Rip T.C.J.:
In his appeals from income tax assessments for 1992 and 1993 taxation years, Douglas J. McDonald claims that he was not in receipt of benefit due to his personal use of an automobile owned or leased by his employer pursuant to subsection 6(1) of the Income Tax Act (“Act’’).
At all relevant times Mr. McDonald was employed as a Safety Manager by the Parks and Property Department of the Municipality of Metropolitan Toronto (“Metro”). In carrying on the duties of his employment Mr. McDonald was required to attend on a daily basis various parks and recreational facilities in the Metro park system in the greater Toronto area. These sites and his office in downtown Toronto were his work-sites but his fixed work location was his office at 365 Bay Street for most of 1992 until Metro Government moved to Metro Hall late in the year. After the move, his office and fixed work location was located at Metro Hall. Both locations are in downtown Toronto.
Metro provided the appellant with a car to use when travelling between work-sites. The cars were equipped with a telephone and an alarm. In the trunk of the car were safety and protective equipment: hard hat, safety boots, clothing, gloves, air and soil sampling equipment, tools, etc.
During the day, when he was not using the car, Mr. McDonald parked the car in the garage at Toronto’s new City Hall for most of 1992, and in the garage at Metro Hall during the rest of the appeal period.
Mr. McDonald testified that the automobile was parked at his residence in the evenings and on weekends. He said he did not make personal use of the car since it was identifiable as a Metro vehicle and he did not want any adverse publicity if anyone saw him using the car for personal errands.
Metro required Mr. McDonald to maintain a travel log indicating the number of kilometres travelled for business and personal reasons and his final destination for each trip. Many of the entries suggest the distance travelled to a particular destination is greater than the distance between the trip’s points of origin and destination. Mr. McDonald stated that he may visit several sites on a given trip, but usually reports the original and final destinations on the log.
Mr. McDonald testified that on many, if not most, mornings he would drive the car from his home to various work-sites in Metro before proceeding to his office. Similarly, if at the end of the day he was at a Metro park, he would drive directly home in the car. Other than driving from his home to the office in the morning and return in the evening, Mr. McDonald did not use the car provided to him for personal purposes. Any personal travel would be in his wife’s car.
The appellant did not dispute that any distance he drove the car between his home and office, the place of employment to which he reports regularly, is personal travel. The issue between the parties is whether any other travel was personal. In making the assessments, the Minister had assumed, among other things, that Mr. McDonald failed to maintain a proper records for use of the Metro supplied vehicles and that the portion of the personal use of that vehicle was 15% of its total use by Mr. McDonald. Respondent’s counsel advised me that the Minister considers the expression “substantially all” in the phrase “substantially all of the distance travelled” in paragraph 6(2)(d) to mean 90% or more of the distance travelled.
By letter dated March 30, 1993 the Manager of Metro’s GST office, Paul Ambos, wrote to the Toronto District Office of Revenue Canada with respect to paragraph 5 of Revenue Canada Interpretation Bulletin IT-63R3 concerning personal use of a motor vehicle. Mr. Ambos described the appellant’s (and other employees’) situation using a Metro vehicle and specifically requested clarification of the expressions “employee’s place of work” and “to a point of call other than the employer’s place of business to which the employee reports regularly”. On April 29, 1993, Revenue Canada replied to Mr. Ambos, in effect paraphrasing paragraph 5 of Bulletin IT-63R3:
On receipt of the letter from Revenue Canada, Metro distributed a memorandum on May 31, 1993 to affected employees outlining the Minister’s view. The memorandum cautioned that the onus is on Metro and the employee to provide details of all business and personal use of Metro owned or leased automobiles. The memo added that a detailed log of all distances driven must be kept by employees to document the business and personal use of the vehicles. Mr. McDonald said he relied on the memorandum when preparing his travel logs and filing his income tax returns for 1993 and 1994.
Paragraph 6(1 )(e) requires an employee to include in income a “reasonable standby charge” for an automobile that is made available to the employee by the employer. Section 6(2) of the Act sets out the formula to calculate the amount of the “reasonable standby charge”. Some relevant factors in the formula are the number of days in a taxation year the vehicle is made available to the employee by the employer, the total number of kilometres driven during the days the car is available to the employee and whether substantially all of the distance travelled by the automobile in the days it was available to the employee is in connection with or in the course of the employee’s employment: paragraph 6(2)(d).
