Citation: 2011 TCC 2
Date: 20110104
Docket: 2010-265(IT)I
BETWEEN:
CHRISTOPHER VICKERS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hogan J.
[1]
This is an appeal by
Christopher Vickers (the “Appellant”) from reassessments for the 2004 and 2005
taxation years. The Appellant was and continues to be employed primarily as an
investment advisor. In 2005, the Appellant changed employers, moving from RBC
Dominion Securities (“RBC”) in Toronto to TD Waterhouse in Ottawa. In reassessing the Appellant, the Minister of
National Revenue (the “Minister”) disallowed several employment expense
deductions claimed under subsection 8(1) of the Income Tax Act (the “Act”).
The expenses were in relation to the Appellant’s move and his employment as an investment
advisor.
[2]
According to the
Minister’s list of issues in the Reply to the Notice of Appeal, at the outset
of the trial the only amounts that remained in issue were $18,000 in salary paid
to an assistant and deducted as an expense by the Appellant for 2004, and the
$7,830.87 in travel expenses and $7,444.33 in meal and entertainment expenses that
the Appellant deducted for 2005.
[3]
During the trial, a
question arose as to whether the Appellant could deduct as moving expenses
under section 62 of the Act the costs related to several of his stays
at an Ottawa hotel. This issue remains to be decided.
I. Factual Background
[4]
In assessing the Appellant for the taxation years under review, the
Minister relied, inter alia, on the following assumptions of fact:
(a) the Appellant was employed by RBC
from August 30, 2002 to March 2, 2005, as an investment advisor and a branch
manager in Toronto;
(b) the Appellant was employed by TD
Waterhouse in Ottawa from March to December of 2005 as a
financial investment advisor;
(c) the Appellant resided in Toronto and moved to Ottawa in June of 2005;
(d) as an RBC employee, the Appellant:
i.
was not generally
required to work outside of RBC’s premises;
ii.
was not required
to be away from the area in which RBC was located;
iii.
was not
reimbursed for travel costs incurred to meet clients;
iv.
was not
reimbursed for selling-related expenses incurred in the performance of his
duties;
(e) the Appellant was married to Susan
Bryson (the “spouse”);
(f)
the Appellant was
not required by his employer to hire an assistant;
(g) the Appellant did not pay his spouse to
work as an assistant;
(h) the Appellant did not incur expenses
of $18,000 for an assistant for the 2004 taxation year;
(i)
the Appellant
claimed meal and entertainment expenses of $1,774.83 and $5,669.50 in
connection with the Lone Star Texas Grill restaurant and the Empire Grill restaurant
respectively;
(j)
the Appellant did
not incur meal and entertainment expenses of $1,774.83 and $5,669.50 to earn employment
income for the 2005 taxation year;
(k) the Appellant claimed $7,830.87 as
lodging expenses for hotel accommodation at the Arc Hotel in Ottawa from March to June 2005;
(l)
the Appellant did
not incur $7,830.87 in hotel accommodation expenses for the 2005 taxation year
to earn employment income;
(m) the Appellant was reimbursed by TD
Waterhouse for the following expenses:
|
Food, beverage and entertainment
expenses
|
$6,527
|
|
Other Expenses
|
5,248
|
|
Travel
|
2,983
|
|
Total Expenses reimbursed by TD
|
$14,758
|
(n) the Appellant did not report the
reimbursed amount of $14,758 as income in his income tax return.
[5]
The Appellant testified
at trial that, when he tendered his resignation to RBC on March 2, 2005, his
role with that organization ended abruptly, and he had to move his book of
business over to his new employer, TD Waterhouse, in order to be able to
continue to serve his clients. However, the Appellant was unable to move his
family until the end of June as his children were in school. On the basis of these
facts, the Appellant argued that it had been necessary for him to travel back
and forth between Toronto and Ottawa for four months – thereby incurring
$7,830.87 in hotel and meal expenses in Ottawa - in order to set up in and
carry out the duties of his new employment with TD Waterhouse. He also had to
find permanent accommodation for his family.
[6]
The Appellant claimed
an $18,000 deduction for salary paid to an assistant in 2004, alleging that the
total amount represented a monthly salary of $1,500 paid to his spouse. The
Appellant testified at trial that his spouse assisted him by attending charity
functions and hosting social events, which helped him sell his services by
presenting a stable, family–oriented image. Although she also assisted by
filling out in advance, and helping the Appellant review, client information
forms, the Appellant’s spouse did not attend client meetings with the
Appellant, nor did she have any training in the field.
