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2004-4417(IT)I
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BETWEEN:
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JAMES M. MacMILLAN,
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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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____________________________________________________________________
Appeal heard on May 6, 2005, at Vancouver, British Columbia,
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By: The Honourable Justice E.A. Bowie
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Appearances:
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For the Appellant:
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The Appellant himself
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Counsel for the Respondent:
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Fiona Mendoza
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____________________________________________________________________
JUDGMENT
The appeal from the reassessment of tax made under the Income Tax Act for 2003 taxation year is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that that the Appellant is not subject to any inclusion in income under paragraph 6(1)(e) or 6(1)(k).
Signed at Ottawa, Canada, this 31st day of August, 2005.
Bowie J.
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Citation: 2005TCC583
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Date: 20050831
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Docket: 2004-4417(IT)I
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BETWEEN:
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JAMES M. MacMILLAN,
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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
BowieJ.
[1] The Appellant is employed by British Columbia Hydro (Hydro) as a vehicle fleet maintenance manager. He is appealing from his income tax assessment for the 2003 taxation year. His specific complaint with the assessment is that the Minister has assessed him an automobile standby charge under paragraph 6(1)(e) of the Income Tax Act (the Act), and an operating benefit under paragraph 6(1)(k). The appeal was heard pursuant to the Court's informal procedure.
[2] As a manager of fleet maintenance the Appellant supervises the personnel at Hydro's Surrey garage. He starts work there at 7:30 each weekday morning, and normally finishes work at 3:30 p.m. There are between 15 and 30 people working there for whom he is responsible. He also has to visit various work locations in the Lower Mainland from time to time, and make occasional visits to Hydro facilities elsewhere in the province. Sometimes he drives to these locations, and sometimes he goes by air.
[3] The Appellant is supplied by Hydro with a five-passenger Dodge Caravan van. His evidence was that he is required by Hydro to have this van available to him at all times, both while he is at work and when he is at home, so that if he is required to attend at any location in an emergency he can use the van to go there immediately. He is not permitted to use his own personal vehicle to travel on Hydro business, and he is not permitted to use the Hydro vehicle for his own personal travel. As he is required to have the vehicle available to him at all times, he necessarily must drive it back and forth between his home and the garage in Surrey, a distance of 49 kilometres each way. As I understand it, the assessment is based on the proposition that this use between home and the Hydro premises is personal use, and that the vehicle is made available to him for that personal use, thus bringing both paragraphs 6(1)(e) and 6(1)(k) into play. These provisions read as follows:
6(1) There shall be included in computing the income of a taxpayer for a taxation year as income from an office or employment such of the following amounts as are applicable:
(a) ...
(e) where the taxpayer's employer or a person related to the employer made an automobile available to the taxpayer, or to a person related to the taxpayer, in the year, the amount, if any, by which
(i) an amount that is a reasonable standby charge for the automobile for the total number of days in the year during which it was made so available
exceeds
(ii) the total of all amounts, each of which is an amount (other than an expense related to the operation of the automobile) paid in the year to the employer or the person related to the employer by the taxpayer or the person related to the taxpayer for the use of the automobile;
(f) ...
(k) where
(i) an amount is determined under subparagraph (e)(i) in respect of an automobile in computing the taxpayer's income for the year,
(ii) amounts related to the operation (otherwise than in connection with or in the course of the taxpayer's office or employment) of the automobile for the period or periods in the year during which the automobile was made available to the taxpayer or a person related to the taxpayer are paid or payable by the taxpayer's employer or a person related to the taxpayer's employer (each of whom is in this paragraph referred to as the "payor"), and
(iii) the total of the amounts so paid or payable is not paid in the year or within 45 days after the end of the year to the payor by the taxpayer or by the person related to the taxpayer,
the amount in respect of the operation of the automobile determined by the formula
A - B
where
A is
(iv) where the automobile is used primarily in the performance of the duties of the taxpayer's office or employment during the period or periods referred to in subparagraph (ii) and the taxpayer notifies the employer in writing before the end of the year of the taxpayer's intention to have this subparagraph apply, 1/2 of the amount determined under subparagraph (e)(i) in respect of the automobile in computing the taxpayer's income for the year, and
(v) in any other case, the amount equal to the product obtained when the amount prescribed for the year is multiplied by the total number of kilometres that the automobile is driven (otherwise than in connection with or in the course of the taxpayer's office or employment) during the period or periods referred to in subparagraph (ii), and
B is the total of all amounts in respect of the operation of the automobile in the year paid in the year or within 45 days after the end of the year to the payor by the taxpayer or by the person related to the taxpayer; ...
[4] I have no reason to disbelieve the evidence of the Appellant. I find that he was required by his employer to keep the Hydro van at home during the hours that he was not working, so that it would be available to him if he were called out to deal with some emergency. I also find that he was under a strict prohibition against using the vehicle for any purpose other than going back and forth between his home and the Hydro garage, and other travel while on duty as a Hydro employee. In my view this does not bring the Appellant within the scope of paragraph 6(1)(e) of the Act, because the employer has not made the vehicle available to the Appellant. It is quite clear that the expression "made available", read in its context, is only satisfied where the employee has discretion to use the automobile for his own personal purposes. Clearly that is not the case here. Mr. MacMillan was not free to use the vehicle as he pleased. He was not even free to not use it, as it was required of him that he have it immediately available both during the day when he was at work, and also during the time he was at home and not at work. I find that the Appellant is not subject to assessment for a standby charge in respect of the vehicle.
[5] The Appellant has also been assessed a use benefit under paragraph 6(1)(k) of the Act. However the opening words of that paragraph make it clear that it only has application where paragraph 6(1)(e) is applicable. It therefore cannot apply in the present case. The Minister did not assess any benefit under paragraph 6(1)(l) in this case, nor was that provision pleaded by the Deputy Attorney General in his Reply to the Notice of Appeal. I do not propose to consider whether any benefit could be said to have arisen that would fall within that paragraph, as to do so would be unfair to the Appellant.
[6] Counsel for the Respondent referred me to a number of cases. The decision of the Federal Court of Appeal in Hogg v. The Queen[1] has no application to this case. It simply deals with the claim of the Appellant in that case that the cost of driving to work and back should be deductible from income, a proposition that is far removed from the issue before me. In each of the other cases, with one exception, it appears that the taxpayer was permitted at least some personal use of the employer's vehicle, and so the vehicle was, to some extent at least, "made available" to the taxpayer. These cases therefore have no application here. The one exception is MacMillan v. The Queen.[2] In that case, O'Connor J. allowed the taxpayer's appeal in circumstances that appear from his brief recitation of the facts to be very similar to the present case.
[7] The appeal is allowed. The assessment is referred back to the Minister for reconsideration and reassessment on the basis that the Appellant is not subject to any inclusion in income under paragraph 6(1)(e) or 6(1)(k).
Signed at Ottawa, Canada, this 31st day of August, 2005.
Bowie J.
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