Citation: 2010TCC60
Date: 20100202
Docket: 2009-2472(IT)I
BETWEEN:
JOHN MYLES,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Sheridan, J.
[1] The Appellant,
John Myles, is appealing the disallowance of his claim for moving expenses
under paragraph 62(1)(a) of the Income Tax Act (the “Act”):
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: [Emphasis added.]
[2] The term
“eligible relocation” is defined in subsection 248(1) of the Act, the
relevant portions of which read:
“eligible
relocation” means a relocation of a taxpayer where
(a) the
relocation occurs to enable the taxpayer
(i) … 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
…
[Emphasis
added.]
[3] There is no
dispute that Mr. Myles moved from Abbotsford, British Columbia (the “old residence”
under the definition above) to take a new job in Victoria, British Columbia. The
only question is whether that “eligible relocation” terminated in September
2006 when he and his wife moved into a rented apartment in Victoria (the
“Victoria Flat”), or in April 2007 when they took possession of the house
they ultimately purchased in that city (the “Victoria House”).
[4] The Minister’s
position is that Mr. Myles “ordinarily resided” in the Victoria Flat as of
September 2006 and was entitled to the moving expenses claimed for that
taxation year only. The Minister disallowed the 2007 moving expenses because the
requirements of paragraphs (a) and (c) of the definition of
“eligible relocation” were not satisfied; namely, the move from the Victoria
Flat to the Victoria House was not for new employment; and the distance between
the two was less than 40 kilometers.
[5] Mr. Myles’
position is that he never “ordinarily resided” in the Victoria Flat; his time
there was merely a transitory part of the overall move from Abbotsford to Victoria.
[6] Mr. Myles
testified on his own behalf and was an entirely credible witness.
[7] For the reasons
set out below, I am satisfied that Mr. Myles did not ordinarily reside in the
Victoria Flat during the period September 2006 to April 2007 and that, for
the purposes of the definition of “eligible relocation”, his “new residence”
was the Victoria House which he moved into in April 2007.
[8] In 2004, Mr.
Myles and his wife, Natalie, were living in Abbotsford in a house they had
owned for some 25 years. At that time, he was working as a consultant with an
architectural firm and commuting daily between Abbotsford and Vancouver.
Because this was adversely affecting his health, he and his wife decided some
drastic changes were in order. He found a new job, exchanging self-employment
in Vancouver for a salaried position in Victoria.
Central to the plan was to find a new home in Victoria close to his workplace.
[9] Mr. Myles took
up his new position in Victoria in May 2005. Mrs. Myles was still working in
Abbotsford and, in any case, had to stay behind to sell their Abbotsford home,
so from May 2005 to September 2006, Mr. Myles rented rooms in Victoria, returning
home to Abbotsford every weekend.
[10] The sale of the
Abbotsford House was crucial to their relocation plans. First of all, Victoria
housing prices were higher and the real estate market more active than in
Abbotsford. Without the equity from the sale of their Abbotsford home, they would
have been unable to make an offer without conditions, a prerequisite to being
competitive in the Victoria market.
[11] Thus it was that
in April 2006, they tried selling the Abbotsford home privately but ultimately
had to seek the help of an agent. Meanwhile, Mr. Myles began taking bits and
pieces of their household with him on his weekly trips back to Victoria.
[12] In September
2006, a month before the closing date of the sale of their house in Abbotsford,
Mr. and Mrs. Myles rented the Victoria Flat, the main floor of a three-unit
rental property and moved all of their belongings to Victoria. The
Victoria Flat was rented on a month-to-month, short-term basis. Because they no
longer had a home in Abbotsford, they arranged for mail delivery at the
Victoria Flat. Indeed, Mr. Myles was careful to use the Victoria Flat
address when completing his 2006 income tax return. They also arranged for
newspaper delivery.
[13] To say the
Victoria Flat cramped their style is an understatement. Their home in Abbotsford
had been quadruple the size of the 700-square-foot Victoria Flat; that meant
that most of their things remained in boxes, stored in a garage on the property
(as it happened, the garage flooded in November 2006 and the contents had to be
moved to a commercial storage site) with the surplus spilling over into the
living room, dining room, spare bedroom and any other available space in the
Victoria Flat.
