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Citation:2004TCC465
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Date:20040624
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Docket: 2003-4131(IT)I
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BETWEEN:
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OTEMAN DELANCY,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Woods J.
[1] This appeal concerns the
deductibility of travel expenses incurred by a professional
athlete who resided in the United States and was employed in
Canada. The appellant submits that a person who maintains a
permanent home in the United States while working temporarily in
Canada should be allowed to deduct the living expenses incurred
in Canada as reasonable travel expenses incurred in the course of
employment.
[2] During the 2000 taxation year,
Oteman Delancy, professionally known as Oteman Sampson, was
employed as a professional football player by the
Calgary Stampeders and the Toronto Argonauts. During this
period he was a resident of the United States and lived in hotels
and apartments while working in Canada. Under his contracts of
employment, Mr. Delancy was reimbursed for travel expenses
incurred in connection with games away from his home clubs and
was otherwise required to pay his own expenses.
[3] In computing income for the 2000
taxation year, Mr. Delancy deducted expenses for hotels,
apartments, meals and other living expenses in Calgary and
Toronto where the home clubs were located and where he presumably
performed the majority of his services. The following amounts
were claimed:
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Agent's fee
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$1,500.00
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Food, beverage, entertainment (50%)
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4,000.00
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Lodging
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7,400.00
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Parking
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100.00
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Supplies
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500.00
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Phone, utilities, hydro
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1,800.00
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Total
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$15,300.00
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[4] In a reassessment of income tax
for the 2000 taxation year, the Minister of National Revenue
disallowed these deductions and also denied a claim for a rebate
under subsection 253(1) of the Excise Tax Act. The parties
agreed that the rebate issue would be determined by the outcome
of the income tax issue.
[5] Mr. Delancy did not attend the
hearing and no one testified on his behalf. Counsel for both
parties agreed that I should accept as facts the assumptions made
by the Minister as set out in the Reply and I have done so.
Statutory provisions
[6] Mr. Delancy argued that his travel
expenses should be deductible pursuant to paragraph
8(1)(h) or alternatively paragraph 115(1)(f) of the
Income Tax Act. These provisions read:
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:
...
(h) where the
taxpayer, in the year,
(i) was ordinarily
required to carry on the duties of the office or employment away
from the employer's place of business or in different places,
and
(ii) was required under
the contract of employment to pay the travel expenses incurred by
the taxpayer in the performance of the duties of the office or
employment,
amounts expended by the taxpayer in the year (other than motor
vehicle expenses) for travelling in the course of the office or
employment, ...
115.(1) For the purposes of this Act, the taxable
income earned in Canada for a taxation year of a person who at no
time in the year is resident in Canada is the amount, if any, by
which the amount that would be the non-resident person's
income for the year under section 3
...
exceeds the total of
...
(f) where all or
substantially all of the non-resident person's income for the
year is included in computing the non-resident person's
taxable income earned in Canada for the year, such of the other
deductions permitted for the purpose of computing taxable income
as may reasonably be considered wholly applicable.
Paragraph 8(1)(h)
[7] Mr. Delancy submits that living
expenses incurred in the cities where his home clubs were located
are deductible pursuant to paragraph 8(1)(h) of the
Act because they are reasonable travel expenses incurred
in the course of employment. I do not agree.
[8] Paragraph 8(1)(h) has been
interpreted to allow a deduction only for travel expenses
incurred by an employee in travelling to a place of work away
from the usual place of employment: Healy v. R., [1979]
C.T.C. 44 (F.C.A.); Chrapko v. R., [1988] 2 C.T.C. 342
(F.C.A.) and Hogg v. R., [2002] 3 C.T.C. 177
(F.C.A.).
[9] The living expenses at issue were
incurred in the cities where the employment was usually
exercised. Mr. Delancy's ordinary place of work
was Toronto when he was employed by the Toronto Argonauts and it
was Calgary when he was employed by the Calgary
Stampeders. Accordingly paragraph 8(1)(h) is
of no assistance to him.
[10] Mr. Delancy submits that, because he is
a non-resident of Canada, his living expenses incurred while
working in Canada should be accepted as reasonably connected to
employment. In support of this position, counsel suggests that I
refer to the United States tax treatment of travel expenses in
analogous circumstances. Counsel referred to a tax guide prepared
by the Internal Revenue Service that deals with travel expenses
incurred by persons working temporarily in the United States. The
guide states that if a non-resident works in the United States on
a temporary basis, away from his regular place of work in a
foreign country, the travel expenses incurred in the United
States are deductible for United States income tax purposes. It
is not clear to me that the position outlined in the IRS document
is analogous to the facts in this appeal. Mr. Delancy's
regular place of work was in Canada and there was no evidence
that he had a regular place of work in the United States.
[11] Even if expenses similar to those incurred by Mr. Delancy
would be deductible for United States tax purposes, that would be
of no assistance to Mr. Delancy in this appeal. Paragraph
8(1)(h) limits the circumstances in which travel expenses
can be claimed by an employee. That provision has been reasonably
interpreted to exclude expenses incurred by an employee in
travelling to the main location of the employment.
Paragraph 115(1)(f)
[12] Mr. Delancy submits in the alternative
that the expenses are deductible pursuant to paragraph
115(1)(f) of the Act. Counsel suggests that this
provision permits a non-resident to deduct reasonable employment
related expenses if the non-resident earns substantially all his
income for the year in Canada.
[13] I cannot accept the argument concerning
paragraph 115(1)(f). If paragraph 115(1)(f) were as
broad as counsel suggests, non-residents of Canada would be
allowed to deduct greater employment expenses than residents of
Canada. Paragraph 115(1)(f) does not have that
result.
[14] The deduction permitted under paragraph
115(1)(f) applies to deductions in computing taxable
income. By virtue of the definition of "taxable income"
in subsections 248(1) and 2(2), the deductions that are allowed
under paragraph 115(1)(f) are only those listed in
Division C of the Act. These deductions do not include
general employment expenses and counsel did not suggest that the
expenses claimed by Mr. Delancy are described in Division C.
Accordingly, I cannot accept the submission that paragraph
115(1)(f) allows a deduction for the expenses at issue in
this appeal.
Agent's fee
[15] Although Mr. Delancy's counsel
submits that all the expenses claimed are travel expenses, the
fee of $1,500 paid to Mr. Delancy's agent is not in that
category. I was not referred to any provision of the Act
that would provide a deduction for this type of expense and
accordingly I conclude that the deduction of the agent's fee
is prohibited by subsection 8(2). Under this provision, a
taxpayer is prohibited from claiming a deduction in computing
employment income unless the deduction is specifically authorized
by section 8.
[16] For the above reasons, the appeal is
dismissed.
Signed at Ottawa, Canada, this 24th day of June,
2004.
J.M. Woods J.
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