Citation: 2011TCC539
Date: 20111201
Docket: 2011-386(IT)I
BETWEEN:
GLEN WUNDERLICH,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
In determining his
income for 2008 the Appellant claimed moving expenses of $33,160. In assessing
the Appellant for 2008, the Canada Revenue Agency denied these expenses on the
basis that the Appellant did not have a “new work location”.
[2]
The Appellant commenced
employment with Boehringer Ingelheim (Canada) Ltd. (the
“employer”) on June 1, 2004. The employer was (and still is) located at 5180 South Service Road, Burlington, Ontario.
At that time the Appellant was living at 76 Crossovers Street, Toronto. In February 2007 the Appellant accepted a
promotion and he determined that he would need to move closer to his place of
work. The Appellant and his family moved to Oakville, Ontario and there is
no dispute that the new residence is 50 kms closer to his work than his former
residence. The Respondent did not dispute that the Appellant had incurred the
costs as claimed in relation to his move in 2008 and the Respondent agrees that
the Appellant was not reimbursed for such costs.
[3]
As provided in
subsection 62(1) of the Income Tax Act (the “Act”) a taxpayer may
claim moving expenses (subject to certain limitations that are not in dispute
in this appeal) that have been incurred in respect of an eligible relocation.
An eligible relocation is defined in subsection 248(1) of the Act, in
part, as follows:
“eligible relocation” means a relocation of a taxpayer where
(a) the relocation occurs to enable the taxpayer
(i) to carry on a business or to be employed at a location in Canada (in section 62 and this subsection
referred to as “the new work location”), or
…
(b) both the residence at which the taxpayer ordinarily
resided before the relocation (in section 62 and this subsection referred to as
“the old residence”) and the residence at which the taxpayer ordinarily resided
after the relocation (in section 62 and this subsection referred to as “the new
residence”) are in Canada, and
(c) the distance between the old residence and the new work
location is not less than 40 kilometres greater than the distance between the
new residence and the new work location
except that, in applying subsections 6(19) to (23) and section 62 in
respect of a relocation of a taxpayer who is absent from but resident in
Canada, this definition shall be read without reference to the words “in Canada” in subparagraph (a)(i), and
without reference to paragraph (b);
[4]
Counsel for the
Respondent referred to the decision of then Chief Justice Christie in Bracken
v. Minister of National Revenue, [1984] C.T.C. 2922, 84 DTC 1813 and to
some of the decisions of this Court which followed this decision, including the
decision of Justice Bowman (as he then was) in Jaggers v. The Queen,
[1997] 3 C.T.C. 2372, 97 DTC 1317. In Bracken, then Chief Justice
Christie stated that:
15 My reading of subsection 62(1) is
that it contemplates the existence of four separate elements: old work
location, new work location, old residence and new residence, and the comparison
of two distances, i.e. the distance from the old residence to the new work
location with the distance from the new residence to the new work location, the
former of which must exceed the latter by 40 or more kilometers in order for
the moving expenses to be deductible. In this case two of the four elements are
each combined with one of the other two resulting in two components. That is to
say the old work location was joined with the old residence and the new work
location is joined with the new residence thereby leaving only the distance
between the two components capable of any conceivably meaningful measurement.
In my opinion the subsection is not properly applicable to these circumstances.
[5]
It is important to note
that then Chief Justice Christie’s comments were based on his reading of
subsection 62(1) of the Act which would be his reading of the Act
as it read in 1981, which was the taxation year in issue. At that time
subsection 62(1) of the Act provided (in part) as follows:
62. (1) Where a taxpayer
(a) has, at any time,
(i) ceased to carry on business or to be employed at the location or
locations, as the case may be, in Canada at which he ordinarily so carried on
business or was so employed, or
(ii) ceased to be a student in full-time attendance at an
educational institution in Canada that is a university, college or other
educational institution providing courses at a post-secondary school level,
and commenced to carry on a business or to be employed at another
location in Canada (hereinafter
referred to as his “new work location”), or
(b) has, at any time, commenced to be a student in full-time
attendance at an educational institution (hereinafter referred to as his “new
work location”) that is a university, college or other educational institution
providing courses at a post-secondary school level,
and by reason thereof has moved from the residence in Canada at
which, before the move, he ordinarily resided on ordinary working days
(hereinafter referred to as his “old residence”) to a residence in Canada at
which, after the move, he ordinarily so resided (hereinafter referred to as his
“new residence”), so that the distance between his old residence and his new
work location is not less than 40 kilometres greater than the distance between
his new residence and his new work location, in computing his income for the
taxation year in which he moved from his old residence to his new residence or
for the immediately following taxation year, there may be deducted amounts paid
by him as or on account of moving expenses incurred in the course of moving
from his old residence to his new residence, to the extent that …
[6]
The four elements
identified by then Chief Justice Christie were clearly identified in the
provisions of subsection 62(1) of the Act as it then read. In 1981 there
was a requirement that a person cease to carry on business or be employed (or
cease to be a student) at a particular location and commence to carry on a
business or be employed at another location. These are the first two elements
identified by then Chief Justice Christie. The other two elements (the old
residence and the new residence) have not changed and are not in dispute in
this case. Since in 1981 there was a reference to the work location where the
taxpayer had been employed (and at which he ceased to be employed) and a
reference to another location, it would be logical to refer to the new location
at which the taxpayer was working as the “new work location”.