[7]
While the Appellant
testified that his spouse worked 20 hours a week for 17 weeks during the
busy months of February, September, October, and November, and 6 hours a week
for another 30 weeks of the year, his spouse did not keep a time sheet, did not
invoice the Appellant for her time, and was not paid regularly or in set amounts
the $1,500 she was said to have earned per month. The Appellant’s spouse did,
however, report $18,000 as income in the 2004 taxation year. The Minister has
not reassessed the Appellant’s spouse to exclude this amount from her income
and, consequently, the Minister’s current position results in double taxation.
[8]
During the trial, the
Minister consented to judgement in favour of the Appellant with regard to the
meal and entertainment expenses at the Lone Star Texas Grill restaurant and the
Empire Grill restaurant.
II. Issues
[9]
Accordingly, the
remaining issues in dispute are:
(a) whether the
Appellant paid his spouse a salary to work as an assistant, the payment of
which salary was required by his contract of employment – those being prerequisites
to deductibility under subparagraph 8(1)(i)(ii);
(b) whether the
Appellant’s meal and lodging expenses that were not covered by TD Waterhouse
are deductible as travel expenses under paragraph 8(1)(h) or paragraph
8(1)(f); and
(c) in the alternative,
whether those meal and lodging expenses are deductible as moving expenses
within the meaning of paragraph 62(3)(c), up to the maximum period
allowed of 15 days.
III. Analysis
Issue 1: Can the Appellant deduct under subparagraph
8(1)(i)(ii) the amount claimed to have been paid to his spouse for her
services as an assistant?
[10]
As prescribed by subsection 8(2)
of the Act:
|
8(2)
General limitation -- Except as permitted by this section, no deductions
shall be made in computing a taxpayer’s income for a taxation year from an
office or employment.
|
8(1) Restriction générale -- Seuls les
montants prévus au présent article sont déductibles dans le calcul du revenu
d’un contribuable tiré, pour une année d’imposition, d’une charge ou d’un
emploi.
|
[11]
Subsection 8(1) sets out an extensive
list of deductions that may be taken from employment income if the amounts to
be deducted can reasonably be regarded as being applicable to that source of
income.
[12]
Subparagraph 8(1)(i)(ii) allows
a taxpayer to deduct the salary paid to an assistant in the circumstances specified
therein. That provision reads as follows:
|
8(1)
Deductions allowed -- 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:
. . .
Dues and other expenses of performing duties
(i)
amounts paid by the taxpayer in the year as
. . .
(ii) . . . Salary
to an assistant or substitute, the payment of which by the officer or
employee was required by the contract of employment,
. . .
to the
extent that the taxpayer has not been reimbursed, and is not entitled to be
reimbursed in respect thereof.
[Emphasis
added.]
|
8(1) Éléments déductibles -- Sont
déductibles dans le calcul du revenu d’un contribuable tiré, pour une année
d’imposition, d’une charge ou d’un emploi ceux des éléments suivants qui se
rapportent entièrement à cette source de revenus, ou la partie des éléments
suivants qu’il est raisonnable de considérer comme s’y rapportant:
[…]
Cotisations et autres dépenses liées à l’exercice des fonctions
i) dans la mesure où il n’a pas été
remboursé et n’a pas le droit d’être remboursé à cet égard, les sommes
payées par le contribuable au cours de l’année au titre:
[…]
(ii) […] du salaire d’un adjoint ou remplaçant que le
contrat d’emploi du cadre ou de l’employé l’obligeait à payer,
[…]
[Je souligne.]
|
[13]
However, in order to claim an
otherwise permissible deduction under subparagraph 8(1)(i)(ii), the
requirements of subsection 8(10) must also be met.
|
8(10) Certificate
of employer -- An amount otherwise deductible for a taxation year under .
