Citation: 2009 TCC 220
Date: 20090423
Docket: 2007-4577(IT)I
BETWEEN:
GINAUD DUPUIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1]
This is an appeal
concerning the 2003 taxation year.
[2]
The issues to be
decided are whether
(a)
the Minister of
National Revenue (the Minister) properly
disallowed the $1,430.16 deduction for other employment expenses claimed by the
appellant for the 2003 taxation year; and
(b)
the Minister properly
limited to $2,767 the amount of the northern residents deduction.
[3]
The appellant clearly
took this matter very seriously. His Notice of Appeal ran to 34 pages, including
a table of contents.
[4]
Although the appellant
filed two books of exhibits with a total of 44 tabs, to which other documents
were added, the evidence is relatively simple to summarize.
[5]
As an education
specialist, the appellant possessed expertise and knowledge that was of
interest to the Cree and Naskapi community of Mistassini. In 2003, he was
retained as a consultant to design a pilot project.
[6]
At the end of his
mandate, the project he designed was accepted, and he was offered an employment
contract to implement it. The duration was initially set at two years. The term
of the first contract was fixed, but the contract was renewed several times and
he ended up working until 2007.
[7]
His contract provided
that he could live on site with his family. The lodging provided included the
basic and usual facilities, including a stove, a refrigerator and four bedrooms.
[8]
This was a normal
residence, with all the usual amenities, except that it was located in a very
particular place, namely a territory where only the Band Council had
jurisdiction.
[9]
The appellant, his
spouse and their children remained there for several years. For the appellant,
this was not his domicile or his residence, because he could be expelled at any
time, but he lived there during his leave periods and at the end of the periods
provided for in his employment contract.
[10]
In other words, the
appellant explained that the lodging he occupied with his family was provided
temporarily by the Band Council and was subject to numerous conditions, to
which he was not a contracting party. Consequently, he could lose his right of
residence, or rather the privilege, and any time and without notice.
[11]
The appellant explained
that this was essentially a concession or a privilege that could be withdrawn
at any time. It was legally impossible for him to consider establishing a
permanent residence there, owing to legal impediments stemming from the various
treaties between Aboriginal communities and governments.
[12]
Those treaties
provided that the territory was under the exclusive jurisdiction of the
Aboriginal community. The presence of any non-Aboriginal person was a sort of
accommodation, a kind of privilege or concession granted by the Band Council. The
right could be revoked at any time and the privilege was temporary and subject
to the goodwill of the Band Council.
[13]
Owing to these
particular circumstances, the appellant stated that he did not reside there,
since the concept of residence implied a certain continuity or, at the very
least, a certain control over the residence and a certain authority or a
minimum of rights regarding that residence. In other words, the appellant
submitted that his right of residence was not that of a tenant, let alone that
of an owner. In fact, it was not a right at all, but only a concession.
[14]
He was effectively at
the mercy of a unilateral decision by the Band Council. To the appellant,
residence implies both the existence of a full right and the freedom and
independence to choose how and for how long to enjoy it.
[15]
Although, according to the
appellant, he was neither domiciled nor resident on the reserve, he stated that
he lived there with his family and performed the work provided for by his
contract. His spouse, for her part, worked there from time to time, and her
remuneration from various sources is confirmed by T4 slips.
[16]
Both the appellant and
his spouse returned occasionally to the Bellechasse area, where they bought a
house which they considered their residence or home
base.
[17]
The appellant also
adduced evidence showing that he had indeed maintained certain ties with the Bellechasse
area (lease, purchase of an immovable, insurance, bank account, etc.).
[18]
The appellant stated
several times that if the premises occupied had been in Baie‑Comeau or in
some other similar place, he would not have disputed the assessment, since
those would have been places where he would have had the right, the power and
the ability to establish himself permanently, either by acquiring an immovable
or by signing a lease guaranteeing him stability and continuity. In other
words, the appellant submitted that from the moment when he could have had full
authority and power over his actions with regard to the premises needed to live
with his family, he would have accepted the tax consequences of his choices or
decisions. The reality, however, was entirely different.
[19]
He acknowledged,
however, that the place where he and his family were lodged in Mistissini was
the place where they lived, since that was where they ate, slept, and so on,
during long and continuous periods. He also acknowledged that he gave that
address when he applied for child tax benefits.
[20]
In preparing his
appeal, the appellant gathered everything he could find that was likely to
support his interpretation.
[21]
He stressed the fact
that the assessment would have been justified if his family and he had lived in
Baie‑Comeau or elsewhere in a remote area, except in a territory where an
Aboriginal community had authority.