[7]
By S.C. 1984, c. 45, s.
21, (applicable with respect to relocations occurring after 1983) subsection
62(1) of the Act was amended to read (in part) as follows:
62. (1) Where a taxpayer has, at any time, commenced
(a) to carry on a business or to be employed at a location in
Canada (in this subsection
referred to as “the new work location”), or
(b) to be a student in full-time attendance at an educational
institution (in this subsection referred to as “the new work location”) that is
a university, college or other educational institution providing courses at a
post-secondary school level,
and by reason thereof has moved from the residence in Canada at
which, before the move, the taxpayer ordinarily resided (in this section
referred to as “the old residence”) to a residence in Canada at which, after
the move, the taxpayer ordinarily resided (in this section referred to as “the
new residence”), so that the distance between the old residence and the new
work location is not less than 40 kilometres greater than the distance between
the new residence and the new work location, in computing the taxpayer's income
for the taxation year in which the taxpayer moved from the old residence to the
new residence or for the immediately following taxation year, there may be
deducted amounts paid by the taxpayer as or on account of moving expenses
incurred in the course of moving from the old residence to the new residence,
to the extent that
[8]
The requirement that
the taxpayer must cease to be employed or to be a student was removed. Hence
the requirement for an “old work location” was removed. Commencing in 1983 the
only requirement related to a work location was that the taxpayer had commenced
to be employed at a location in Canada. The label that was put on this location
was the “new work location”. It should also be noted that the same label “new
work location” was also placed on the educational institution if the taxpayer
was a student. This emphasizes the point that “new work location” is simply the
name or the label that was placed on the particular location. The words used as
part of this label (in particular new and work) should not be used to define
the expression “new work location”. “New work location” is the expression or
label that, prior to 1998, was defined in subsection 62(1) of the Act
and was the location where the taxpayer commenced to be employed (or at which
he commenced to be a student).
[9]
By S.C. 1999, c. 22,
subsec. 17(1), (applicable after 1997), subsection 62(1) of the Act was
again amended. In 1999 subsection 62(1) of the Act was amended to read,
in part, as follows:
62. (1) There may be deducted in computing a taxpayer's income for
a taxation year amounts paid by the taxpayer as or on account of moving
expenses incurred in respect of an eligible relocation, to the extent that…
[10]
The requirements
related to the location of the work and the old residence and the new residence
were moved to the definition of “eligible relocation” in subsection 248(1) of
the Act, which is quoted above. The requirement that the taxpayer must
have “commenced …to be employed” has been changed to a “relocation [that]
occurs to enable the taxpayer…to be employed”.
[11]
The argument of the
Respondent is that the Appellant was employed by the same employer prior to his
promotion in 2007 and his move in 2008 and therefore there was no “old work
location” nor was there a “new work location”. The requirement for an “old work
location” was based on the comments of then Chief Justice Christie in Bracken,
above. It seems to me that the comments of then Chief Justice Christie in Bracken,
above, were based on the Act as it read in 1981. Since the Act
was amended in 1984 to remove the requirement that a taxpayer cease to be
employed at a particular location and therefore removed the requirement for an
“old work location”, it seems to me that there is no longer any requirement
that there must be an “old work location”.
