Mahoney,
J.A.
(Hugessen
and
MacGuigan,
JJ.A.
concurring):—This
is
an
appeal
from
a
reported
decision
of
the
Trial
Division,
[1988]
2
C.T.C.
274;
88
D.T.C.
6478,
which
upheld
the
assessment
of
the
appellant's
1979
and
1980
income
tax
returns
on
the
basis
that
he
was
not
entitled
to
claim
certain
expenses
pursuant
to
paragraph
8(1)(f)
of
the
Income
Tax
Act,
which
provides:
8.
(1)
In
computing
a
taxpayer's
income
for
a
taxation
year
from
an
office
or
employment,
there
may
be
deducted
such
of
the
following
amounts
as
are
wholly
applicable
to
that
source
or
such
part
of
the
following
amounts
as
may
reasonably
be
regarded
as
applicable
thereto:
(f)
where
the
taxpayer
was
employed
in
the
year
in
connection
with
the
selling
of
property
or
negotiating
of
contracts
for
his
employer,
and
(i)
under
the
contract
of
employment
was
required
to
pay
his
own
expenses,
(ii)
was
ordinarily
required
to
carry
on
the
duties
of
his
employment
away
from
his
employer's
place
of
business,
(iii)
Was
remunerated
in
whole
or
in
part
by
commissions
or
other
similar
amounts
fixed
by
reference
to
the
volume
of
the
sales
made
or
the
contracts
negotiated,
and
(iv)
was
not
in
receipt
of
an
allowance
for
travelling
expenses
in
respect
of
the
taxation
year
that
was,
by
virtue
of
subparagraph
6(1)(b)(v),
not
included
in
computing
his
income,
amounts
expended
by
him
in
the
year
for
the
purpose
of
earning
the
income
from
the
employment
(not
exceeding
the
commissions
or
other
similar
amounts
fixed
as
aforesaid
received
by
him
in
the
year)
to
the
extent
that
such
were
not
(v)
outlays,
losses
or
replacements
of
capital
or
payments
on
account
of
capital,
except
as
described
in
paragraph
(j),
or
(vi)
outlays
or
expenses
that
would,
by
virtue
of
paragraph
18(1)(l),
not
be
deductible
in
computing
the
taxpayer's
income
for
the
year
if
the
employment
were
a
business
carried
on
by
him.
There
is
no
dispute
that
the
appellant
met
the
requirements
of
subparagraphs
(iii)
and
(iv)
nor
that
the
amounts
claimed
did
not
fall
within
subparagraphs
(v)
and
(vi).
What
is
disputed
is
whether
his
contract
of
employment
required
him
to
pay
his
own
expenses,
as
provided
by
subparagraph
(i),
whether
he
was
ordinarily
required
to
carry
on
his
duties
away
from
his
employer's
place
of
business,
as
provided
by
subparagraph
(ii),
and
whether
the
amounts
claimed
were
expended
for
the
purpose
of
earning
his
commission
income.
That
the
amounts
were
actually
expended
by
him
in
the
year
claimed
is
not
disputed.
All
of
the
evidence
was
directed
to
1980.
It
is
agreed
that
the
facts
as
to
1979
are
not
materially
different.
The
appellant
was
a
highly
successful
automobile
salesman
employed
by
a
Winnipeg
dealership.
In
1980,
sales
of
269
vehicles
at
retail,
25
at
wholesale
and
175
fleet
vehicles
generated
commissions
of
$65,977.32.
He
claimed
$7,391.28
disputed
expenses
which
the
learned
trial
judge
described
as
including:
gas
and
oil
for
his
demonstrator
(provided
free
of
charge
by
his
employer)
and
for
the
two
"courtesy"
cars
owned
and
provided
by
him
to
his
customers
for
their
own
use
when
their
cars
were
being
serviced.
The
expenses
claimed
also
include
parking
charges
incurred
while
conducting
business,
advertising
carried
out
by
the
plaintiff
on
his
own
to
seek
customers
for
himself,
entertainment
expenses
(coffee
and
meals)
incurred
for
the
benefit
of
customers
or
prospective
customers,
and
commissions
or
finders'
fees
paid
by
him
to
persons
referring
customers
to
him
where
the
referral
resulted
in
a
sale.
In
the
view
of
the
matter
taken
by
the
learned
trial
judge,
it
was
not
necessary
for
him
to
deal
expressly
with
whether
the
expenses
claimed
were
amounts
expended
for
the
purpose
of
earning
income
or
whether,
under
his
contract
of
employment,
the
appellant
was
required
to
pay
his
own
expenses.
The
undisputed
evidence
points
only
to
affirmative
answers
to
those
questions.
There
was
no
written
contract
of
employment
and,
hence,
no
express
condition
readily
at
hand
to
demonstrate
whether
the
appellant
"was
ordinarily
required
to
carry
on
the
duties
of
his
employment
away
from
his
employer's
place
of
business.”