[22]
In fact, the appellant's
sole argument in support of his appeal is that it was a special territory where
all authority was held by a Band Council.
[23]
The agreement covered a
definite period and created rights and obligations for the parties, respecting,
inter alia, remuneration and the prestation of work.
[24]
The evidence disclosed
that the parties were no doubt satisfied with the situation, since it lasted
for several years thanks to the renewal of the employment contract.
[25]
I cannot accept the
argument that the assessment would have been justified if not for the principal
residence in Bellechasse. If that were so, a person who decided to keep his or
her residence while living elsewhere would receive a different tax treatment
from one who, for practical or financial reasons, disposed of his or her
residence.
[26]
In the case at bar, the
situation is different, however, since the appellant was subject to very
special conditions regarding his residence, over which he had neither
jurisdiction nor authority. The Bellechasse residence thus became a sort of
guarantee, a sort of back-up solution, a sort of essential plan B, or, at
least, a wise and prudent measure having regard to the fact that he could have
found himself in a very precarious situation.
[27]
The Minister, for his
part, assumed the following facts in making and confirming his assessment:
[Translation]
(a) The appellant worked for the Cree
school board from August 2003 to 2006.
(b) The appellant's family occupied the
lodging provided during the school year.
(c) The appellant received $1,430 as a
housing allowance.
(d) The appellant was allowed 50% of the
transportation expenses claimed as a "northern residents deduction".
[28]
The Minister thus
disallowed deductions, namely the other 50% of the transportation expenses, but
also $1,430, on the ground that those amounts appear in box 14 of the T4 slip as benefits. The Minister also
relied on paragraph 6(1)a) of the Act in disallowing the deduction,
adding that subsection 6(6) did not apply. For the same year, the appellant
also claimed the "northern residents deduction" provided for in
section 110.7 of the Act. In his analysis, the Minister apparently disregarded
all facts related to the special nature of the territory where the appellant
and his family resided.
Relevant Provisions
Section 6 of the Income Tax Act
Amounts to be included as income from office or employment
(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
Value of benefits
Employment at
special work site or remote location
(6) Notwithstanding subsection 6(1), in computing the income of a
taxpayer for a taxation year from an office or employment, there shall not be
included any amount received or enjoyed by the taxpayer in respect of, in the
course or by virtue of the office or employment that is the value of, or an
allowance (not in excess of a reasonable amount) in respect of expenses the
taxpayer has incurred for,
(a) the taxpayer's board and lodging
for a period at
(i) a special work site, being a
location at which the duties performed by the taxpayer were of a temporary
nature, if the taxpayer maintained at another location a self-contained
domestic establishment as the taxpayer's principal place of residence
(A) that was, throughout the period, available
for the taxpayer's occupancy and not rented by the taxpayer to any other
person, and
(B) to which, by reason of distance, the
taxpayer could not reasonably be expected to have returned daily from the
special work site, or
(ii) a location at which, by virtue
of its remoteness from any established community, the taxpayer could not
reasonably be expected to establish and maintain a self-contained domestic
establishment,
if the period during which the
taxpayer was required by the taxpayer's duties to be away from the taxpayer's
principal place of residence, or to be at the special work site or location,
was not less than 36 hours; or
(b) transportation between
(i) the principal place of residence
and the special work site referred to in subparagraph 6(6)(a)(i),
or
(ii) the location referred to in
subparagraph 6(6)(a)(ii) and a location in Canada or a location in the country in which the
taxpayer is employed,
in respect of a period described in
paragraph 6(6)(a) during which the taxpayer received board and lodging,
or a reasonable allowance in respect of board and lodging, from the taxpayer's
employer.
