The Queen v. Wright, 81 DTC 5004, [1981] CTC 14 (FCTD)

Grant, DJ:—This is an appeal by the plaintiff from a decision of the Tax Review Board dated December 13,1977, whereby it allowed the defendant’s appeal from the reassessment of his income tax returns for the year 1975 by the Minister of National Revenue. Such taxpayer in such returns sought to deduct the sum of $2,142 on account of travelling expenses incurred by him in going to and coming from his employment during the year. The Minister in his reassessment of such returns disallowed such amount. The Board found the defendant entitled to such deduction and referred the matter to the Minister for reassessment thereof on the basis of such Board’s decision.

The taxpayer is an electrician who lives in London. In 1974 he began working for Comstock International Limited a large international company with head offices at such city of London which was engaged in installation of electrical equipment in the premises of its customer. Its head office was in such city of London where its administrative offices were located but it performed no electrical manufacture or installation there. Such work is performed by the company on the customer’s premises. During 1975 such company was engaged in providing all electrical equipment and installing the same in buildings being erected for the Ontario Provincial Police Commis- sion at Aylmer, Ontario. The company maintained a work site on the premises which contained provision for storage of employees tools but the taxpayer usually took his home each night. During 1974 the taxpayer had worked for a time for such employer on a construction site in London but in the year 1975 he worked only at the Aylmer police building. He drove his own vehicle each day direct from his home to the work site at Aylmer where he reported for work. He was not obliged to report to the London office of his employer at any time except to give information concerning his qualifications on the day that he was first employed in 1974. Comstock paid the taxpayer’s mileage to and from the work site in those cases where the work site was a distance of 23 miles or more in a straight line from the company’s offices in London. If such distance was less than that he had to bear his own travelling expenses. He provided his own tools. A company foreman at the work site kept record of his working time. His regular work hours were from 8 am to 4:30 pm. He never used his vehicle on company business while working on the job or at any other time. He was paid by the hour only for the time he was actually working at such work site. There was no stipulation in his employment contract requiring him to use his motor vehicle in going to or from his work nor as to where he should live.

Sections of the Income Tax Act which have application to the assessment of the taxpayer’s income are as follows:

Deductions allowed:

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.

Travelling expenses:

(h) Where the taxpayer, in the year,

(i) was ordinarily required to carry on the duties of his employment away from his employer’s place of business or in different places,

(ii) under the contract of employment was required to pay the travelling expenses incurred by him in the performance of the duties of his office or employment, and

(iii) was not in receipt of an allowance for travelling expenses (balance of subsection not applicable)

amounts expended by him in the year for travelling in the course of his employment.

General Limitation:

(2) Except as permitted by this section, no deductions shall be made in computing a taxpayer’s income for a taxation year from an office or employment.

The first obstacle in permitting the taxpayer to make such deduction is that such expenditure must be under such section “for travelling in the course of his employment”. Travelling between his home and his place of employment is not part of the duties of his employment.

Ricketts v Colquhoun 1926, AC 1;

Mahaffy v MNR, [1946] SCR 450; [1946] CTC 135; 3 DTC 937; D B Lakey v MNR, [1967] Tax ABC 262; 67 DTC 222;

G K Madsen v MNR, [1970] Tax ABC 71% 70 DTC 1475;

A M if sud v MNR, [1978] CTC 2537; 78 DTC 1408;

H Luks v MNR, [1959] Ex CR 45; [1958] CTC 345; 58 DTC 1194;

In D Broese v MNB, [1973] CTC 2251; 73 DTC 207, the employers head office was in Montreal with a branch office in Toronto but the taxpayer drove to his employment at a construction site in Oshawa where he ordinarily reported for work and carried out his duties. It was held that one of the employee’s place of business was the construction site in Oshawa and the taxpayer was not entitled to deduct his travelling expenses in going to and returning from his work.

The result is different where the employee is obliged to perform his duties in more than one place. In such case he comes within the words of the statute namely: “He is ordinarily required to carry out the duties of his employment in different places.’’ Such situation is dealt with by Cattanach, J in The Queen v E E Deimert, [1976] CTC 301; 76 DTC 5187 where he states at 310 [6139]:

It is a variant of the category of itinerant jobs that the concept of two places of work had been introduced particularly in Owen v Pook, [1969] 2 AllER 1, and Taylor v Provan, [1974] 1 All ER 1201, both decided by the House of Lords. Basically, that variant is that if a man has to travel from one place of work to another place of work he may deduct the expense of this travel because he is travelling on his work, but not those travelling from either place or work to his home or vice versa unless his home happens to be a place of work. For this concept to apply, the facts must be that the work or the job must be done in two places. It is not enough that the man might choose to do part of the work in a place separate from where the job is objectively located.

But neither of the decisions in Owen v Pook (supra) or Taylor v Provan (supra) detract from the authority of Ricketts v Colquhoun (supra). In Owen v Pook their Lordships did not say that Ricketts v Colquhoun was wrongly decided, but on the contrary it was distinguished on its facts. In the Ricketts case there was only one place of employment, Portsmouth. No duties were performed in London. In Owen v Pook there was a finding of fact that the work was done in 2 places, first when the doctor was contacted by the hospital authorities and secondly at the hospital. Similarily in Taylor v Provan, Owen v Pook was applied and Ricketts v Colquhoun was distinguished on the facts.

Mr Justic Thurlow anticipated the decisions of the House of Lords in Owen v Pook and Taylor v Provan by some two years in Cumming v MNR, [1968] 1 Ex CR 425; 67 DTC 5312;[1967] CTC 462. In the Cumming case, an anaesthetist held an appointment at a hospital where he rendered all his services to his patients. All of the administrative work in connection with his practice was carried on at his home. No facilities were available to him at the hospital for this purpose. The appellant’s expenses in travelling to the hospital where he treated his patients from his home base where he performed all administrative work and returning to his home were allowed as a deduction. Because the doctor was engaged in a business, Thurlow, J pointed out that the Luks (supra) case the taxpayer was an employee and so the Luks case had no application to the Cumming case.

In T Healy v Her Majesty the Queen, [1979] CTC 44; 79 DTC 5060, the taxpayer was allowed to deduct his travelling expenses. He lived in Toronto where he ordinarily worked for the Toronto Jockey Club. He was also required to work for such club at its tracks in Fort Erie about one third of the year. Thus he came within the words of paragraph 8(1 )(h) of the Act in that he was required to work for his employer “in different places’’. Heald, J in delivering the judgment of the Court of Appeal at 48 [5064] stated:

The objective of paragraph 8(1)(h) is to enable employees who are required by their employment to work from time to time away from the places at which they usually work, to deduct their out-of-pocket expenses in so doing. Paragraph 8(4) is designed to prevent abuses in the application of paragraph 8(1)(h) but not to prevent the legitimate duduction of expenses properly incurred while working at different places. As I see it, the rather restrictive interpretation adopted by the Trial Judge would unfairly detract from the overall objective of the sections.

In the present case the taxpayer worked throughout the whole 1975 taxation year for his employer at its work site in Cayuga.

To claim an exemption the taxpayer must bring his claim clearly within the provisions of the Income Tax Act. IV G Lumbers v MNR, [1943] Ex CR 202; [1943] CTC 281; 2 DTC 631.

For the above reasons the appeal is allowed and the decision of the Tax Review Board is set aside and the reassessment by the Minister is confirmed.

Pursuant to subsection 178(2) fo the Act the Minister shall pay to the respondent all his reasonable and proper costs of this appeal.