The
learned
trial
judge
held
that
he
was
not.
Some
of
the
appellant's
absences
from
the
dealership,
such
as
taking
customers
on
test
drives,
taking
sold
vehicles
elsewhere
to
get
custom
equipment
installed
and
delivering
their
vehicles
to
purchasers,
were
characterized
as
"errands"
which
did
not
amount
to
"duties
away
from
his
employer's
place
of
business".
As
to
the
rest,
he
held:
However
most
of
the
activities
relied
on
by
the
plaintiff
involve
means
employed
by
him
at
his
discretion
to
find
customers,
to
encourage
them
to
buy
cars
from
him,
and
to
encourage
them
to
come
back
to
him
for
future
purchases
through
various
follow-up
services
offered
by
him.
Such
activities
include
making
contact
with
"bird-dogs"
(persons
encouraged
by
the
plaintiff
to
refer
customers
to
him),
the
demonstration
of
vehicles
at
the
home
or
place
of
business
of
clients,
picking
up
from
customers
cars
already
purchased
to
take
them
in
for
servicing
and
leaving
with
the
customer
a
“courtesy
car”
owned
by
the
plaintiff,
entertaining
customers
with
coffee
or
meals,
etc.
It
is
clear
from
the
evidence
that
none
of
these
activities
of
the
plaintiff
were
specifically
required
by
his
employer.
.
.
.
What
the
employer
was
interested
in
was
results,
i.e.
sales.
The
plaintiff
was
a
very
successful
salesman.
No
doubt
the
particular
means
which
he
employed
were
important
to
that
success.
But
they
were
means
chosen
by
him
and
to
the
extent
that
they
took
him
away
from
the
dealership
that
was
his
choice.
That
entire
finding
is
said
to
be
founded
on
an
error
in
law
in
that
the
learned
trial
judge
is
said
to
have
misunderstood
the
clear
intention
of
paragraph
8(1)(f).
That
misunderstanding
is,
it
is
said,
manifest
in
his
opinion
that
the
provision
is
illogical,
which
he
expressed
more
than
once.
At
one
point,
he
said:
It
is
common
ground
that
if
[the
requirements
of
subparagraphs
(i)
and
(ii)]
are
met,
the
expenses
deductible
under
paragraph
8(1)(f)
are
not
limited
to
those
attributable
to
the
fact
that
the
plaintiff
was
ordinarily
required
to
carry
on
the
duties
of
his
employment
away
from
his
employer's
place
of
business.
In
other
words,
once
he
can
show
that
he
meets
the
requirements
of
(subparagraphs
(i)
and
(ii))
then
any
expenses
however
incurred
for
the
purpose
of
earning
income
from
his
employment
are
deductible.
The
illogicality
of
this
provision
will
be
discussed
later.
At
another,
he
said:
It
is
difficult
to
give
a
purposive
interpretation
of
the
words
“ordinarily
required"
within
the
context
of
subparagraph
8(1)(f)
because
the
expenses
deductible
under
that
paragraph
bear
no
necessary
relationship
to
the
fact
that
a
taxpayer
is
ordinarily
required
to
carry
on
the
duties
of
his
employment
away
from
his
employer's
place
of
business”.
Once
he
establishes
that
he
is
so
required,
he
can
then
deduct
any
expenses
incurred
for
the
purpose
of
earning
income
from
the
employment.
The
logic
of
this
provision
is
far
from
apparent.
For
example,
there
are
no
doubt
many
commission
salesmen
(e.g.
of
clothing
or
furniture)
who
are
never
obliged
to
leave
their
employer's
place
of
business
for
work
purposes
but
who
may
well
incur
promotional
expenses
such
as
sending
greeting
cards
to,
or
buying
coffee
for,
customers
or
prospective
customers.
They
are
unable
to
claim
under
this
paragraph.
Similarly,
salaried
persons
cannot
claim
under
it,
even
though
in
many
employment
situations
it
is
thought
advantageous
for
those
in
supervisory
roles
to
entertain
members
of
their
staff,
at
their
own
expense.
The
learned
trial
judge
seems
to
have
felt
that,
somehow,
the
deductible
expenses
contemplated
ought
to
relate
to
the
necessity
of
the
appellant's
absence
from
the
showroom
but
that
sort
of
expense
is
dealt
with
by
paragraph
8(1)(h)
and
subsection
8(4)
makes
clear,
if
that
be
necessary,
that
paragraphs
8(1)(f)
and
(h)
deal
with
two
different
allowable
deductions.
The
necessary
interaction
of
subsection
8(4)
and
paragraph
8(1)(f)
leads
to
the
conclusion
that
an
employee
may
be
“ordinarily
required"
to
carry
on
the
duties
of
his
employment
away
from
the
employer's
establishment
to
which
he
“ordinarily
reported"
for
work.