Section 110.7
Residing in
prescribed zone
110.7 (1)
Where, throughout a period (in this section referred to as the "qualifying
period") of not less than 6 consecutive months beginning or ending in a
taxation year, a taxpayer who is an individual has resided in one or more
particular areas each of which is a prescribed northern zone or prescribed
intermediate zone for the year and files for the year a claim in prescribed
form, there may be deducted in computing the taxpayer's taxable income for the
year
(a) the total of all amounts each of
which is the product obtained by multiplying the specified percentage for a
particular area for the year in which the taxpayer so resided by an amount
received, or the value of a benefit received or enjoyed, in the year by the
taxpayer in respect of the taxpayer's employment in the particular area by a
person with whom the taxpayer was dealing at arm's length in respect of travel
expenses incurred by the taxpayer or another individual who was a member of the
taxpayer's household during the part of the year in which the taxpayer resided
in the particular area, to the extent that
(i) the amount received or the value
of the benefit, as the case may be,
(A) does not exceed a prescribed
amount in respect of the taxpayer for the period in the year in which the
taxpayer resided in the particular area,
(B) is included and is not otherwise deducted in
computing the taxpayer's income for the year or any other taxation year, and
(C) is not included in determining an amount
deducted under subsection 118.2(1) for the year or any other taxation year,
(ii) the travel expenses were
incurred in respect of trips made in the year by the taxpayer or another
individual who was a member of the taxpayer's household during the part of the
year in which the taxpayer resided in the particular area, and
(iii) neither the taxpayer nor a member of the taxpayer's household
is at any time entitled to a reimbursement or any form of assistance (other
than a reimbursement or assistance included in computing the income of the
taxpayer or the member) in respect of travel expenses to which subparagraph
110.7(1)(a)(ii) applies; and
(b) the lesser of
(i) 20% of the
taxpayer's income for the year, and
(ii) the total of all amounts each of which is the product obtained
by multiplying the specified percentage for a particular area for the year in
which the taxpayer so resided by the total of
(A) $7.50 multiplied by the number of days in the year included in
the qualifying period in which the taxpayer resided in the particular area, and
(B) $7.50 multiplied by the number of days in the year included in
that portion of the qualifying period throughout which the taxpayer maintained
and resided in a self-contained domestic establishment in the particular area
(except any day included in computing a deduction claimed under this paragraph
by another person who resided on that day in the establishment).
Specified percentage
(2) For the
purpose of subsection 110.7 (1), the specified percentage for a particular area
for a taxation year is
(a) where the area is a prescribed northern
zone for the year, 100%; and
(b) where the area is a prescribed intermediate
zone for the year, 50%. (Emphasis added.)
Restriction
(3) The
total determined under paragraph 110.7(1)(a) for a
taxpayer in respect of travel expenses incurred in a taxation year in respect
of an individual shall not be in respect of more than 2 trips made by the
individual in the year, other than trips to obtain medical services that are
not available in the locality in which the taxpayer resided.
Board and lodging
allowances, etc.
(4) The
amount determined under subparagraph (1)(b)(ii) for
a particular area for a taxpayer for a taxation year shall not exceed the
amount by which the amount otherwise determined under that subparagraph for the
particular area for the year exceeds the value of, or an allowance in respect
of expenses incurred by the taxpayer for, the taxpayer's board and lodging in
the particular area (other than at a work site described in paragraph 67.1(2)(e)) that
(a) would, if not for subparagraph 6(6)(a)(i), be included in computing the taxpayer's income for
the year; and
(b) can reasonably be considered to be
attributable to that portion of the qualifying period that is in the year and
during which the taxpayer maintained a self-contained domestic establishment as
the taxpayer's principal place of residence in an area other than a prescribed
northern zone or a prescribed intermediate zone for the year.
Idem
(5) Where on any day an
individual resides in more than one particular area referred to in subsection
110.7 (1), for the purpose of that subsection, the individual shall be deemed
to reside in only one such area on that day.
[29]
It is important to
situate the territory in question, namely the Mistissini area. Did the
appellant live with his family in a northern zone or an intermediate zone? To
answer that question, one must consult paragraphs 7303.1(1)(e) and
7303.1(2)(f) of the Income Tax Regulations.
[30]
Under those provisions,
the zone where the appellant resided was either northern or intermediate. It is
important to determine which zone it was, so that the appropriate percentage –
100% or 50%, respectively – can be applied to the deduction available to
residents of the areas in question. Paragraph 7303.1(1)(e) delimits the northern zone.
(1) An area is a
prescribed northern zone for a taxation year for the purposes of section 110.7
of the Act where it is
…
(e) that part of Quebec that lies
(i) north of 51°05‘N latitude, or
(ii) north of
the Gulf of St. Lawrence and east of 63°00‘W longitude;
[31]
Paragraph 7303.1(2)(f)
delimits the intermediate zone:
(2) An area is a
prescribed intermediate zone for a taxation year for the purposes of
section 110.7 of the Act where it is the Queen Charlotte Islands, Anticosti Island, the Magdalen Islands or Sable Island, or where it is not
part of a prescribed northern zone referred to in subsection (1) for the year
and is
…
(f) that part of Quebec that lies
(i) north of 50°35‘N latitude and west of 79°00‘W
longitude,
(ii) north of 49°00‘N latitude, east of 79°00‘W
longitude and west of 74°00‘W longitude,
(iii) north of 50°00‘N latitude, east of 74°00‘W
longitude and west of 70°00‘W longitude,
(iv) north of 50°45‘N latitude, east of 70°00‘W
longitude and west of 65°30‘W longitude, or
(v) north of the Gulf of St. Lawrence, east of
65°30‘W longitude and west of 63°00‘W longitude.
