Citation: 2010TCC252
Date: 20100507
Docket: 2009-3683(IT)I
BETWEEN:
DAVID LUND,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
The Appellant was
reassessed to deny his claim for moving expenses incurred in moving his
residence from Oakville, Ontario to downtown Toronto
in 2007. The only issue in this appeal is whether, for the purposes of the
definition of “eligible relocation” in subsection 248(1) of the Income Tax
Act, the distance from his old residence in Oakville to his new work
location should be determined based on the route as chosen by the Appellant
(which is 53 kilometres long) or based on the route as proposed by the
Respondent (which is 33 kilometres long). Both parties agree that the distance
from his new residence in downtown Toronto to his new
work location is 9.8 kilometres.
[2]
As provided in
subsection 62(1) of the Income Tax Act (the “Act”) a taxpayer may
claim moving expenses (that have not been reimbursed and that do not exceed the
income from a new work location) that have been incurred in respect of an
eligible relocation. An eligible relocation is defined in subsection 248(1) of
the Act, in part, as follows:
“eligible relocation” means a relocation of a taxpayer where
…
(c) the distance between the old residence and the new work location
is not less than 40 kilometres greater than the distance between the new
residence and the new work location
[3]
If the Appellant is
correct that his route is the route that should be used, then the distance, for
the purposes of this definition, between his old residence and his new work
location would be 53 kilometres and the test in paragraph (c) of the definition
of “eligible relocation” will be satisfied since the distance between the
Appellant’s new residence and his new work location is 9.8 kilometres. If the route
that should be used is the route proposed by the Respondent, then since the distance
between his old residence and his new work location will only be 33 kilometres,
the Appellant will not satisfy this test and the moving expenses will not be
deductible.
[4]
The Appellant based his
determination of the distance between his old residence and his new work
location on his preferred route of travel during rush hour. The Appellant
described his route and the alternate shorter route as follows:
MR.
LUND: Excuse me. I will back up. Highway 403 north, you get on at Upper Middle
Road and, from 403, the highway ends and it becomes Highway 401 going east.
From Highway 401 east, I would take the 427 south, which hooks up with the
Gardiner Expressway.
The
alternative route would be to take the Upper Middle Road to Ford Drive, south,
and then get on the QEW and go east. The QEW hooks up directly with the
Gardiner Expressway. There is no doubt in anyone's mind on this planet that
that is the shortest route, the QEW. But the QEW is an old highway. It only has
three lanes. There are no HOV lanes, high-occupancy vehicle lanes; if you drive
with more than one person you can get in the HOV lane. There are no breakdown
lanes on that highway, on many of the sections. There are no collectors. The
merge ramps are short. The highway becomes congested very quickly.
Therefore,
the quickest way to get to work in this metropolitan area, if you live in
northeast Oakville, is to take 403/401/427. You have to deal with the Gardiner,
one way or the other, so it doesn't become part of the equation.
Again,
after living in Oakville for more than four years and driving downtown most
days – I didn't drive all the time, sometimes I took the train – we found the
quickest, most effortless, stress-free way, most of the time was to take
403/401/427.
The
flipside, the QEW, is a nightmare. So time, really --
[5]
The QEW (Queen Elizabeth Way) route referred to by the Appellant is the
route proposed by the Respondent. In the Reply it is stated that this route is
35.5 kilometres from the Appellant’s old residence to his new work location.
The Appellant stated during his testimony that this route is 33 kilometres from
his old residence to his new work location. It is immaterial for the purposes
of this Appeal whether this route is 33 kilometres or 35.5 kilometres since the
Appellant cannot succeed based on either measurement if this is the correct
route to use for the purposes of the definition of “eligible relocation” in
subsection 248(1) of the Act.
[6]
The Appellant stated
that it would take him less time to travel downtown using his preferred route and
that on average the amount of time that he would save would be 10 minutes. The
Appellant also called a witness who drives a limousine for a living. He also
indicated that his preferred route to travel from Oakville to downtown Toronto would be the route chosen by the Appellant. He
emphasized the high-occupancy vehicle lanes that were available on the route
chosen by the Appellant and not available on the QEW.
[7]
The Appellant also submitted
copies of various pages from the website for the Ministry of Transportation
showing the traffic density on each of the two routes (the Appellant’s and the Respondent’s).
It seems clear that there is a significant amount of traffic on each route but
since the highways on the Appellant’s route have more lanes, his route can more
easily handle a greater volume of traffic.
[8]
The reference in the
definition of “eligible relocation” is to the “distance”. In the decision of
the Federal Court of Appeal in Giannakopoulos v. Minister of National
Revenue, [1995] 2 C.T.C. 316, 95 D.T.C. 5477, 185 N.R. 84, [1995] 3 F.C.
294, Justice Marceau, on behalf of the Federal Court of Appeal stated that:
7 Subsection 62(1) permits a taxpayer
to deduct moving expenses when he moves closer to a new workplace. An employee
must live within a reasonable distance of his work. When he accepts a new
position, the employee may have to move in order to remain within a practical
commuting distance of his job. Subsection 62(1) recognizes that relocation is a
legitimate work-related expense. In order to prevent the provision from being
invoked when a taxpayer simply desires a change in residence, the provision
requires that the move bring the taxpayer at least forty kilometres closer to
work. Usually, a taxpayer travels to work using ordinary routes of public
travel, i.e. roads, highways, railways. In determining whether the taxpayer has
really moved forty kilometres closer to work, it only makes sense to measure
the distance he has moved using real routes of travel. A realistic measurement
of travelling distance is necessary in order to give effect to the purpose of
the provision. The straight line method bears no relation to how an employee
travels to work. It is illogical to apply this technique to a provision which
exists to recognize work related relocation expenses. It leads to absurd
results where the old residence and the new workplace are separated by a body
of water. A taxpayer who moves across a river to be closer to his workplace may
have only moved a few miles “as the crow flies” but may actually be several
dozen miles closer to work. In fact, this is exactly what happened in Cameron
v. Minister of National Revenue* wherein the taxpayer moved across the
Ottawa River from Aylmer,
Quebec to Kars, Ontario. The Tax Court of Canada held that
he could not deduct his moving expenses because the distance was less that 40
kilometres using a straight line measurement.