The
criterion
chosen
by
Parliament
to
differentiate
between
commission
salesmen
entitled
to
deduct
their
expenses
and
those
not
so
entitled,
namely
that
those
entitled
be
“ordinarily
required”
to
carry
on
their
duties
away
from
their
employer's
establishment,
may
be
arbitrary
but
it
is
clear
and
the
provision
must
be
applied
according
to
its
plain
meaning,
whatever
one's
view
of
its
logic.
The
legislative
objective
is
apparent.
A
taxpayer
entirely
dependent
on
commissions
directly
related
to
sales
volume
and
not
entitled
to
claim
his
expenses
from
his
employer
is,
in
many
respects
relevant
to
the
scheme
of
the
Income
Tax
Act,
more
comparable
to
a
self-employed
person
than
to
a
conventional
salaried
employee.
Such
a
taxpayer
benefits
from
laying
out
the
deductible
expenses
only
because
that
results
in
increased
income.
Absent
a
100
per
cent
tax
rate,
allowance
of
the
deduction
does
not
fully
compensate
the
taxpayer
for
the
outlay;
that
compensation
is
realized
in
increased
sales,
precisely
what
the
learned
trial
judge
found
to
be
the
interest
of
the
appellant's
employer,
and
concomitant
increased
commission
income,
the
appellant's
(and,
one
might
have
thought,
the
fisc's)
interest.
I
am
of
the
opinion
that
the
learned
trial
judge
erred
in
law
in
his
construction
of
paragraph
8(1)(f).
It
remains
to
consider
whether
that
led
him
to
the
wrong
result
in
the
present
case.
There
is
no
contradictory
evidence.
Most
salesmen,
but
not
the
appellant,
were
required
by
the
employer
to
take
shifts
manning
the
showroom:
six
hours
a
day
Monday
through
Thursday,
four
hours
on
Friday
and
four
hours
on
alternate
Saturdays.
When
hiring
a
new
salesman,
the
employer's
evidence
was:
.
.
.
initially
we'd
clarify
with
the
individual
that
we
had
hours
of
on
duty
work
with
the
dealership
with
the
expectation
though
that
certainly
they
being
six
hour
shifts,
that
we
were
well
aware
that
no
salesperson
could
make
a
living
working
six
hours
a
day
and
expect
to
do
the
job.
The
indication
on
our
part
at
that
stage
would
be
to
make
sure
that
the
salesperson
would
in
fact
cultivate
their,
you
know,
their
own
clientele,
go
out
on
their
own,
talk
to
friends,
relations,
acquaintances,
continue
on
with
their
day's
work
when
they
were
not
on
shift.
[Transcript,
Vol.
Il,
p.
165,
II.
13
to
24.]
As
to
his
own
understanding,
the
appellant
was
asked
and
answered:
Q.
.
.
.
did
Mr.
Gillis
ever
tell
you
how
many
cars
you
had
to
sell
or
was
[sic]
to
be
expected
to
sell?
A.
No.
If
you
didn't
sell
enough
cars,
you
were
just
dismissed
from
your
job.
This
Court
had
occasion,
in
Hoedel
v.
The
Queen,
[1986]
2
C.T.C.
419;
86
D.T.C.
6535,
to
consider
the
term
“ordinarily
required
to
carry
on
the
duties
of
his
employment
away
from
his
employer's
place
of
business"
as
it
is
used
in
subparagraph
8(1)(h)(i),
and
held,
per
Heald,
J.A.
at
pages
422-3
(D.T.C.
6538),
that
if
an
employee's
failure
to
carry
out
a
task
can
result
in
an
unfavourable
assessment
by
his
employer,
it
would
seem
to
me
that
such
a
circumstance
is
compelling
evidence
that
the
task
in
issue
is
a
duty
of
employment.
It
would
seem
to
me
that
if
failure
to
sell
enough
cars
would
have
resulted
in
the
appellant's
discharge
and
if
both
employer
and
salesman
recognize
that
enough
cars
can
only
be
sold
if
the
salesman
conducts
some
of
his
work
away
from
the
showroom,
then
the
salesman
is
ordinarily
required
to
carry
on
the
duties
of
his
employment
away
from
his
employer's
place
of
business.
It
follows
that,
in
my
opinion,
the
learned
trial
judge
erred
in
concluding
that
the
appellant
was
not
entitled
to
claim
the
deduction
of
expenses
under
paragraph
8(1)(f)
of
the
Income
Tax
Act
in
his
1979
and
1980
returns.
I
would
allow
the
appeal
with
costs
here
and
in
the
Trial
Division
and,
pursuant
to
subparagraph
52(b)(i)
of
the
Federal
Court
Act
and
subparagraph
177(b)(iv)
of
the
Income
Tax
Act,
I
would
refer
the
appellant's
returns
for
those
years
back
to
the
Minister
for
reconsideration
and
reassessment.
Appeal
allowed.