Did the appellant hold employment on a
special work site or in a remote location and was it temporary employment?
[32]
The Minister disallowed
the $1,430 deduction on the ground that paragraph 6(6)(a) does not
apply. That paragraph reads as follows:
(6) Notwithstanding subsection 6(1), in computing the income of a
taxpayer for a taxation year from an office or employment, there shall not be
included any amount received or enjoyed by the taxpayer in respect of, in the
course or by virtue of the office or employment that is the value of, or an
allowance (not in excess of a reasonable amount) in respect of expenses the
taxpayer has incurred for,
(a) the taxpayer's board and lodging
for a period at
(i) a special work site, being a
location at which the duties performed by the taxpayer were of a temporary
nature, if the taxpayer maintained at another location a self-contained
domestic establishment as the taxpayer's principal place of residence
(A) that was, throughout the period, available
for the taxpayer's occupancy and not rented by the taxpayer to any other
person, and
(B) to which, by reason of distance, the
taxpayer could not reasonably be expected to have returned daily from the
special work site, or
(ii) a location at which, by virtue
of its remoteness from any established community, the taxpayer could not
reasonably be expected to establish and maintain a self-contained domestic
establishment,
if the period during which the taxpayer was required by the
taxpayer's duties to be away from the taxpayer's principal place of residence,
or to be at the special work site or location, was not less than 36 hours;
[33]
The Minister submits,
first, that subparagraph (i) does not apply, on the ground that the workplace
was not a special work site, and second, that the work was not of a temporary
nature. The terms "special work site" and "remote location"
are not defined in the Act.
[34]
Generally speaking,
lodging, board and expenses of that nature that are essential to day-to-day
life are personal expenses and thus their reimbursement should be included in
income as a taxable benefit under paragraph 6(1)(a) of the Act.
[35]
However, subsection 6(6)
of the Act provides for an exception in the case of a special work site. For
that exception to apply, the duties performed by the taxpayer must be of a
temporary nature.
[36]
Determining whether
employment is of a temporary nature is essentially a question of fact. When the
determination concerns a short period, the beginning and end of which are
known, the exercise is a relatively simple one. However, when it is necessary
to analyse a situation that continued for several years, or when a short period
was extended, the exercise is much more delicate.
[37]
In reality, everything
is temporary, including life. In a tax context, temporary means limited, of short
duration, with a known beginning and end. With regard to employment, this is a
very complex concept, for the following reasons among others.
[38]
Indeed, it is not
uncommon to see jobs that were supposed to be permanent actually last only a
few months, and, conversely, jobs that were supposed to be short-term become
permanent.
[39]
The appellant explained
the context and special circumstances of his arrival on Aboriginal territory
and the details of the various contract renewals. Subsection 6(6) requires that
employment be either at a special work site and of a temporary nature, or at a
remote work location.
[40]
If those requirements
are met, the reasonable benefit received by virtue of the employment will not
be included in income. Dussault J. analysed the term "special work
site" in Guilbert in 1991:
The Act is indeed complex, and
contains numerous definitions. However, we cannot assume, in the absence of a
special statutory definition, that the usual words used by Parliament must have
a meaning different from the generally recognized meaning set out in current
dictionaries. A "work site" is a "work site" and this
expression cannot refer to just any place of work. The newspaper's premises are
not, in my humble opinion, a work site, or a "special work site",
within the meaning intended by Parliament. By analogy, we could refer to the
decision in Graham L. Harle. M.L.A.. and Calvin E. Lee. M.L.A. v. M.N.R.,
76 DTC 1151, cited by counsel for the respondent, which refused to recognize
that provincial legislative buildings were "a special worksite", or
in French, "un chantier particulier".
[41]
In finding that
the appellant in Graham
Harle was not
employed at a special work site, Prociuk J. had this to say:
From an historical point of view, the
quoted subsections of section 6 are indeed a broadening of the scope of the
former subsection (2) of section 5 which now relates not only to construction
sites but to other work sites located in outlying areas where the duties of the
employee would be temporary or where the availability of the usual amenities of
life is nonexistent at or near the site.
[42]
The definition of
"chantier" ["work site" in the Act] in the French
dictionary Le Robert reads as follows:
[Translation]
4. Place where materials are piled up
– Workshop, warehouse. Construction site; demolition site. To work on a work
site. He rarely left the work site. – Pierre, quot. 14. The workers at a work site. Mining, extracting site.