. . subparagraph (1)(i)(ii) or (iii) by a taxpayer shall not be deducted
unless a prescribed form, signed by the taxpayer’s employer certifying that
the conditions set out in the applicable provision were met in the year in
respect of the taxpayer, is filed with the taxpayer’s return of income for
the year.
|
8(10) Attestation de l’employeur -- Un
contribuable ne peut déduire un montant pour une année d’imposition en
application des […] sous-alinéas (1)i)(ii) ou (iii) que s’il
joint à sa déclaration de revenu pour l’année un formulaire prescrit, signé
par son employeur, qui atteste que les conditions énoncées à la disposition
applicable ont été remplies quant au contribuable au cours de l’année.
|
[14]
In Schnurr v. The Queen,
2004 TCC 684 (General Procedure) (available on CanLII), Associate Chief Justice
Bowman, as he then was, explained that:
The filing of
forms T2200 serves a dual function: it is a statutory condition precedent to
the claiming of an employment expense deduction under subsection 8(1)(i)
and it provides evidence of the terms of employment. I doubt that the form is
conclusive or determinative if the evidence showed it to be wrong but it is at
least prima facie evidence.
[15]
The former Chief Justice further
stated, in Schnurr, that it is not necessary that the contract of
employment specifically refer to the requirement in subparagraph 8(1)(i)(ii),
that the expenditures be required by the contract of employment; such a
requirement can be inferred from the circumstances as being implicit in the
employment relationship.
Nevertheless, the requirement is only satisfied if it is essential that the
expenditures be incurred in order for the taxpayer to carry out the duties of his
or her employment.
[16]
As observed by Bowie J. in Morgan
v. The Queen, 2007 TCC 475 (General Procedure) (available on CanLII):
. . . Both the English verb “to
require” and the verb “obliger” that appears in the French version of the Act
are necessarily imperative.
[17]
The Appellant has failed to meet
his burden of proof on this point. The Appellant’s evidence that his spouse
filled out forms and attended social functions in no way suggests that his
spouse’s services were necessary for the Appellant to be able to carry out the
duties of his employment as an investment advisor. Moreover, while it was open to
the Appellant to do so, he did not call his spouse to substantiate his oral
evidence, nor did he call an employee or officer of RBC, who could have spoken
to the matter of whether or not her assistance was implicitly required.
[18]
Although the Appellant did submit
his T2200 form as an exhibit, it was indicated thereon that he was not required
under his contract of employment to pay for an assistant. While that form is
not determinative of the issue, the Appellant did not call the supervisor who completed
the form in an attempt to explain that the situation was otherwise, and he did
not lead evidence of a different, implied understanding that may have existed
with RBC, contrary to the information appearing on the T2200 form.
[19]
Despite the fact that the
Appellant’s testimony indicated that his spouse may have genuinely provided
some assistance, he did not provide evidence sufficient to establish the prima
facie element of necessity. Accordingly, the Minister’s assumptions and
assessment with regard to this point must stand. As a consequence of the
Minister’s decision being upheld on this point, and mindful of the fact that I
have no authority to deal with the matter, I would expect that the Minister will
nonetheless reassess the Appellant’s wife for her 2004 taxation year to exclude
the amount that she wrongly included as employment income.
Issue 2: Can the Appellant
deduct the meal and lodging expenses for which TD Waterhouse did not reimburse him
under paragraph 8(1)(h) or paragraph 8(1)(f)?
[20]
While the Appellant invoked
paragraph 8(1)(f) in justification of his deduction of his Ottawa meal and
lodging expenses, the Respondent organized its submissions around paragraph
8(1)(h). Under that paragraph, unlike under paragraph 8(1)(f),
only expenses for "travel" may be deducted; however,
paragraph 8(1)(h) applies to any officer or employee, and not just
commissioned salespersons. The Appellant is positioned in such a manner that,
generally speaking, the expenses could be claimed under either paragraph. In
any event, the dispute in this case boils down to the same issue – can the
Appellant’s expenditures at the Arc Hotel be considered expenses incurred by
the Appellant in the performance of his employment duties or are they personal
expenses and consequently not deductible under section 8 of the Act?
[21]
In considering this question, the
particularly concise words of Jorré J. in Blackburn v. The Queen., 2007
TCC 284 (Informal Procedure) (available on CanLII), are instructive:
[41] When
considering whether the deductions claimed are personal expenses or travel
expenses within the meaning of paragraph 8(1)(h)] it is . . . necessary
to take into account the principle that the choice to live in one city rather
than another is a personal choice and that the expenses incurred to get to work
are personal expenses and are not deductible.
[42] If an
individual who lives in one city takes a job in another city that is very far
from his or her home, he or she cannot deduct the costs incurred by the choice
not to move. That includes not only transportation, but also food and
lodging. However, the Act provides for the deduction of moving expenses.
[43] We
therefore have two important principles:
(1) Travel
expenses incurred in the performance of one's employment duties are deductible.
