https://decisia.lexum.com/fca-caf/decisions/en/item/310835/index.do
Freitas v. Canada (June 4, 2018 – 2018 FCA 110, Webb (Author), Gleason, Laskin JJ. A.).
Précis: The appellant was a retired accountant who appealed to the Tax Court unsuccessfully arguing that amounts received from his former partnership after the date of his retirement were not subject to mandatory Canada Pension Plan (CPP) contributions. His appeal to the Federal Court of Appeal was successful. The Court of Appeal ruled that the deeming provision of the Income Tax Act (the Act), subsection 96(1.1), relied upon by CRA deemed payments to retired partners to be income from business for certain purposes of the Act but did not apply to deem such payments to be business income for the purposes of the CPP. Mr. Freitas was awarded $3,500 in costs.
Decision: While this case has many technical niceties the main thrust of the decision is found in three paragraphs:
[30] The deeming rule in subsection 96(1.1) of the ITA only provides that Mr. Freitas is deemed to be a member of the partnership for the purposes of subsection 96(1) and sections 34.1, 34.2, 101, 103, and 249.1 of the ITA. Similarly, subsection 96(1.6) of the ITA only deems him to be carrying on business for the purposes of subsection 96(2.3), sections 34.1 and 150 and (subject to subsection 34.2(18)) section 34.2 of the ITA. Neither of these provisions deems him to be a member of the partnership or to be carrying on business for the purposes of the CPP. Since there is no other provision that would deem him to be a member of the partnership or to be carrying on business for the purposes of the CPP, he would not be a member of the partnership in 2008 for the purposes of the CPP and he would not be carrying on a business in 2008 for the purposes of section 14 of the CPP.
[31] The second part of section 14 of the CPP which requires that income is computed under the ITA, would also only apply to the business as described above, which would only be a business carried on by Mr. Freitas. This part of section 14 of the CPP does not determine what business is to be included under section 14 but only how the income is determined once it has been found that a particular business is one to which section 14 applies.
[32] The income that was allocated to Mr. Freitas by Deloitte & Touche LLP for 2008 was not self-employed earnings of Mr. Freitas for 2008 for the purposes of section 14 of the CPP as this income did not arise from a business that he was carrying on in 2008.
Thus the appeal was allowed and Mr. Freitas was awarded $3,500 in costs.