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Citation: 2005TCC94
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Date: 20050204
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Docket: 2004-3543(IT)I
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BETWEEN:
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DANIEL L. BEAUDOIN,
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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
Little J.
A. FACTS:
[1] The Appellant commenced to work
for Dairyland Fluid Division ("Dairyland") at its plant
in Nanaimo, British Columbia in 1978.
[2] Dairyland closed its plant in
Nanaimo in October 1996 and relocated its dairy operation to
Courtenay, British Columbia.
[3] During the 1996 taxation year the
Appellant resided at 1914 Kelsie Road in Nanaimo ("Kelsie
Road Home").
[4] In May 1997 the Appellant
purchased 1.104 acres of vacant land located at 6671 Elm
Road, in Lantzville, B.C. The Appellant built a house on the Elm
Road property ("Elm Road Home").
[5] The Appellant moved from the
Kelsie Road Home to the Elm Road Home in 1999.
[6] The Appellant commuted from either
the Kelsie Road Home or the Elm Road Home to the Courtenay
Plant of Dairyland for approximately seven years.
[7] In the fall of 2003 the Appellant
purchased a home located at 4636 Arran Road ("Arran
Road Home") in Courtenay.
[8] In November 2003 the Appellant
sold the Elm Road Home and relocated to the Arran Road Home.
[9] The Appellant testified that he
incurred net moving expenses in the amount of $23,452.50 (this
number includes a real estate commission in the amount of
$14,252.40 which the Appellant paid when he sold the Elm Road
Home).
[10] In filing his income tax return for the
2003 taxation year the Appellant deducted the amount of
$6,250.00. (Note: The amount of $6,250.00 is the
salary received by the Appellant from Dairyland after he
relocated to the Arran Road Home in Courtenay in November 2003
until the end of 2003. The agent for the Appellant said that the
Appellant intends to deduct the difference between $23,452.50
minus $6,250.00 or $17,202.50 when the Appellant files his income
tax return for the 2004 taxation year).
B. ISSUE:
[11] The issue is whether the Appellant is
entitled to deduct moving expenses in the amount of $6,250.00 in
calculating his income for the 2003 taxation year.
C. ANALYSIS:
[12] Counsel for the Respondent maintains
that the moving expenses claimed by the Appellant in the 2003
taxation year are not deductible in calculating the
Appellant's income for the 2003 taxation year as the
Appellant did not move from the Elm Road Home to the Arran Road
Home to enable him to earn income from employment within the
meaning of subsection 248(1) and section 62 of the
Income Tax Act (the
"Act").
[13] Counsel for the Respondent noted that
Dairyland closed its plant in Nanaimo in 1996 and relocated to
Courtenay at that time. However the Appellant commuted from his
homes in Nanaimo to Courtenay until 2003 when he purchased a home
in Courtenay and moved to this home. Counsel for the Respondent
said that the seven year period between the move of the plant to
Courtenay in 1996 and the move by the Appellant to Courtenay is a
long time.
[14] The phrase "moving expenses"
is defined in subsection 62(3) of the Act as follows:
62. (3) 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,
(d) the cost to the taxpayer of cancelling the lease by
virtue of which the taxpayer was the lessee of the old
residence,
(e) the taxpayer's selling costs in respect of the
sale of the old residence,
(f) where the old residence is sold by the taxpayer or
the taxpayer's spouse or common-law partner as a result of
the move, the cost to the taxpayer of legal services in respect
of the purchase of the new residence and of any tax, fee or duty
(other than any goods and services tax or value-added tax)
imposed on the transfer or registration of title to the new
residence, and
(g) interest, property taxes, insurance premiums and
the cost of heating and utilities in respect of the old
residence, to the extent of the lesser of $5,000 and the total of
such expenses of the taxpayer for the period
(i) throughout
which the old residence is neither ordinarily occupied by the
taxpayer or by any other person who ordinarily resided with the
taxpayer at the old residence immediately before the move nor
rented by the taxpayer to any other person, and
(ii) in which
reasonable efforts are made to sell the old residence, and
(h) the cost of revising legal documents to reflect the
address of the taxpayer's new residence, of replacing
drivers' licenses and non-commercial vehicle permits
(excluding any cost for vehicle insurance) and of connecting or
disconnecting utilities,
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.