(2) However,
expenses incurred by the choice of where one lives are personal expenses.
[44] At
what point does the decision to travel rather than to move become a personal
choice? One cannot reasonably conclude that the fact that one does not
relocate for a business trip of a few weeks is a personal choice. However, if
someone takes a permanent position in another far away city, there cannot be
any doubt that it is a personal choice if the person keeps his or her house and
family in his or her hometown and chooses to travel between the two cities
every Monday morning and Friday evening and to rent a small apartment in the
city where he or she works.
[Footnotes
omitted and emphasis added.]
[22]
The permanence of the
Appellant’s employment with TD Waterhouse in Ottawa is not in dispute.
[23]
Despite the fact that the Appellant’s
choice was likely the best one for his family, it is clear it was a personal
one and therefore outside the scope of the deductions permitted in subsection
8(1). Thus, the Appellant’s appeal should fail on this point. Nevertheless, as
highlighted by Jorré J., the Act does provide for the deduction of
moving expenses.
Issue 3: Can the
Appellant deduct the meal and lodging expenses for which TD Waterhouse did not
reimburse him as moving expenses within the meaning of paragraph 62(3)(c)?
[24]
In its written submissions to the
Court on this question, the Respondent took the position that, in order for an
amount to qualify as a moving expense under subsection 62(3)(c), it must
have been incurred in the course of the taxpayer’s actual move, when he or she
changes his or her residence. With respect, that position is incorrect.
[25]
Section 62 of the Act opens
as follows:
|
62(1)
Moving expenses -- There may be deducted in computing a taxpayer’s income
for a taxation year amounts paid by the taxpayer as or on account
of moving expenses incurred in respect of an eligible relocation .
. .
|
62(1) Frais de déménagement -- Un
contribuable peut déduire dans le calcul de son revenu pour une année
d’imposition les sommes qu’il a payées au titre des frais de
déménagement engagés relativement à une réinstallation admissible
dans la mesure où, […]
|
[26]
As highlighted by the emphasis
added, the provision allows for the deduction of moving expenses where the
following three conditions are satisfied:
(a) The amount was paid by the taxpayer;
(b) The amount was paid as or on account of moving expenses (as
defined in subsection 62(3) of the Act); and
(c)
The moving expense was incurred in respect of an eligible relocation (as
defined in subsection 248(1) of the Act).
[27]
That the third requirement has
been met is not in dispute in this case.
[28]
With regard to the first
requirement, in the Statement of Facts in its Written Representations the
Respondent raises the point that TD Waterhouse reimbursed the Appellant for
more than 15 days of meal and lodging expenses incurred at the Arc Hotel. Even so, there is nothing
in subsection 62(1), reproduced above, or paragraph 62(3)(c), reproduced
below, that would preclude the Appellant from claiming under paragraph 62(3)(c)
15 of the 44 days for which there was no reimbursement. Directly addressing the
argument alluded to by the Respondent herein, Judge O’Connor, in Trainor v. R.,
[2000] 1 C.T.C. 2159 (TCC, Informal Procedure) (available on CanLII), concluded:
6 . . . I see
nothing in subparagraph 62(3)(c) that would lead to the conclusion that
[the appellant] cannot qualify because he has been reimbursed by his employer
for a period other than the 11 days in question. I also see nothing that
necessarily leads to the conclusion that it is only the first 15 days that are
considered. If that were the case it would lead to the curious result that if a
taxpayer personally bears the costs for the first 11 days, he gets the
deduction but if the costs are for a period after the first 15 days, he does
not.
7 Section 62,
in my opinion, should be given a liberal interpretation. As a matter of policy
it allows a person to deduct certain expenses which would otherwise be personal
and/or living expenses. This policy was to encourage mobility in our workforce
and since in my view the section is not entirely clear on the issue at hand, a
liberal interpretation following the teleological approach should be adopted.
8 Moreover,
since section 62 is not precisely clear on the issue, if there were any doubt
on its interpretation, the taxpayer should be entitled to the residual
presumption in his favour . . . .
