Citation: 2014 TCC 24
Date: 20140122
Dockets: 2011-933(IT)I
2013-1563(IT)I
BETWEEN:
ABBEY K. SIRIVAR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hogan J.
I. Introduction
[1]
This is an appeal under
the informal procedure from assessments made under the Income Tax Act
(the “ITA”) for the Appellant’s 2008 and 2011 taxation years. The issue before
me is whether the Appellant, a tax officer with the Canada Revenue Agency (the
“CRA”) during the periods at issue, was entitled to deduct certain expenses as
moving expenses under section 62 of the ITA.
II. Factual Summary
[2]
From February 2002 to
January 2008, the Appellant worked as a tax officer for the CRA in Ottawa. He resided in a townhouse which he owned in Ottawa.
[3]
In January 2008, he
moved to Toronto to take up a new position with the CRA. The first week he
lived in a hotel. Afterwards, he rented a room in a private home.
[4]
The Appellant testified
that he intended to purchase a home in Toronto but postponed the purchase
because he was required to work at different locations. For about 20 weeks
during the relevant period, the Appellant was required to return to Ottawa to work on a large case that was under appeal. He was reimbursed for only eight of
the 20 weeks for which he incurred travel expenses. Moreover, for most of the
period, there was uncertainty as to which CRA office he would report to in Toronto. Higher housing prices in Toronto also prevented the Appellant from acquiring a
home there in 2008.
[5]
In March 2011, the
Appellant finally sold his Ottawa residence. He claimed approximately $5,000 in
respect of his home ownership expenses. According to the Appellant, the Ottawa residence was unoccupied during 2011. In prior years, the Appellant had rented out
rooms to relatives to help cover his home ownership expenses. His cousin,
Tefiro Kyeyune, testified that he moved out of the Appellant’s residence in
2010. However, he could not confirm that the home was unoccupied in 2011.
[6]
The following table is
a summary of the expenses which were claimed by the Appellant and disallowed by
the Minister of National Revenue:
|
Year
|
Expense
|
Amount claimed
|
Amount allowed
|
Amount in dispute
|
|
2008
|
Room rental in Toronto
|
$5,250
|
$275
|
$4,975
|
|
9 trips to Ottawa
|
$677.57
|
$196.88
|
$480.69
|
|
2011
|
Ottawa home ownership expenses
|
$5,000
|
$0
|
$5,000
|
|
Travel expenses
|
$940.16
|
$0
|
$940.16
|
|
Storage and moving
expenses
|
$4,828.80
|
$4,268.80
|
$560
|
III. Positions of the Parties
[7]
The Appellant argues
that the expenses claimed by him are deductible as moving expenses under section
62 of the ITA.
[8]
With respect to the
expenses disallowed for the 2008 taxation year, the Respondent argues that
paragraph 62(3)(c) of the ITA limits lodging expenses to those incurred
for a maximum period of 15 days, which represent an amount of $275 in the
present case. The Respondent further submits that the disallowed travel
expenses related to the Appellant’s work assignment and accordingly do not
qualify as moving expenses.
[9]
With respect to the
expenses disallowed for the 2011 taxation year, the Respondent argues that the
same expenses were claimed by the Appellant as rental expenses in 2010 and were
allowed. Furthermore, the Appellant failed to show that the property was
unoccupied in 2011.
IV. Analysis
[10]
This matter concerns
the application of section 62 of the ITA. That section reads as follows:
62(1) Moving
expenses - 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
(a) they were not paid
on the taxpayer’s behalf in respect of, in the course of or because of,
the taxpayer’s office or employment;
(b) they were not deductible because of
this section in computing the taxpayer’s income for the preceding taxation
year;
(c) the total of those amounts does not
exceed
(i) in
any case described in subparagraph (a)(i)
of the definition “eligible relocation” in subsection 248(1),
the total of all amounts, each of which is an amount included in computing
the taxpayer’s income for the taxation year from the taxpayer’s
employment at a new work location or from carrying on the business at
the new work location, or because of subparagraph 56(1)(r)(v) in respect of the
taxpayer’s employment at the new work location, and
(ii) in any case
described in subparagraph (a)(ii)
of the definition “eligible relocation” in subsection 248(1),
the total of amounts included in computing the taxpayer’s income for the
year because of paragraphs 56(1)(n)
and (o); and
(d) all reimbursements
and allowances received by the taxpayer in respect of those expenses are
included in computing the taxpayer’s income.
(2) Moving expenses of
students - There may be deducted in computing a taxpayer’s income for a
taxation year the amount, if any, that the taxpayer would be entitled to deduct
under subsection (1) if the definition “eligible relocation” in
subsection 248(1) were read without reference to subparagraph (a)(i) of that definition and
if the word “both” in paragraph (b)
of that definition were read as “either or both”.
(3) Definition of
“moving expenses” - 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,
(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.
. . .