[43]
In support of his
submissions, the Minister refers to Interpretation Bulletin IT‑91R4 and
states:
[Translation]
Subparagraph 6(6)(a)(ii)
stipulates that a taxpayer in a "remote location" could not
reasonably be expected to establish and maintain a self-contained domestic
establishment, by virtue of the location's remoteness from any established
community, if the period during which the taxpayer's duties required him or her
to be away from the taxpayer's principal place of residence, or to be at the
special work site or location, was not less than 36 hours.
[44]
In Dubé, Docket 98-454(IT)I,
August 27, 1998, Tremblay J. relied on the testimony and the contract of
employment to make the factual finding that the different locations where the
appellant performed his duties were remote locations for the purposes of the
ITA.
[Translation]
The fact that the appellant worked in
an intermediate zone under section 110.7 of the Act and section 7303.1 of the
Regulations does not mean that the location was remote for the purposes of
subsection 6(6). That subsection describes a remote location as being so far
from any established community that a person could not reasonably be expected
to maintain a self-contained domestic establishment.
"Self-Contained Domestic
Establishment"
[45]
The definition of
"self-contained domestic establishment" is found in subsection 248(1)
of the Act and reads as follows:
A dwelling-house, apartment or other similar place of residence in
which place a person as a general rule sleeps and eats.
[46]
This definition
includes a place to which the person returns at the end of the day to eat and
sleep. The expression therefore creates a sort of special category of
accommodation. In this regard, the evidence adduced seems to support the
finding that the appellant did indeed choose such an "establishment".
[47]
Is this fact in itself
fatal to the application of subsection 6(6)? Although that provision assumes
that the appellant cannot reasonably be expected to establish himself in that
place, the fact that he chose to do so does not necessarily render the
exception in subsection 6(6) inoperative.
[48]
The Minister submits
that the establishment of a place of residence creates a "reasonable
presumption" that the inclusion exception provided for in subsection 6(6) does
not apply.
[49]
The Minister relies on
Interpretation Bulletin IT-91R4 to justify his interpretation. The respondent
adds that it was the employer who provided the residence and subsequently
included that benefit in the appellant's T4 slip.
[50]
The residence made
available to the appellant by his employer represents a benefit related to his
employment, therefore it must receive the same tax treatment as that which was
used as the basis of the assessment. The dispute therefore turns essentially on
the remoteness of Mistissini from an established community and the temporary
nature of the employment.
Temporary Nature
[51]
The Minister's position,
as stated in Interpretation Bulletin IT-91R4, is that employment for a period
of less than two years will not be considered permanent employment. The
employment contract in Dubé did not provide any guarantee of renewal. In
addition, Tremblay J. relied on paragraphs 5 and 6 of Interpretation Bulletin IT-91R4
in finding that the employee's duties, and not the duration of the employer's
project as a whole, will help to determine whether the employment is temporary.
The Bulletin specifies:
Duties of a temporary nature
5. The
expression “duties performed by the taxpayer were of a temporary nature” as
used in subparagraph 6(6)(a)(i) (see 4(a) above) refers to the
duration of the duties performed by the individual employee, not the expected
duration of the project as a whole. For example, a project might take ten years
to complete but the individual's duties at that project might take only a few
months.
6. The term “temporary” is not defined
in the Income Tax Act. However, as a general rule, duties will be considered to
be of a temporary nature if it can reasonably be expected that they will not
provide continuous employment beyond a period of two years. The determination
of the expected duration of employment must be made on the basis of the facts
known at its commencement. In this regard, particular consideration should be
given to the following factors:
- the nature of the duties
to be performed by the employee (certain types of work are, by their nature,
short term engagements, such as repair work or trades which are involved only
during a certain phase of a project);
- the overall time estimated for a
project, or a particular phase of a project, on which the employee is engaged
to perform duties; and
- the agreed period of time for which
the employee was engaged according to the employment contract or other terms of
the engagement.
[52]
In considering the
evidence with regard to the duration of the contract, it is important to bear
in mind the finding in Dubé that the duties were of a temporary nature
despite the fact that the appellant had worked on several work sites over an
8-year period, always for the same employer.
[53]
The absence of a
contract renewal guarantee was fatal to the Minister's position.