[29]
With regard to the second
requirement, the definition of “moving expenses” is set out in subsection 62(3)
of the Act. The portions of that subsection relating to travel read as
follows:
|
62(3)
Definition of “moving expenses” -- In subsection (1), “moving
expenses” includes any expense incurred as or on account of
(a)
travel costs (including a reasonable amount expended for meals and lodging),
in the course of moving the taxpayer and members of the taxpayer’s household
from the old residence to the new residence,
(b)
the cost to the taxpayer of transporting or storing household effects in the
course of moving from the old residence to the new residence,
(c)
the cost to the taxpayer of meals and lodging near the old residence or the
new residence for the taxpayer and members of the taxpayer’s household for a
period not exceeding 15 days,
. . .
but, for
greater certainty, does not include costs (other than costs referred to in
paragraph (f)) incurred by the taxpayer in respect of the acquisition
of the new residence.
|
62(3) Frais de déménagement -- Pour
l’application du paragraphe (1), sont comprises dans les frais de
déménagement toutes dépenses engagées au titre :
a) des frais de déplacement (y compris
les dépenses raisonnables pour repas et logement) engagés pour le
déménagement du contribuable et des membres de sa maisonnée qui se
transportent de l’ancienne résidence à la nouvelle résidence;
b) des frais de transport et
d’entreposage des meubles du contribuable qui doivent être transportés de son
ancienne résidence à sa nouvelle résidence;
c) des frais de repas et de logement,
près de l’ancienne résidence ou de la nouvelle résidence, engagés par le
contribuable et les membres de sa maisonnée pendant une période maximale de
15 jours;
[…]
il est toutefois entendu que le terme ne vise pas les frais
(autres que les frais visés à l’alinéa f)) engagés par le contribuable
pour l’acquisition de sa nouvelle résidence.
|
[30]
Under paragraph 62(3)(a),
the Act allows a deduction of expenses incurred as or on account of
travel costs – which include meals and lodging – by a taxpayer in the course of
moving the taxpayer’s household from the old residence to the new residence.
[31]
Under paragraph 62(3)(c),
the Act also allows a general deduction of expenses incurred as or on
account of the cost of meals and lodging near a taxpayer’s old or new residence
for a period of up to 15 days.
[32]
It is true that travel costs
claimed under paragraph 62(3)(a) must be incurred in the course of
moving from the old residence to the new one. Nevertheless, the
requirements under paragraph 62(3)(c) are unconnected with and
independent of those in paragraph 62(3)(a). In fact, deductions claimed
as moving expenses under paragraph 62(3)(c) may be claimed in addition
to any deductions claimed under paragraph 62(3)(a) or any of the other
paragraphs of subsection 62(3). Limited to a maximum of 15 days, the
expenses claimed as a deduction under paragraph 62(3)(c) need only
be incurred as or on account of the cost of meals and lodging near the
old residence or the new residence of the taxpayer.
[33]
If the requirement that expenses
be incurred “in the course” of moving was imported into paragraph 62(3)(c),
that paragraph would be rendered redundant by paragraph 62(3)(a) – which
already provides for the deduction of meal and lodging expenses incurred in the
course of moving – making it a subset of that paragraph. I would note that a
more logical result would be achieved by taking the plain meaning of the word
and interpreting paragraph 62(3)(a) as allowing the deduction of all
travel expenses incurred in the actual move, and 62(3)(c) as allowing
further and other meal and lodging expenses incurred near either the old or new
residence, expenses such as are often incurred in scouting for a new residence
or in setting up in or leaving a residence before the actual move takes place.
[34]
The Respondent justifies its
position by citing the Federal Court of Appeal’s interpretation of paragraph
62(3)(d) in Séguin v. R., [1998] 2 C.T.C. 13 (available on
CanLII). As recognized by the Respondent, the wording of subsection 62(1)
of the Act was changed in 1998, after the Séguin decision was
rendered. Paragraph 62(3)(c) is not comparable to the provision
considered by the Federal Court of Appeal in that case. It is evident that the
change to the wording of subsection 62(1) is substantive, rendering the Federal
Court of Appeal’s interpretation of section 62 in Séguin wholly
inapplicable to paragraph 62(3)(c) in its current form.
[35]
The relevant portions of the Act
interpreted by the Federal Court of Appeal in Séguin read as follows:
|
62(1)
Moving expenses -- Where a taxpayer has, at any time, commenced
(a)
to carry on a business or to be employed at a location in Canada (in this
subsection referred to as "the new work location"), or
. . .
and by
reason thereof has moved from the residence in Canada . . . in computing the
taxpayer's income for the taxation year in which the taxpayer moved from the
old residence to the new residence or for the immediately following taxation
year, there may be deducted amounts paid by him as or on account of moving
expenses incurred in the course of moving from his old residence to his
new residence
. . .