8 In one case before the Tax Court of
Canada, Bernier, J-C, Estate v. Minister of National Revenue,*
Lamarre-Proulx T.C.J. held herself to be bound by the prior decisions but only
after expressing her own discordant personal view. She stated at page 2539
(D.T.C. 1223):
In my view, the remedy in subsection 62(1) should be interpreted in
relation to the workers, and the distance in question should be measured by the
worker's normal route or the route that he would normally take to go from home
to his place of work.
9 While the use of the normal route
notion is more realistic and more effectively furthers the purpose of the
section, I would not go so far as Lamarre-Proulx T.C.J. would apparently have
been prepared to go, i.e. to accept a measurement based merely on the worker's
normal route or the route that he would normally take to go from home to his
place of work. Such a subjective approach would introduce a source of
uncertainty which might become “a trap for litigation”, which was precisely the
reason invoked by the judges to explain their adherence to the direct line
approach. It is necessary to be more objective. The idea of the shortest route
that one might travel to work should be coupled with the notion of the normal
route to the travelling public. Thus, the shortest normal route would be a
preferable test to the straight line method, for it is both realistic and
precise. It also furthers the purpose of the provision. This test would prevent
a taxpayer from being expected to use an extraordinary route such as a
neglected or unpaved road. It would also leave room to consider travel not only
on roads but on ferries and rail lines.*
(the * indicates a footnote reference that was inserted in the
decision rendered by the Federal Court of Appeal.)
[9]
In Nagy v. The
Queen, 2007 TCC 394, 2007 D.T.C. 1208, [2007] 5 C.T.C. 2642, after
referring to the decision of the Federal Court of Appeal in Giannakopoulos,
then Chief Justice Bowman stated that:
11 Counsel invites me to read the
passage from Giannakopoulos as requiring that a mechanical measurement
of all possible routes should be made and the shortest chosen, regardless of
whether any reasonable person would follow such a route. The route suggested by
the respondent as the shortest involves 18 left turns and 19 right turns and
requires travelling on about 40 roads, some rural, as well as driving through
the heavily congested City of Brampton. I attach as Schedule A, Tab 4 of Exhibit R-1, which sets out the
multiplicity of zigging and zagging that the Crown suggests should be followed
to achieve the “shortest” route which it says is mandated by the Federal Court
of Appeal. The respondent's approach illustrates simply the triumph of
mechanical irrationality over common sense. No rational person would follow
such a route. Indeed, anyone trying to follow those instructions would get lost
unless he or she had a navigator in the passenger seat giving directions. The
approach advocated by the Crown represents an attempt to reverse the salutary
effect of the Federal Court of Appeal's decision which endeavours to substitute
a measure of common sense and rationality for the unthinking mechanical
approach that prevailed prior to Giannakopoulos.
12 The Federal Court of Appeal suggests
no such robotic approach. In his reasons Marceau J.A. speaks of a “realistic
measurement of travelling distance”. He also says that “the idea of the
shortest route that one might travel to work should be coupled with the notion
of the normal route to the travelling public” (emphasis added). His use
of “realistic” and “normal” implies that reason and common sense should play a
part in the determination of distance. The 38 turn slalom suggested by the
Crown is neither realistic, nor normal, nor reasonable, nor commonsensical. In
some ways it is even more nonsensical than the straight line approach. The
straight line approach would at least make sense to a crow. The 40 road zigzag
approach makes sense to no one.
[10]
As noted by Justice
Marceau above:
The idea of the shortest route that one might travel to work should
be coupled with the notion of the normal route to the travelling public. Thus, the
shortest normal route would be a preferable test to the straight line
method, for it is both realistic and precise.
(emphasis added)
[11]
The Federal Court of
Appeal specifically rejected a measurement based merely on the particular
individual’s normal route and instead stated that the test should be the
“shortest normal route”. In this case the route suggested by the Respondent
(the QEW) is clearly shorter than the Appellant’s chosen route (as acknowledged
by the Appellant) and was the route that the Appellant would travel downtown
when it was not busy. It is clear from the map that was submitted and by the
directions given by the Appellant that the Respondent’s route does not suffer
from the same problems as the route suggested by the Crown in Nagy. It
is also clear from the traffic volumes as noted by the Appellant that many
people use the QEW route. The Appellant’s problem was that too many people used
the QEW route. If fewer people would have been using the QEW the Appellant
would have taken this route as evidenced by his admission that he would use
this route when he travelled downtown at times other than the early morning
commuting time.
[12]
Unfortunately for the
Appellant the test is based on the distance of the “shortest normal route”. The
test is not based on the route which takes the least amount of time. The
Appellant has not established that the QEW was not a normal route. It seems to
me that both routes could be considered normal routes (given the large volumes
of traffic on each route). The test is then applied based on the shortest
normal route, determined by distance, which would be the QEW.
[13]
As a result the appeal
is dismissed, without costs.
Signed at Toronto, Ontario, this 7th day of May, 2010.
“Wyman W. Webb”
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