[54]
In Rozumiak,
Beaubier J. dealt with a contract that was renewed once it was signed. He found
that the intentions of the parties at the time the initial contract was
signed determined its temporary nature:
10 The appellant and VPA’s contract was
not for an indeterminate period of employment. Moreover, VPA and Mr. Rozumiak
both viewed Mr. Rozumiak and his duties as temporary – an experiment to
discover the lay of the land. Mr. Rozumiak had never signed such a
contract before and VPA had no office of its own in the United States. The contract was extended in 2004
for a further year to the end of Mr. Rozumiak’s Visa and the office was closed
as a failure at the end of that time; but neither party foresaw these events in
2002.
11 On this basis, the Court finds that the
appellant’s duties were of a temporary nature when the original contract was
signed. His duties were to test the market. He was an older, experienced man
who had his roots in the Vancouver area who had the knowledge to test
the market for VPA. Their contract was terminable by either party in 3 months’
notice. …
[55]
The respondent submits
that the fact that the contract was renewed several times between August 2003 and
June 2006 means that the duties were not of a temporary nature. However, it is
necessary to study the contract, as Tremblay J. did in Dubé, in order to
ascertain its true nature. The answer could obviously depend on the presence or
absence of an inherent renewal guarantee.
[56]
Le Robert defines "temporaire"
["temporary"] as follows:
[Translation]
◊ Which lasts or is meant to
last for only a limited time. — Short, discontinuous, fleeting, momentary, transient,
provisional.
◊ Which is active only for a
time.
[57]
Dussault J., ruling in Leduc,
adopted the analysis of Robertson J.A. in Phillips, [1994] 2 F.C. 680, in
which the latter tried to define the objectives of section 6.
[58]
The argument is drawn
from the decision of the Federal Court of Appeal in Phillips, supra,
where Robertson J.A. stated his understanding of Parliament's aim in the
following terms, at pages 700 and 701:
… Quite obviously, section 6 of the Act seeks to limit
tax avoidance relating to monetary and non-monetary compensation not reflected
in wages or salaries.
Another primary and, for the
purposes of this appeal, overriding objective of section 6 is to ensure that
"employees who receive their compensation in cash are on the same footing
as those who receive compensation in some combination of cash and kind;"... Two employees performing the same
work for the same employer should receive the same tax treatment in respect of
their employment.
[59]
The logic followed by Bowman
J. (as he then was) in Pezzelato helps us to understand the distinction
between a benefit and income:
13 The matter has been
much litigated in this court and in higher courts. Before I deal with the
cases, I should like to approach the problem simply as a matter of principle
and of common sense. Notwithstanding the breadth of its wording section 6 is
not intended to create an artificial concept of income from employment. Rather,
it is designed to recognize the numerous and varied ways in which an employee
may be remunerated for his or her services and to bring them within the net of
taxation. It is not intended to expand beyond the ordinary understanding of the
word benefit (avantage) things that are not benefits at all. In other words,
the wide net that section 6 casts relates to the manner in which the benefit is
conferred, not to the definition of the benefit2. The point is easier to illustrate
by examples than to articulate. If an employer, to induce an employee to move
from a pleasant and low cost city in Southern Ontario (for example, Guelph) to
an expensive and high pressure metropolis like Toronto, increases that
employee's salary by 50% no one would doubt that the increased salary is income
even though the increase is designed in part to compensate him or her for the
increased cost of living and the diminution in the quality of life. If, on the
other hand, the employer brings the employee to Toronto for a month, pays
for a hotel room (or even a company owned apartment) and meals, no one would
suggest that this is a taxable benefit. Similarly if an employer moves an
employee from one city to another the reimbursement of the moving expenses is
not taxable.
14 It is easy to point
to extremes at either end of the spectrum, but the cases that come with
increasing frequency before the courts are not at either end. They fall
somewhere in between. The courts must decide on which side of the line each
case falls.
[60]
Bowman J. gives an
interesting overview of the case law and finds that it is not uniform. He
reiterates, however, that a benefit must be treated as income if the allowance
or property received by the taxpayer improves his or her economic position. When
the amount paid by the employer merely compensates for a loss or reimburses an
expense incurred as the result of a forced relocation, the amount is not
considered a benefit.
[61]
A taxable benefit is
recognized by the fact that it improves the taxpayer's economic position, or in
other words, that it enriches the taxpayer.
[62]
Noting the discordance
among the judgments rendered both by the Tax Court of Canada and by the Federal
Court of Appeal, Bowman J. commented that some of them were based on logic and
common sense, but not necessarily on legal analysis.