(3)
Definition of "moving expenses" -- In subsection (1),
"moving expenses" includes any expense incurred as or on account of
(a)
traveling costs (including a reasonable amount expended for meals and
lodging), in the course of moving the taxpayer and members of the taxpayer’s household
from the old residence to the new residence,
(b)
the cost to the taxpayer of transporting or storing household effects in the
course of moving from the old residence to the new residence,
(c)
the cost to the taxpayer of meals and lodging near the old residence or the
new residence for the taxpayer and members of the taxpayer’s household for a
period not exceeding 15 days,
(d)
the cost to the taxpayer of cancelling the lease by virtue of which the
taxpayer was the lessee of the old residence,
[Emphasis
added.]
|
62(1) Frais de déménagement --
Lorsqu'un contribuable a, à une date quelconque, commencé
a) à exploiter une entreprise ou à
être employé dans un lieu au Canada (dans le présent paragraphe appelé son
nouveau lieu de travail), ou
[...]
et a, de ce fait, déménagé d'une résidence au Canada […] il peut
déduire, dans le calcul de son revenu pour l'année d'imposition dans laquelle
il a déménagé de son ancienne résidence pour venir occuper sa nouvelle
résidence, ou pour l'année d'imposition suivante, les sommes qu'il a payées à
titre ou au titre des frais de déménagement engagés pour déménager de son
ancienne résidence pour venir occuper sa nouvelle résidence
[...]
(3) Définition de "frais de déménagement" -- Dans le paragraphe (1), "frais de déménagement"
comprend toutes dépenses engagées à titre ou au titre
a) de frais de déplacement (y compris
les dépenses raisonnables pour repas et logement) engagés pour déménagement
du contribuable et des membres de sa maisonnée, qui se transportent de
l’ancienne résidence à la nouvelle résidence du contribuable,
b) de frais de transport et
d’entreposage des meubles du contribuable qui doivent être transportés de son
ancienne résidence dans sa nouvelle résidence,
c) de frais de repas et de logement,
près de l’ancienne résidence ou de la nouvelle résidence, engagés par le
contribuable et les membres de sa maisonnée pendant une période maximale de
15 jours,
d) de frais de résiliation du bail, si
bail il y a, en vertu duquel il était le locataire de son ancienne résidence,
[Je souligne.]
|
[36]
In interpreting the words of
subsection 62(1), the Federal Court of Appeal reasoned:
7 What section 62 allows, within
its first subsection, is a deduction by the taxpayer of the amounts
|
62(1)
...paid by him as or on account of moving expenses incurred in the course
of moving from his old residence to his new residence
|
62(1) ...payées à titre ou au titre des frais de déménagement engagés
pour déménager de son ancienne résidence pour venir occuper sa nouvelle
résidence....
|
8 According to
the ordinary meaning of the words used, the provision includes those expenses
incurred for physically moving, changing one’s residence, and certain other
expenses directly related to the actual move and resettlement . . . .
[37]
As is unmistakably evident from the
wording of the provisions of the Act quoted above, subsection 62(1) did
in fact contain introductory language that directly limited the subsequently
authorized deductions to expenses “incurred in the course of moving”. The
Federal Court of Appeal accurately assessed the ordinary meaning of the words
used, and limited the deduction claimed by that taxpayer to such expenses.
[38]
However, in 1998, a few months
after the Court gave its oral reasons, the 1998 federal budget proposed several
amendments to the wording of section 62 “to clarify the tax treatment of
relocation expenses”; the proposals were enacted shortly thereafter.
[39]
The relevant sections of the Act,
as amended, now read as follows:
|
62(1) Moving
expenses -- There may be deducted in computing a taxpayer’s income for a
taxation year amounts paid by the taxpayer as or on account of moving
expenses incurred in respect of an eligible relocation, to the extent
that
. . .
62(3)
Definition of “moving expenses” -- In subsection (1), “moving expenses”
includes any expense incurred as or on account of
(a)
travel costs (including a reasonable amount expended for meals and lodging),
in the course of moving the taxpayer and members of the taxpayer’s household
from the old residence to the new residence,
. . .
(c)
the cost to the taxpayer of meals and lodging near the old residence or the
new residence for the taxpayer and members of the taxpayer’s household for a
period not exceeding 15 days,
. . .
248 (1)
Definitions -- In this Act,
. . .