[12]
With respect to the
requirement related to a “new work location”, the expression that is defined is
“new work location”. This expression is defined within the definition of
“eligible relocation” in subsection 248(1) of the Act. “Eligible
relocation” is defined, in part, as follows:
“eligible relocation” means a relocation of a taxpayer where
(a) the relocation occurs to enable the taxpayer
(i) to carry on a business or to be employed at a location in Canada (in section 62 and this subsection
referred to as “the new work location”),
[13]
Therefore “the new work
location”, as defined in the definition of “eligible relocation” in subsection
248(1) of the Act, is simply a location in Canada
where the taxpayer is employed. There is no reference in the part of the
subsection in which the definition is found to any requirement that the
location be a “new” location. If instead the provision were to read:
“eligible relocation” means a relocation of
a taxpayer where
(a) the relocation occurs to enable
the taxpayer
(i) to carry on a business or to be
employed at a new work location in Canada,
then it would be necessary to determine how the words
“new” and “work” would modify the location and how they would affect the
determination of whether a particular location is a new work location. However
this is not how the provision reads. The provision refers to “a location in Canada” [at which the person is employed] which is referred
to as “the new work location”. If the provision, instead of stating that it is
referred to as “the new work location”, were to state that it is referred to as
“the work location” or “the specified location”, then “the work location” or “the
specified location” would have the same meaning as would be ascribed to “the
new work location” as only the label for the expression would be changed, not
the meaning assigned to that label. The words used as part of the phrase should
not be used to interpret the phrase when the phrase is defined in the Act.
[14]
The Appellant relied on
the decision of Justice C. Miller in Gelinas v. The Queen, 2009
TCC 111, 2009 DTC 1091, [2009] 4 C.T.C. 2232. In that case the taxpayer changed
her job from a part-time job to a full-time job. Justice C. Miller found that
there was no requirement that there be an “old work location” and found that
the change in the taxpayer’s job from a part-time job to a full-time job was
sufficient to allow the taxpayer to claim moving expenses, even though the
Appellant was employed by the same employer.
[15]
It seems to me that in
this case, based on the decision of Justice C. Miller in Gelinas, the
change in the Appellant’s job would also support the Appellant’s claim for
moving expenses. The Appellant stated that his new position was a management
position. He described his commute as barely manageable prior to his new job
and as a result of his new managerial responsibilities he felt that he needed
to be closer to his work.
[16]
It also seems to me
that there is another basis on which the Appellant’s claim for moving expenses
should be allowed. In Beyette v. Minister of National Revenue, [1989] T.C.J. No. 1001, 89 DTC 701, Justice Taylor
stated that:
The only
issue raised in this appeal, is whether, all other conditions being met (and they
were) the taxpayer is entitled to the deduction claimed for moving to his new
employment site in 1986, from his old employment site after he had already been
working at the new site (commuting daily) for the intervening five year period.
The Respondent's assessment explanation read:
"The general rule is that you may deduct moving expenses
from your income if you move from the residence you ordinarily live in to
commence employment at a new location. As the information submitted indicates
that you commuted from Winnipeg to Beausejour for several years, you do not
meet the above-mentioned criteria."
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.
[17]
In Simard v. The
Queen, [1996] T.C.J. No. 626, [1998]
2 C.T.C. 2312, Justice Watson also allowed a taxpayer to deduct moving expenses
that had been incurred five years after the taxpayer started to work at the “new
work location”, as then defined in section 62 of the Act (now defined
within the definition of “eligible relocation” in subsection 248(1) of the Act).
Justice Watson stated that:
17 I
concur with Judge Taylor. In my view, the Income Tax Act does not
require that the move to the new work location be completed within a prescribed
period of time.
[18]
Justice Watson quoted
the provisions of section 62 as they read at that time. In part section 62
provided that:
(1) Where
a taxpayer has, at any time, commenced
(a)
to carry on a business or to be employed at a location in Canada (in
this subsection referred to as his "new work location"), or
…
and by reason
thereof has moved from the residence in Canada at which, before the move, he
ordinarily resided (in this section referred to as his "old
residence") to a residence in Canada at which, after the move, he ordinarily
resided (in this section referred to as his "new residence"), …
[19]
At the time that the
decisions of this Court in Beyette and Simard were rendered, in
order to claim moving expenses in relation to employment, a person must have
commenced to be employed at a location and by reason of the commencement of
such employment, must have moved. The current wording is that there must be a
relocation which enables the person to be employed at a “new work location”. Just
as the previous version of section 62 of the Act did not provide any
time period within which a move must occur following the commencement of
employment at a “new work location”, the current version of section 62 of the Act
and the definition of “eligible relocation” in subsection 248(1) of the Act
do not provide any time period within which a move must occur following the
commencement of employment at a “new work location”.