248(1) Definitions
- In this Act,
“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
(ii) to be a student in
full-time attendance enrolled in a program at a post-secondary level
at a location of a university, college or other educational institution (in
section 62 and in this subsection referred to as “the new work
location”),
(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).
[11]
In Storrow v. The
Queen,
the Federal Court Trial Division interpreted subsection 62(3) as follows (at
pages 598-99):
The main issue, in this
appeal, is whether the additional monies laid out by the taxpayer, when he
moved, in acquiring a new residence reasonably comparable to his old residence,
were
... 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 ...
I
agree with certain initial propositions put forward by counsel for the
plaintiff:
(a) Where a definition section uses the word
"includes", as it does in subsection 62(3), then the expression said
to be defined includes not only those things declared to be included, but such
other things “... as the word signifies according to its natural import.”
(b) The words "moving expenses" must be
construed in their ordinary and natural sense in their context in the
particular statute.
The
plaintiff submits that a moving expense is an expense of moving from one
dwelling to another; it includes all costs directly and solely related to the
move from the time of the decision to leave to the time of resettlement. The
additional monies laid out to acquire a comparable residence in Vancouver, the interest on that amount, and the costs of registration, of installing the
dishwasher and new locks were all incurred, it is said, because of the
move from one residence to another.
For
the defendant, it is contended the amounts in issue are not really expenses at
all; they are the extra costs incurred, in this case, in replacing an
asset, the old residence.
I
agree generally with the defendant's contention.
The
disputed outlays were not, to my mind, moving expenses in the natural and
ordinary meaning of that expression. The outlays or costs embraced by those
words are, in my view, the ordinary out-of-pocket expenses incurred by a
taxpayer in the course of physically changing his residence. The expression
does not include (except as may be specifically delineated in subsection 62(3))
such things as the increase in cost of the new accommodation over the old
(whether it be by virtue of sale, lease, or otherwise), the cost of installing
household items taken from the old residence to the new, or the
cost of replacing or re-fitting household items from the old residence (such as
drapes, carpeting, etc.). Moving expenses, as permitted by subsection 62(3), do
not, as I see it, mean outlays or costs incurred in connection with the
acquisition of the new residence. Only outlays incurred to effect the physical
transfer of the taxpayer, his household, and their belongings to the new
residence are deductible.
[12]
In A.G. of Canada v. Séguin,
the Federal Court of Appeal adopted a similar interpretation:
8 According
to the ordinary meaning of the words used, the provision includes those
expenses incurred for physically moving, changing one's residence, and certain
other expenses directly related to the actual move and resettlement, and not
some amount intended to compensate for accessory damages that are
unrelated to the actual move to and resettlement in the new residence. Thus, it
excludes the interest expenses on the old residence that do not pertain
directly to the physical move of the taxpayer and his family, but
instead pertain to the bank loan he took out on his old residence.
[13]
The Respondent submits
that paragraph 62(3)(c) limits the general deduction of lodging expenses
to a period of up to 15 days. It relies for this on Justice Favreau’s
decision in Christian v. The Queen:
20 The disputed amount in respect of the claim for temporary living
expenses (accommodation) is $4,550.88. The Minister has accepted an amount of
$2,298, which represents 13 days and is within the 15-day maximum period
allowed by paragraph 62(3)(c) of the Act. This statutory requirement
allows of no exceptions and must be met. The Minister has accepted the claim
for those expenses supported by receipts that were incurred while the Appellant
stayed in the London area.
[14]
I note that paragraph
63(2)(c) refers to the deduction of “the cost . . . of meals and lodging”
for temporary accommodations. In the instant case, the Appellant’s claim is for
lodging alone, which is not specifically covered by paragraph 63(2)(c).
In my opinion, the provision contemplates a claim for room and board expenses. If
Parliament had intended to restrict lodging expenses to 15 days, it would
have done so explicitly. Paragraph 62(3)(c) is meant to include things
that might not otherwise be considered “moving expenses”.
[15]
The facts in Christian
are also substantially different than those in the instant case. The evidence
shows that in the present case the Appellant’s employer prolonged the
completion of the Appellant’s move to Toronto. The Appellant could not find a
permanent home because it was unknown to him where his exact workplace in Toronto would be and because his employer wanted him to divide his time between Toronto and Ottawa. The Appellant should not be penalized for accommodating the needs of
his employer.
V. Conclusion
[16]
With respect to the
balance of the disputed expenses, the Appellant has failed to prove that the
amounts claimed by him are deductible under section 62. The travel expenses
that were disallowed for 2008 were incurred in relation to the Appellant’s
employment. With respect to the amount claimed for the 2011 taxation year, the
evidence shows that those expenses were deducted and allowed as rental expenses
for the 2010 taxation year. In summary, the Appellant failed to show that the
balance of the disputed expenses qualified as moving expenses for the purposes
of section 62 of the ITA.
Signed at Montréal, Québec, this 22nd day of January 2014.
“Robert J. Hogan”
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