“eligible
relocation”
“eligible
relocation” means a relocation of a taxpayer where
(a)
the relocation occurs to enable the taxpayer
(i) to carry
on a business or to be employed at a location in Canada (in section 62 and
this subsection referred to as “the new work location”), or
[Emphasis
added.]
|
62(1) Frais de déménagement -- Un
contribuable peut déduire dans le calcul de son revenu pour une année
d’imposition les sommes qu’il a payées au titre des frais de déménagement
engagés relativement à une réinstallation admissible dans la mesure où, à
la fois
[…]
62(3) Frais de déménagement -- Pour
l’application du paragraphe (1), sont comprises dans les frais de
déménagement toutes dépenses engagées au titre :
a) des frais de déplacement (y compris
les dépenses raisonnables pour repas et logement) engagés pour le
déménagement du contribuable et des membres de sa maisonnée qui se
transportent de l’ancienne résidence à la nouvelle résidence;
[…]
c) des frais de repas et de logement,
près de l’ancienne résidence ou de la nouvelle résidence, engagés par le
contribuable et les membres de sa maisonnée pendant une période maximale de
15 jours;
[…]
248(1) Définitions -- Les définitions
qui suivent s’appliquent à la présente loi.
[…]
« réinstallation admissible »
« réinstallation admissible » Réinstallation d’un contribuable
relativement à laquelle les conditions suivantes sont réunies:
a) elle est effectuée afin de
permettre au contribuable :
(i) soit d’exploiter une entreprise ou d’occuper un emploi à un
endroit au Canada (appelé « nouveau lieu de travail » à l’article
62 et au présent paragraphe),
[Je souligne.]
|
[40]
Aside from the transfer out of
section 62 of the requirements now found under the definition of “eligible
relocation” in subsection 248(1), only one substantive change was made to the
relevant portions of section 62. In subsection 62(1), the precise words
interpreted by the Federal Court of Appeal, “incurred in the course of moving
from his old residence to his new residence”, were removed and were replaced
with “incurred in respect of an eligible relocation”.
[41]
As explained by the Supreme Court of
Canada in Nowegijick v. The Queen, [1983] 1 S.C.R. 29 (available on
CanLII):
The words “in
respect of” are . . . words of the widest possible scope. They import such
meanings as “in relation to”, “with reference to” or “in connection with”. The
phrase “in respect of” is probably the widest of any expression intended to
convey some connection between two related subject matters.
[42]
Parliament did not just reshape
the requirement that the expenses claimed under section 62 be incurred in the
course of moving, it removed the requirement entirely and replaced it with
words of the widest scope of any expression intended to convey some connection
between two related subject matters. While a more subtle change to the phrasing
of subsection 62(1) may have left some room for argument, the phrasing chosen
leaves no doubt that Parliament’s intent was to broaden significantly the
potential scope of section 62.
[43]
As subsection 62(1) provides the
foundation for the series of different deductions included in the definition of
“moving expenses” in subsection 62(3), the amendment notably affects the
breadth of the deductions authorized by several of the paragraphs – one such being
paragraph 62(3)(c). Unlike paragraph 62(3)(a), paragraph 62(3)(c)
does not contain what used to be a second statement of the “in the course of
moving” requirement. Thus, the removal of that requirement from subsection
62(1) leaves it open to a taxpayer to claim a deduction for any expenses
incurred as or on account of the cost of meals and lodging, so long as they are
generally referable to the “eligible relocation” – in this case for the
Appellant’s new employment. As mentioned above, the relation of the meal and
lodging expenses to the Appellant’s employment with TD Waterhouse is not in
dispute.
[44]
In light of this, the Appellant is
entitled to succeed in part, as there are grounds for allowing the deduction of
a further 15 days of meal and lodging expenses at the Arc Hotel under paragraph
62(3)(c). The deduction for the 15 days should be granted in addition to
that for the three days with respect to which the Appellant claimed a deduction
when he filed his 2005 return, since the expenses for those three days are
deductible under paragraph 62(3)(a) of the Act as they represent travel
costs incurred in the course of moving the Appellant and his household from the
old residence to the new residence.
[45]
The Appellant’s appeal from the
reassessment for the 2004 taxation year is dismissed, and his appeal from the
reassessment for the 2005 taxation year is allowed and the matter is referred
back to the Minister for reconsideration and reassessment in accordance with
the reasons above, without costs with respect to either appeal.
Signed at Ottawa, Canada, this 4th day of January 2011.
"Robert J. Hogan"
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