[15] The Appellant testified during the
hearing that he and an associate had incorporated a company by
the name of J. Star Investments Ltd. ("J. Star") in
1993. J. Star was involved in the house construction and the land
development business.
[16] The Appellant said that at the time
that Dairyland moved its plant to Courtenay in 1996, J. Star was
involved in land development at Chemanius, B.C. and certain
complications had occurred with this development that required
"management" by the Appellant.
[17] The Appellant testified that the
property in Chemanius owned by J. Star was sold and J. Star
was dissolved in 2003.
[18] The Appellant further testified that
after J. Star sold its property he and his wife decided to
relocate to the Courteney area to be nearer Dairyland's plant
and they purchased their home on Arran Road in Courtenay.
[19] The Appellant also said that the Credit
Union had filed a lien against his Elm Road Home. The Appellant
said that Credit Union officials told him that they wanted the
business problems of J. Star cleaned up before they would remove
the lien. The Appellant said that the main reasons for the delay
in moving from Nanaimo to Courtenay were caused by the business
problems encountered by J. Star and the lien registered by the
Credit Union against the Elm Road Home.
[20] In James D. Beyette v. M.N.R.,
89 DTC 701 Judge Taylor considered the deduction of moving
expenses. Judge Taylor said at page 702:
Counsel for the Respondent argued that section
62(1) of the Act implied a certain time limit - between
the change of work site and the move - and that five years was
unreasonable. In addition the critical word in the legislation
was "commenced", in his view and there was a
requirement for a relationship between the "commencement of
employment" and the "move".
I do not agree with either point raised by the
Respondent. In this matter, I was satisfied from the evidence and
testimony that there were good reasons for which the taxpayer
delayed his move from Winnipeg to Beausejour - illness, lack of
housing in Beausejour, inactive real estate selling market in
Winnipeg, etc. - but that is probably irrelevant. In my opinion,
the taxpayer and he alone is left to determine the timing of the
move, and the costs associated with the move, and no time limit
is expressed by the wording of the Act. While clearly five
years is an unusually long period of time between the change of
work locale and the move, that cannot be put in issue - the
Respondent has no basis upon which to conclude (I.T. Bulletin
178R2) that there is some time frame that is
"reasonable" and another that is unreasonable. As I
read section 62(1) of the Act, it is a requirement
that the taxpayer " - has - commenced to be employed
previous to the move for which an expense claim is made. I do not
see that one should read into the word "commenced" more
than that. Mr. Beyette "commenced to be employed" in
1981 at the new work location, he "moved" in 1986 and
is entitled to his costs of moving.
I agree with the comments of Judge Taylor.
[21] I also refer to the decision of Justice
Bowman in Jaggers v. Canada, [1997] T.C.J. No. 477. In
Jaggers Justice Bowman held that moving expenses claimed
by the Appellant should be allowed. In that situation Revenue
Canada (as it then was) refused to allow Mr. Jaggers to deduct
the cost of selling his home because the home was sold two years
after the move. At page 6 of the Reasons for Judgment, Justice
Bowman said:
...What section 62 is aimed at is the deduction of moving
costs where a move is occasioned by a change of job. Its purpose
would be defeated if an unduly narrow and technical approach were
followed. We have here a taxpayer who moves to another city
to take up new employment. He buys a home there but,
sensibly, retains his old home until he is sure that the job will
work out. He rents the old home as an interim
measure. Because he does not evict the tenants as soon as he
could - for reasons of commercial morality, it appears, rather
than pure commerciality - he loses, in the view of the Department
of National Revenue, the right to any deductions under section
62. I do not find this acceptable interpretation of section
62. These expenses are precisely the type contemplated by
section 62.
[22] I have concluded that the Appellant
should be allowed to deduct moving expenses of $6,250.00 that he
incurred in moving from the Elm Road Home to the Arran Road Home
in calculating his income for the 2003 taxation year.
[23] The appeal is allowed with costs.
Signed at Vancouver, British Columbia, this 4th day of
February 2005.
Little J.
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