Citation: 2003TCC160
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Date: 20030409
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Dockets: 2002-3267(IT)I
2002-3269(IT)I
2002-3270(IT)I
2002-3271(IT)I
2002-3272(IT)I
2002-3273(IT)I
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BETWEEN:
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MARIE CAMPBELL,
DAVID AUSTEN,
HAZEL KENNEDY,
GEORGE KEHOE,
ALLAN ARMSWORTHY,
MARY JESS MACDONALD,
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Appellants,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
Counsel for the
Appellants:
Bruce S. Russell
Counsel for the
Respondent:
Dominique Gallant
____________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally from the Bench at Halifax,
Nova Scotia, on
Wednesday, February 26, 2003 and revised as to
style and syntax at
Ottawa, Canada on April 9, 2003.)
Margeson, J.T.C.C.
[1] The matters before the Court at
this time for decision are Marie Campbell and
Her Masjety The Queen, 2002-3267(IT)I;
David Austen and Her Majesty The Queen, 2002-3269(IT)I;
Hazel Kennedy and Her Majesty The Queen,
2002-3270(IT)I; George Kehoe and Her Majesty The
Queen, 2002-3271(IT)I; Allan Armsworthy and Her Majesty The
Queen, 2002-3272(IT)I and Mary Jess MacDonald and Her
Majesty The Queen, 2002-3273(IT)I. It was agreed at the
outset that all of these matters would be heard on common
evidence and the Court proceeded on that basis.
[2] The facts are not in dispute and
can be briefly stated as follows:
. . . . .
b) at all material times, the Appellants held an office with
the Strait Regional School
Board (the "School Board").
c) The Appellants received an annual stipend of $7,200 from
the School Board.
d) The Appellants received a T4 from the School Board for the
taxable portion
of the stipend, $4,800.
e) The Appellants reported only the $4,800 of the $7,200 in
each of the 1998
and 1999 taxation years.
f) The Appellants maintained an office in their homes.
g) The Appellants' home offices were their main bases from
which they
performed their duties and were a regular place of work.
h) The School Board had its main office in Port Hastings,
Nova Scotia
(the "School Board Building").
i) The Appellants did not maintain an office at the
School Board Building.
j) The Appellants were required to attend regularly
scheduled meetings
each month at the School Board Building as part of their regular
duties.
k) The School Board Building was a regular place of work
for the
Appellants.
l) The Appellants received a travel allowance calculated on a
per kilometer
basis from the School Board with respect to attendance at the
Meetings in the years in question.
m) The Appellants did not include the travel allowance
in their income in the years in
question.
Issues
[3] The Respondent contended that the
travel between the Appellants' home offices and the School
Board Building to attend the Meetings was personal travel and
that the amounts received in 1998 and 1999 for travel were
benefits conferred upon the Appellants by the School Board and
therefore are taxable under the provisions of paragraph
6(1)(b) of the Income Tax Act,
("Act").
[4] The Appellants submitted that
their automobile travels in 1998 and 1999 between their offices
located in their houses and the Strait Regional School
Board's administration building in Port Hastings, for which
they received a per kilometre allowance from the School Board,
was travel, "in the performance of the duties of the
Appellants' office" as members of that School Board,
pursuant to subparagraph 6(1)(b)(vii.1) of the Act
and that they were exempt from taxation.
[5] The Court is satisfied that the
witnesses who testified were very straightforward. It accepts
their evidence. There is no question at all that these were not
personal or living expenses. They were, in fact, in compliance
with subparagraph 6(1)(b)(vii.1) of the Act.
That subparagraph exempts
(vii.1) reasonable allowances for the use of a motor
vehicle received by an employee (other than an employee employed
in connection with the selling of property or the negotiating of
contracts for the employer) from the employer for travelling in
the performance of the duties of the office or employment.
Therefore, they are exempt from the Appellants'
income.
[6] There was very little by way of
presumptions in the Reply to the Notice of Appeal
("Reply"), that have not been agreed upon and the Court
can find very little, if anything, in the Reply which would give
the Minister very much comfort in reaching the decision that he
did that these amounts were personal in nature.
[7] In paragraph 10(f) of the Reply,
it is admitted that the Appellants maintained an office in their
homes. That is unquestionably correct. The evidence establishes
that beyond any doubt at all. The Court is satisfied that there
was an office in each of their homes where they performed
extensive work for the purposes of their position, that is, as
members of the School Board.
[8] In paragraph 10(g) of the Reply it
was admitted that the Appellants' home offices were their
main bases from which they performed their duties and were
regular places of work. That has been established on the
evidence. That assists the Appellants in their appeals.
[9] Paragraph 10(i) stated that the
Appellants did not maintain offices at the School Board building.
