http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/108370/index.do 
Butler v. The Queen (January 8, 2015 (Oral), February 27 (Written) – 2015 TCC 49, V. Miller J.).
Précis: Mr. Butler suffered a work related injury in 1969. In 2012 he received a lump sum payment from the Worker’s Compensation Board of Nova Scotia in respect of the continuing pain from his injury. CRA included the payment in computing the Old Age Security claw back under Part I.1 of the
Income Tax Act (the “Act”) resulting in a liability of $3,269.00. The Tax Court dismissed his appeal. While the award was not included in computing his “taxable income” for the purposes of Part I of the Act, it was included in computing his “income” for the purposes of Part I.1.
Decision: Mr. Butler received a lump sum award from the Worker’s Compensation Board of Nova Scotia in 2012 which resulted in a claw back of his Old Age Security pension. He appealed the claw back to the Tax Court arguing that it was compensation for non-economic loss and should not factor into the claw back amount:
[1] This is an appeal where the Minister of National Revenue (the “Minister”) determined that the Appellant is to repay the Old Age Security Pension (“OAS”) in the amount of $3,269.00 which he received in the 2012 taxation year.
[2] In 2012, the Appellant received a payment of $53,816.00 from the Workers’ Compensation Board of Nova Scotia (“WCB”). The Minister assessed the Appellant for repayment of the OAS on the basis that his income for 2012 included the payment from WCB and his total income was $109,634.00.
[3] The Appellant was injured in 1969 while working for the Sydney Steel Corporation. He was burned by molten steel which struck his left thigh leaving him with a bad burn. Over the years, the Appellant continued to have pain in the affected area which increased with time so that by 2011 he was diagnosed with Complex Regional Pain Syndrome Type 1. The Appellant made a claim to the WCB in 2011. The result of that claim was that the Appellant received an award of $39,123.95 which was retroactive to 1969. He was also entitled to receive a monthly benefit of $114.19 for life but instead he chose to receive a lump sum so that the total amount he received was $53,816.00.
[4] In 2012, the WCB issued a T5007 slip in the amount of $53,816.00 to the Appellant but he did not include the amount in his income when he completed his income tax return. It was his view that a T5007 slip should not have been issued to him. According to his reading of the Income Tax Guide, a T5007 slip includes benefits for wage-loss replacement or income for future loss. It was the Appellant’s view that the lump sum he received was a non-economic loss award for pain and it was not to be included in income. He said it was an award of damages for the pain he suffered.
The Court held that under the relevant provisions of the Act a worker’s compensation award formed part of his income for the purposes of the claw back rule in Part I.1:
[6] The lump sum received by the Appellant from the WCB must be included in the Appellant’s income for the purposes of Part 1.2 of the Act. Paragraph 56(1)(v) and subsection 180.2(1) of the Act read:
56. (1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
Workers’ compensation
(v) compensation received under an employees’ or workers’ compensation law of Canada or a province in respect of an injury, a disability or death;
180.2 (1) The definitions in this subsection apply in this Part.
“adjusted income” of an individual for a taxation year means the amount that would be the individual’s income under Part I for the year if in computing that income no amount were
(a) included
(i) under paragraph 56(1)(q.1) or subsection 56(6),
(ii) in respect of a gain from a disposition of property to which section 79 applies, or
(iii) in respect of a gain described in subsection 40(3.21), or
(b) deductible under paragraph 60(w), (y) or (z);
The Court reasoned that although the award for pain was made in 2012 it resulted from his injury in 1969 and therefore was “in respect of” that injury:
[8] In referring the Appellant’s claim back to another Hearings Officer, the Workmen’s Compensation Tribunal directed that the Appellant’s “pain resulting from the injury” was to be rated (See exhibit A-1, page 2 paragraph 2). After his pain was rated, the percentage was added to the rate which had been found for the scars he had sustained. This total rate was used to calculate the lump sum amount of $53,816.00 received by the Appellant. It is my view that the lump sum received by the Appellant was in respect of the injury he sustained in 1969; it was for the scars and pain in respect of the injury he sustained in 1969. But for the injury, there would have been no award of money from the WCB to the Appellant.
[9] The decisions from the Hearing Officer and the WCB Tribunal are contained in exhibits A-1, A-2, and A-3. The terms “non-economic loss award” or damages are not used in any of these exhibits.
[10] The lump sum received from the WCB was not taxable because the Appellant could deduct it pursuant to subparagraph 110(1)(f)(ii) of the Act, However, subsection 180.2 (1) of the Act assesses a tax of 15% of an individual’s “adjusted income” over a threshold amount of $69,562.00 in 2012. “Adjusted income” is defined as “the amount that would be the individual’s income under Part I for the year if no amount were deductible under paragraph 60(w). The Appellant’s lump sum award had to be included in his adjusted income in order to calculate the tax under Part I.2.
In a somewhat odd twist Mr. Butler, who was self-represented, appears to have introduced a letter from a CRA rulings officer suggesting that the award was not in respect of worker’s compensation but the Court chose to give the letter no weight:
[12] The Appellant submitted a letter from the Rulings Directorate in which the author of the letter concluded that a “lump sum award for pain and suffering is not a “workers’ compensation benefit” and would not be required to be included in income” or reported on a T5007 slip. However, the Appellant did not submit the letter he sent to the Rulings Directorate in order to get this opinion. I have given no weight to this opinion as it is my view that it does not apply to the facts which were before me.
The Court dismissed the appeal from the bench.