An appeal similar to that at bar was before Lamarre Proulx, J.T.C.C. in Biermann v. Minister of National Revenue^ A taxpayer used an employer owned car to travel to various client locations. These locations were situated between the taxpayer’s home and office. Consequently, he frequently found it more convenient to travel directly to his home from these locations at the end of a work day and to proceed directly to them in the morning. The Minister assumed that this travel was for personal purposes. Lamarre Proulx J.T.C.C. held that this travel was required for business purposes and was not an employment benefit to the taxpayer. At p. 407 she stated:
Counsel for the Respondent raises the point that travelling between home and the office has always been considered personal expense. This is generally true. However, in the case at bar, when the taxpayer went home he carried with him pieces of equipment that he had to deliver the next day to the CNR repair station. Had the taxpayer resided east of this plant he could not have had a valid business purpose in going home. But under the circumstances of this case, he could. I find it difficult to determine that these trips are of a personal rather than of a business nature, where they meet both characteristics. I find support in this regard in the case of Yorke v. M.N.R., 89 D.T.C. 12.
Lamarre Proulx, J.T.C.C. did not follow Revenue Canada ’s administrative policy as outlined in Interpretation Bulletin IT-63R2 but rather she found that the taxpayer’s travel to his home could not be distinguished from the business travel required by his employer.
An employee may have multiple work locations and travel to such places from his or her home is considered personal travel: Carter, supra. However, 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.
The characterization of the locations visited by an employee is important in determining advantage to the employee. This will largely be a matter of fact. One may want to consider the frequency to which a particular location is visited, its relation to the employee’s home as opposed to the fixed work location, and the degree of travelling required by the employee regardless of the destination. In the case at bar, the logs indicate that the appellant travelled most workdays to multiple locations. Given the numerous places the appellant visited during the taxation years in issue, I am of the opinion that none of them can fairly be classified as “places of business to which the employee reports regularly”. The word “regularly” means "... constantly ... steadily ...”. Consequently, I am of the opinion that such travel by Mr.
McDonald should not be classed as personal and should not be taxed as an employee benefit under paragraph 6(1 )(e).
I would also add that I do not find that Mr. McDonald’s method of maintaining his travel logs was deficient. He kept a daily log of his travels. His credibility was not challenged and his explanation that a trip may include travel to several sites, yet the log may specify only the origin and final destinations, is reasonable. (I note that on some occasions, several destinations were specified for single trip).
It is quite likely that as a result of my finding that travel between various work-sites and his home is not personal, the portion of the personal use of Metro’s vehicle by Mr. McDonald is less than 10% and thus I need not concern myself with the meaning of the words “all or substantially all”. However, assuming the personal use is still more than 10%, or if I erred in concluding such travel is not personal, I have to consider the meaning of the words “all or substantially all” in the context of subsection 6(2) of the Act.
The word “substantially” is not defined in dictionaries as a fixed portion of a whole. The so-called “90% rule” is a rule of thumb that is no doubt convenient to assessors and tax advisors in determining a reasonable standby charge.
The Oxford English Dictionary defines “substantially” to mean, among other things,
b. essentially, intrinsically
c. actually, really
The same dictionary defines the word “substantial” to include “of ample or considerable amount, quantity or dimensions”.
In the French version of subsection 6(2), the words “all or substantially all” are “la totalité, ou presque”. The word “presque” is defined by Le Petit Robert as “à peu près”. The Collins-Robert French-English, English- French Dictionary does not include the words “substantial” or “substantially” in the English meaning of the word “presque”. The words included are: “almost” and “nearly”. The word “substantially” is translated in Collins-Robert as “considérablement” in the context of “considerably” and “en grande partie” when the word “substantially” means “to a large extent”.
These dictionary definitions confirm that the word “substantially”, as Bowman, J.T.C.C. remarked in Ruhl v. R.6, is elastic and an unsatisfactory medium for conveying the concept of an ascertainable proportion of the whole. The words “substantially all” in the context of paragraph 6(2)(d) need not be interpreted as 90% or more but may be a lesser proportion of the whole depending on the facts. In the case at bar, at least 85% of the distance travelled was in connection with Mr. McDonald’s employment and in my view that is substantially all of the distance travelled by the automobile in the total days it was available to Mr. McDonald.
The appeals for 1992 and 1993 will be allowed with costs and the assessments are referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that substantially all of the distance travelled by the automobile in the total available days was in connection with Mr. McDonald’s employment.
Appeal allowed.
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