26 … Visceral reaction, however much it
may form the inarticulate premise upon which judicial decisions are sometimes
founded, is not however a substitute for legal analysis. Any attempt to state a
legal proposition that encompasses all four cases, and conflicts with none,
must necessarily fail. The following is an attempt to state such a proposition
but it is obvious that it is flawed: where an employee sustains a loss or
incurs an expense as the result of his or her employment a reimbursement by the
employer of that loss or expense is not a taxable benefit if the employee,
after the reimbursement, is not in a better economic position than he or she
would have been in had the loss or expense giving rise to the reimbursement had
not been incurred (Splane and Ransom). Where, however,
the employee, as the result of the payment, is in an economically better
position than he would have been in had no loss occurred, the payment
constitutes a taxable benefit (Phillips and Blanchard).
23 … He was to that extent economically
ahead of the position he had been in when he lived in Moncton. I can see very
little difference between that situation and the example I gave above of an
employer who increases an employee's salary to induce him or her to move from
Guelph to Toronto.
[63]
In Beaulieu, on
the question of the temporary or permanent nature of employment, I stated the
following:
31 In other words, the evidence showed
that the appellant had a strategic job and expertise that was quite
indispensable; he was an employee who was essential to the efficient operation
of the company.
…
43 The appellant did not work for
several employers during various periods that were interrupted by periods
without work. The situation in this case was quite different: the appellant
worked regularly and was laid off very exceptionally. He always worked for the
same employer or for a related or affiliated group.
…
45 In actual fact, unlike the various
operators, the duration of whose work basically depended on the use of
machinery, the appellant had a special status, primarily in terms of the
benefits he received but also in terms of continuity, since he was directly
associated with and involved in the activities that generated work.
…
48 Theoretically, the appellant had no
contractual or formal guarantee with regard to the duration of his employment.
However, given the conditions he was granted (car, credit card, reimbursement
of expenses, various premiums), he was no doubt aware that his employer was
doing everything possible and leaving absolutely nothing to chance to provide
him with stability and continuity. Moreover, if the appellant's arguments were
valid, the vast majority of jobs would be of a temporary nature.
49 Very few people can claim to have
absolute job security. All jobs are dependent on the economic situation of the
company doing the hiring. The appellant certainly did not have job security,
but this does not automatically mean that his duties were of a temporary
nature, like those of a machine operator; rather, his status was comparable to
the status of the people who had administrative responsibilities in the
company. Was he not one of the main architects of most of the bids, which were
the very foundation of the company's existence?
Established
Community
[64]
Le Petit Robert defines "agglomération"
["established community" in the Act] as follows:
[Translation]
◊ Fact of gathering naturally.
◊ Union, close association.
◊ Concentration of dwellings,
city, town or village.
◊ Whole formed by a city and
its inner or outer suburbs.
[65]
According to
Interpretation Bulletin IT-91R4, certain factors should be considered in
determining whether the location where the duties are performed is
"remote" from "any established community".
[66]
The appellant argues
that there was indeed such an established community, but he adds a cultural
element, so that in order to be considered an established community, the locality
must permit integration, meaning that it must be possible to create or
establish ties in that community.
[67]
That cultural aspect is
not contained either in the provision of the Act or in Interpretation Bulletin IT‑91R4.
Rather, the proximity of an established community should provide access to
essential services such as a basic food store, a basic clothing store (not a
mail-order outlet), housing, medical assistance and educational facilities.
[68]
Although Le Petit
Robert does not allude to a cultural element as a necessary facet of an
established community, as Mr. Dupuis argues, Le Grand Robert does
include that element, to some extent, in its definition of "agglomération":
[Translation]
◊ Union, close association: packing
together (of people, animals). Grouping, gathering. Groupings of animals.
School, flock, colony, covey, swarm, bevy, herd, pack, cluster, hive, band, drove,
flight. A gathering of tribes, peoples, men.
The French nation is more
heterogeneous than any other in Europe; it
is in truth an international agglomeration of peoples. (Ch. Seignobos, Hist.
sincère de la nation française.)
◊ Concentration (of dwellings)
forming a unit – borough, township, estate, hamlet, locality, village, town, city.
A small cluster of farms, houses. …
Whole formed by a city and its inner
or outer suburbs. The greater Lyons area. He went to live in the Paris area.
[69]
There is thus a certain
facet that can be characterized as cultural in that second definition. The word
"heterogeneous" implies a certain consistency in the makeup of the
established community.
[70]
The appellant relies on
the Cree-Naskapi (of Quebec) Act to argue that he could work in that
location only for the duration stipulated in the contract, and that taking up residence
on a Cree reserve is not permitted except during the periods provided for in
the contract.
Right to reside on IA or IA-N land
103.(1) The following persons have the right to reside
on the Category IA or IA-N land of a band:
(a) a member of that band;
(b) the member’s consort, within the meaning of
section 174; and
(c) the family to the first degree of a person
described in paragraph (a) or (b).
