate the $58,436 lost salary portion of the lump sum over the years 2012, 2013, and 2014 to which the salary related. He explained that such allocation would be consistent with the treatment afforded the amount by the Canada Revenue Agency and Employment Canada, and would restore his eligibility for the Guaranteed Income Supplement. The Minister refused the request in letters dated June 1, 2023 and June 3, 2024.

Appeal to the Tax Court of Canada Mr. Bousquet appealed the Minister's refusal to the Social Security Tribunal, requesting that his income be corrected and his Guaranteed Income Supplement eligibility reinstated. Because the Minister's refusal concerned Mr. Bousquet's income, the appeal was referred to the Tax Court of Canada pursuant to subsection 28(2) of the Old Age Security Act. The Tax Court dismissed the appeal, essentially adopting the Minister's position.

Relevant statutory provisions and the Minister's position The Minister's position, adopted by the Tax Court, may be summarized as follows. Under sections 2 (definition of "income"), 10, and 12 of the Old Age Security Act, the income calculated under the Income Tax Act (with limited exceptions not relevant here) is the income used to determine eligibility for the Guaranteed Income Supplement. The $58,436 lost salary amount constitutes a "retiring allowance" under section 248 and subparagraph 56(1)(a)(ii) of the Income Tax Act (R.S.C. 1985, c. 1 (5th supp.)) — namely, an amount received in respect of the loss of employment, since Mr. Bousquet would not have received the amount but for losing his employment (Overin v. R., 98 DTC 1299 at paras. 14–17; Bonsma v. The Queen, 2010 TCC 342 at para. 19). As specified by paragraph 56(1)(a), this retiring allowance must be included in income for the year in which it was received — 2017 in this case (Burchill v. Canada, 2010 FCA 145 at paras. 11–12). Similarly, the $10,708 in interest must be added to Mr. Bousquet's 2017 income under subsection 5(1) and paragraph 12(1)(c) of the Income Tax Act (Davies v. The Queen, 2007 TCC 409 at paras. 14, 17–18).

The Tax Court further accepted that, while the Canada Revenue Agency had deducted the $58,436 from Mr. Bousquet's "taxable income" for 2017 pursuant to section 110.2 and subsection 120.31(2) of the Income Tax Act, and had calculated his 2017 tax as if the amount had been spread over 2012, 2013, and 2014, this did not change the fact that his 2017 "income" under the Income Tax Act, and therefore for the purposes of section 2 of the Old Age Security Act, included the $58,436 retiring allowance and the $10,708 interest (Gaisford v. Canada, 2011 FCA 28 at paras. 3–4; Burchill at para. 12; Vincent v. Canada (Employment and Social Development), 2017 TCC 254 at para. 13). As to the $11,522 employment insurance benefit repayment claimed by the Employment Insurance Commission, the Tax Court accepted that it was not in issue, since Mr. Bousquet's appeal concerned his Guaranteed Income Supplement entitlement under the Old Age Security Act. In any event, the $11,522 had been deducted from Mr. Bousquet's 2017 income for purposes of both the Income Tax Act and the Old Age Security Act, so the repayment claim did not disadvantage him in respect of the Guaranteed Income Supplement.

Appeal to the Federal Court of Appeal To succeed on appeal, Mr. Bousquet had to persuade the Federal Court of Appeal that the Tax Court had committed an error of law or a palpable and overriding error (Housen v. Nikolaisen, 2002 SCC 33). He referred to no such error.

Instead, Mr. Bousquet asked the Court to "unravel a Gordian knot" by deciding whether the $58,436 represented salary or a retiring allowance. The Court held that although the Tribunal administratif du travail's decision had awarded the $58,436 as lost salary, the amount constituted a retiring allowance under subparagraph 56(1)(a)(ii) and section 248 of the Income Tax Act — and therefore for the purposes of calculating the Guaranteed Income Supplement under the Old Age Security Act. That was the conclusion reached by the Tax Court.

Mr. Bousquet also argued that the $69,144 received from his former employer was not a retiring allowance and interest, but rather a sum to settle several potential disputes. This argument had also been advanced before the Tax Court. The Court of Appeal noted that, as the Minister had pointed out before the Tax Court, the agreement stipulated that the $69,144 was paid "in full and final payment" of a decision of an administrative tribunal that required Mr. Bousquet's former employer to pay this amount for lost salary and interest. The $69,144 therefore had to be included in Mr. Bousquet's 2017 income.

Mr. Bousquet further asked the Court to take into account the $11,522 employment insurance benefit repayment claimed from him. However, the income used to calculate his Guaranteed Income Supplement entitlement had already been computed taking this claim into account. He also requested compensation to offset the employment insurance repayment, but the Court noted that no legislative provision permitted such a remedy.

Jurisdictional argument under the Tax Court of Canada Act Finally, Mr. Bousquet submitted that subsection 12(1) of the Tax Court of Canada Act (R.S.C. 1985, c. T-2) conferred on the Tax Court the power to deal with the consequences of receipt of the $69,144 not only under the Old Age Security Act, but also under the Income Tax Act and the Employment Insurance Act, S.C. 1996, c. 23. He argued that the Tax Court ought to have ruled on the consequences under all three statutes and "harmonized" them. The Court of Appeal acknowledged that the Tax Court does have jurisdiction under all three statutes. However, Mr. Bousquet had appealed under the Old Age Security Act against the Minister's refusal to allocate the lost salary amount across 2012, 2013, and 2014, and his notice of appeal sought reinstatement of his Guaranteed Income Supplement eligibility. The dispute before the Tax Court therefore concerned — and could only concern — his income for purposes of determining Guaranteed Income Supplement eligibility under subsection 28(2) of the Old Age Security Act. For the Tax Court and the Federal Court of Appeal to rule on the consequences of receipt of the $69,144 under the two other statutes, Mr. Bousquet would have had to appeal the decisions rendered under those statutes. Since he had not done so, neither court had jurisdiction to rule on those consequences.

Outcome The Federal Court of Appeal dismissed Mr. Bousquet's appeal without costs. The successful party was the respondent, the Attorney General of Canada. As the appeal was dismissed without costs, no monetary award or costs were ordered in favour of the successful party.