The Court is satisfied that that was the case. That is of great
assistance to the Appellants. The Court is satisfied on the basis
of the evidence that it would not be practical to do so.
[10] Paragraph 10(k) admits that the School
Board building was a regular place of work for the Appellants.
There is no doubt about that. That was a regular place of work,
but their offices in their homes also were regular places of work
for each of the Appellants. When they travelled from the place
where they resided they actually were travelling from one work
place to another work place. They kept a portion of that
residence separate and apart for an office.
[11] In making the decision that he did the
Minister was obviously influenced by the fact that the offices
were in their homes. The Court can see no difference in having
those offices in the home rather than having them 10 feet down
the street or 100 yards down the street which, according to the
evidence, would have been unreasonable, would have been too
expensive and they would not have been any further ahead.
[12] The Court cannot find that just because
their offices happen to be in the home that thereby the Minister
should conclude or the Court should conclude that they must have
been on personal business when they left that place and went
somewhere else or when they come back to that place.
[13] The evidence established beyond any
doubt that when they left their offices in their homes and went
to some other place to conduct business they were going from one
place of business to another place of business and they did so
when they were returning to their home offices. The Court does
not consider it significant that after they came home they might
have gone to bed or turned on the TV or had a sandwich or raided
the refrigerator, whatever the case may be. That does not
militate against a finding that they were involved in business
related activities on the way home.
[14] When they went from their home office
to the School Board in Port Hastings, they were engaged in
carrying out their duties of a School Board member and they were
doing the same thing when they were on their way home. They come
squarely within the provisions of
subparagraph 6(1)(b)(vii.1) of the Act.
[15] In R. v. Deimert, 75 DTC 262,
page 10, paragraph 38 says:
It is a variant on the category
of itinerant jobs that the concept of two places of work has been
introduced particularly in Owen v. Pook, [1969] 2 All E.R.
1, and Taylor v. Provan, [1974] 1 All E.R. 1201,
both decided by the House of Lords. Basically, that variant is
that if a man has to travel from one place of work to another
place of work he may deduct the expense of this travel because he
is travelling on his work, but not those of travelling from
either place of work to his home or vice versa unless his home
happens to be a place of work. For this concept to apply, the
facts must be that the work or the job must be done in two
places. It is not enough that the man might choose to do part of
the work in a place separate from where the job is objectively
located.
[16] Here, the Court is satisfied that there
were two places of work. The trips that gave rise to the claim
for the expenses and their deductibility in each case was from
one place of work, (the office in the home) to another place of
work (the School Board office), which was located in Port
Hastings. All of the expenses that they claimed were related to
the use of their vehicles, for travelling, in the performance of
their duties of their office as School Board members.
[17] Counsel also referred to Goldhar v.
M.N.R., [1985] 1 C.T.C. 2187, 85 DTC 202, where Taylor
J. allowed the taxpayer's claims on the basis that it was
established that she worked out of her house, which was her
"base of operations". The same can be said of the case
at bar. The case of Hoedel v. R., 86 DTC 6536, a case
decided by the Federal Court of Appeal also offers some
consolation to the Appellants pleas. Counsel also referred to
Sword v. M.N.R., [1990] 2 C.T.C. 2298, 90 DTC 1798,
but this Court does not find that case particularly helpful.
[18] In McDonald v. R., [1998] 4
C.T.C. 2569, 98 DTC 2151, Judge Rip indicated that:
". . . an employee also may have only one fixed work
location but is required to travel to other places where the
employer carries on business or for a business purpose. If it is
more efficient or cost effective to the employer for the employee
to begin or complete such trips at the employee's home, then
such travel ought not be characterized as personal."
That factual situation is reflected by the evidence given in
the case at bar.
[19] The Court will allow the appeals in
each case and refer the matters back to the Minister for
reassessment and reconsideration based upon the Court's
finding that these expenses are exempt from taxation under the
provisions of subparagraph 6(1)(b)(vii.1) of the
Act.
[20] On the matter of costs, counsel for the
Appellants asked that there be separate Bills of Costs and
counsel for the Respondent argued that there should only be
one.
[21] All of these cases involved the same
points of facts and law. The evidence of each Appellant varied
but the central theme was the same. The research that was
involved in preparing these cases and the other work involved in
the preparation of the cases certainly was enlightened by the
fact that the Appellants were members of the same School Board
and the problem that existed was the same for each one. The cost
of presenting all of the Appellants as witnesses will be dealt
with in the Bill of Costs and there is no disadvantage to the
Appellants there.
[22] The Court concludes that this is a
proper case for allowing one Bill of Costs, to be taxed.
Signed at Ottawa, Canada, this 9th day of April 2003.
J.T.C.C.