The Taxation of Strike Pay

24 Pages Posted: 1 Oct 2006

See all articles by Benjamin Alarie

Benjamin Alarie

University of Toronto - Faculty of Law

Matthew Sudak

University of Toronto - Faculty of Law

Abstract

The Supreme Court of Canada in 1990 in Fries v. The Queen confirmed as a legal matter the longstanding administrative practice of characterizing strike pay as a non-taxable receipt by virtue of its not being income . . . from a source pursuant to paragraph 3(a) of the Income Tax Act. By contrast, in the United States, strike pay is generally subject to income tax, consistent with the more inclusive approach to defining income that predominates under section 61 of the Internal Revenue Code. This article examines in detail this tax policy difference. In the process, it canvasses the attitude of some other countries to similar issues, maps out what can be inferred about the likely fiscal and economic consequences of not taxing strike pay, and suggests some ideas for reform for Canadian policy makers.

Keywords: income, labour disputes, strikes, tax exemptions, tax policy, unions

JEL Classification: K34, J52, J58

Suggested Citation

Alarie, Benjamin and Sudak, Matthew, The Taxation of Strike Pay. Canadian Tax Journal, Vol. 54, No. 2, pp. 426-449, 2006. Available at SSRN: https://ssrn.com/abstract=933616

Benjamin Alarie (Contact Author)

University of Toronto - Faculty of Law ( email )

Jackman Law Building
78 Queen's Park
Toronto, Ontario M5S 2C5
Canada
416-946-8205 (Phone)
416-978-7899 (Fax)

HOME PAGE: http://www.law.utoronto.ca/faculty-staff/full-time-faculty/benjamin-alarie

Matthew Sudak

University of Toronto - Faculty of Law ( email )

78 and 84 Queen's Park
Toronto, Ontario M5S 2C5
Canada

Register to save articles to
your library

Register

Paper statistics

Downloads
231
rank
126,609
Abstract Views
2,135
PlumX Metrics