[20]
In Attorney General
of Canada v. Hoefele, et al., 95 DTC 5602, Justice Linden, writing on behalf
of the majority of the Justices of the Federal Court of Appeal, stated that:
…What must be
determined is whether those portions of the mortgage loans taken out by the
taxpayers in respect of the Toronto homes, and to which the interest subsidy
was directed, came about 'because of', 'as a consequence of' or 'by virtue of'
employment.
In resolving this question, one must first note that subsection
80.4(1), whether in its older or newly amended form, requires a close
connection between the loan or debt and employment, a connection much closer
than that required by paragraph 6(1)(a) as between benefit and
employment. In the latter, a benefit may arise if it is received merely 'in
respect of' employment. The phrase 'in respect of' connotes only the slightest
relation between two subjects and is intended to convey very wide scope. In Nowegijick
v. The Queen, the Supreme Court of Canada stated the following concerning
the words 'in respect of':
The words 'in respect of' are, in my opinion, words of the widest
possible scope. They import such meanings as 'in relations to', 'with reference
to' or 'in connection with'. The phrase 'in respect of' is probably the widest
of any expression intended to convey some connection between two related
subject matters. [ FOOTNOTE 19 : [1983] 1 S.C.R. 29 at 39 per Dickson, J. See
also Linden, J.A. in Blanchard. ]
On the other
hand, the phrases used in the amended subsection 80.4(1), 'because of',
or 'as a consequence of', as well as in the original version, 'by
virtue of', require a strong causal connection. I find
little or no difference between the meanings of the phrases 'because of',
'as a consequence of' and 'by virtue of'. Each phrase implies a
need for a strong causal relation between subject matters, not merely a
slight linkage between them.
(emphasis added)
[21]
It seems to me that “by
reason of” would be equivalent to “because of”, “as a consequence of” and “by
virtue of”. If the strong causal connection between the commencement of employment
and the move that would have been required when Beyette and Simard were decided, based on the wording of section 62 of
the Act at that time, would not result in a time period within which the
move must occur, then, in my opinion, the change in wording from the
requirement that:
(a)
a person had to
commence work at the “new work location” and move by reason of the commencement
of such employment,
to
(b)
a relocation has
occurred to enable a person to be employed at a “new work location”
cannot be construed as adding a time period within
which a person must move or create any stronger connection or link between the
move and the commencement of employment at the “new work location”. If anything
the change in wording to provide that a relocation must occur to enable the
person to be employed suggests less of a causal connection between the move and
the commencement of employment than did the previous requirement that the
person had to move by reason of commencing employment. There is no longer any
reference to the commencement of employment in section 62 of the Act or
in the definition of “eligible relocation” in subsection 248(1) of the Act.
[22]
Since it seems to me
that it must be accepted that it is not necessary to move before the employment
commences at the “new work location” in order to qualify for the deduction,
whether the move occurs a short time after the commencement of the employment
at the “new work location” or a longer time after such commencement, the
relocation has occurred to enable the person to be employed. It does not seem to
me that there is any reason to now read into the definition of eligible
relocation a requirement that the person must move within a certain amount of
time after commencing employment at a “new work location”. If a move within one
month of commencing such employment enables a person to be employed at that
location, then a move within two months of commencing such employment would
also enable the person to be employed at that location, as would a move within
one year or two years and so on. Therefore the Appellant’s move in 2008 could
be considered to have occurred to enable him to be employed, even though the employment
commenced in 2004.
[23]
As a result, since
there was no dispute that the Appellant otherwise satisfied the requirements of
section 62 of the Act and the definition of “eligible relocation” in
subsection 248(1) of the Act, the Appellant is entitled to deduct moving
expenses in the amount of $33,160 in computing his income for 2008.
[24]
The appeal from the
reassessment made under the Act for the 2008 taxation year is allowed and
the matter is referred back to the Minister of National Revenue for reconsideration
and reassessment on the basis that the Appellant is entitled to deduct moving
expenses of $33,160 in determining his income for 2008.
[25]
The Respondent shall
pay costs to the Appellant which are fixed in the amount of $250.
Signed at Ottawa,
Canada, this 1st day of December, 2011.
“Wyman W. Webb”
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