Special categories
of persons who may reside on IA or IA-N land
(2) In addition to persons described in subsection (1), the following
persons may reside on the Category IA or IA-N land of a band:
(a) a person so authorized in writing by that band
or by a by-law of that band;
(b) a person so authorized by virtue of a grant from
that band under Part VIII;
(c) an administrator holding office pursuant to
section 100; and
(d) subject to subsection (3), a person engaged in
administrative or public duties approved by that band or scientific studies approved by
that band.
Band’s control over
number of outsiders
(3) A band may prohibit a person described in
paragraph (2)(d) from residing on its Category IA or IA-N land where the number of such
persons would be such as to significantly alter the demographic composition of
the community.
[71]
The appellant relies on
the fact that it was impossible for him to settle in an established community
near his work location and also on the possibility that he would be denied the
right to reside there.
[72]
With regard to the
continuity of employment as it concerns teachers, the Federal Court of Appeal
stated as follows in Oliver:
30 The jurisprudence of this Court has consistently
held that, in cases where teachers' contracts terminate at the end of June and
they are re-hired for the following school year, they are not entitled to
employment insurance for the months of July and August. See Bishop v. Canada (Employment Insurance Commission), 2002 FCA 276; Canada (Attorney
General) v. Partidge (1999), 245 N.R. 163 (F.C.A.); Gauthier v. Canada (Employment and Immigration
Commission), [1995]
F.C.J. No. 1350 (C.A.); and Canada (Attorney General) v. Hann, [1997] F.C.J. No. 1641 (C.A.). The only exception is Ying v. Canada
(Attorney General), [1998] F.C.J. No. 1615 (C.A.).
31 In the present case, the applicants
are paid exactly the same amount as equivalent permanent teachers. Yet they
also claim to be entitled to employment insurance benefits for the months of
July and August. They were all re-hired before or shortly after the end of June
for the subsequent school year. The dominant jurisprudence of this Court would
deny their claims to employment insurance benefits.
Malone J.A. dissented:
37 In Dick v. Canada
(Unemployment Insurance Commission), [1980] 2 S.C.R. 243 (Dick), the
Supreme Court of Canada acknowledged that when a teacher's salary is paid in
twelve monthly instalments for ten months of teaching, the payments relate to
the work performed in the ten work months and not to the vacation months of
July and August. This decision recognized that, depending on their contracts,
some teachers will experience an annual interruption of their earnings in the
non-teaching period of the school year. Therefore, because of Dick,
school teachers would qualify for employment insurance benefits in the
non-teaching summer months.
38 Following Dick,
section 46.1, now subsection 33(2) of the Regulations, was promulgated to
prevent "double dipping" by teachers who were not truly facing the
prospect of unemployment after their non-teaching period. The only exception,
relevant to these applications, is found at paragraph 33(2)(a), which
provides that a teacher will be entitled to benefits during a non-teaching
period if "the claimant's contract of employment for teaching has
terminated." The word "terminated" is not defined in either the
Act or the Regulations.
[73]
On the balance of the
evidence, it appears that the appellant held a temporary position in Mistissini,
and, under subsection 103(3) of the Cree-Naskapi (of Quebec) Act, that he was in a location remote from any established community in 2003.
The community of Mistissini does not seem to have the heterogeneous quality
that Le Robert includes in its definition of "agglomération".
[74]
The appellant greatly
stressed the fact that the premises in which he was lodged were in a special
territory where he had no rights, since it was under the absolute jurisdiction
of the Band Council.
[75]
This fact appears to me
to be an element, if not the very basis, of the special nature of the territory.
Indeed, when a person agrees to work in a location sufficiently remote that it
would be unreasonable to expect him to return every day to the residence he
occupied before obtaining the work, that person must decide on a steady,
practical and reasonable place to sleep, at the risk of being denied the
expenses reimbursed over a temporary and transitory period.
[76]
Any person having to
make such a choice must make a decision based on control over all the elements
required. The situation is very different in the case at bar, since the
appellant could not make and could not have made such a choice, which was impossible
because of the particular rules that applied with respect to the management of
the territory.
[77]
In light of all the
facts established by the evidence, I find on balance that during the period in
issue the appellant worked on a special work site and that his employment was
temporary in nature. For these reasons, the appeal is allowed.
Signed at Ottawa, Canada, this 23rd
day of April 2009.
"Alain Tardif"
Translation
certified true
on this 6th day of
July 2009.
Brian McCordick,
Translator
Email this Content