[14] Given these
crowded conditions, the Myles, along with their dog and two cats, did not
“settle in” the way they might have in other circumstances. Mr. Myles did not
unpack his woodworking equipment; they did not hook up the stereo; they learned
to maneuver around the large upright freezer that graced their tiny kitchen. It
goes without saying that they did not decorate. Nor did they make overtures to
their new neighbours.
[15] What they did do
was devote every spare moment to finding a new home in Victoria. They
found a realtor; walked the neighbourhoods; went to open houses; scanned the
real estate listings on the internet and in the local paper. Eventually, their
efforts paid off and in April 2007, they and their domesticated menagerie moved
into the Victoria House.
[16] In these
circumstances, it cannot be said that Mr. Myles “ordinarily resided” in the
Victoria Flat. There being no statutory definition of the term “ordinarily
resident”, its meaning has developed in the jurisprudence. In Thomson v. Minister
of National Revenue[1], Estey, J. held that:
A reference to
the dictionary and judicial comments upon the meaning of these terms indicates
that one is “ordinarily resident” in the place where in the settled routine of
his life he regularly, normally or customarily lives. One “soujourns” at a
place where he unusually, casually or intermittently visits or stays. In the
former, the element of permanence; in the latter that of the temporary
predominates. The difference cannot be stated in precise and definite terms,
but each case must be determined after all of the relevant factors are taken
into consideration, but the foregoing indicates in a general way the essential
difference. It is not the length of the visit or stay that determines the
question. …[2]
[17] Having thus noted
the fact-specific nature of the inquiry, after reviewing the evidence in some
detail, Estey, J. went on to conclude that the taxpayer, a retired businessman
of some means who divided his time between houses in North Carolina and New
Brunswick, had been “ordinarily resident” in Canada during his time in East
Riverside:
In 1932 he
spent the summer months at St. Andrews, New Brunswick, and again in 1933 and 1934.
In the latter year he built and furnished another residence, at a cost of
approximately $90,000, at East Riverside near Rothesay, New Brunswick. This
residence at East Riverside was built in order that his wife might have the
opportunity of visiting and enjoying the friendship of her relatives and
friends in Saint John and Rothesay, and that he himself might enjoy the golf
course near the residence. He employed a family who occupied the servants’
quarters throughout the year, and though the rest of the house was closed
during the appellant’s absence, they looked after the premises. His practice
was to move into this residence in the Spring and remain until some time in the
Fall of each year. ...
This residence
at East River was maintained in a manner that made it always at his disposal
and available at any time. When there his activities of life were centred about
that point. It was to and from there he made his visits to other places. He and
his family were then living there. It would appear that the appellant was
maintaining more than one residence to which he could and did come and go as he
pleased.[3]
…
The appellant
selected the location, built and furnished the residence for the purpose
indicated, and has maintained it as one in his station of life is in a position
to do. In successive years his residence there was in the regular routine of
his life acting entirely upon his own choice, and when one takes into
consideration these facts, particularly the purpose and object of his
establishing that residence, the conclusion appears to be unavoidable that
within the meaning of this statute he is one who is ordinarily resident at East
Riverside, New Brunswick …[4]
[18] In the present
matter, the same cannot be said of the Victoria Flat. Nothing about the way Mr.
and Mrs. Myles conducted themselves while at the Victoria Flat was consistent
with what had been their “settled routine” prior to the move to Victoria. They
went from a spacious dwelling, full of furniture and effects, large enough to
accommodate family, neighbours and pets to what was essentially a hotel room cum
storage unit. Though not particularly comfortable, the Victoria Flat served the
“purpose and object” of providing a base from which the Myles could devote
themselves to finding an affordable permanent home close to Mr. Myles’
workplace in Victoria. So focussed were they on this goal that they invested no
time in establishing themselves in either the Victoria Flat or the
neighbourhood, in general.
[19] In support of the
Minister’s position that Mr. Myles had got into a “settled routine” at the
Victoria Flat, counsel for the Respondent pointed to the fact that he had his
family with him, had his mail redirected and newspapers delivered to that
address, and had slept and ate there. In some circumstances, such facts might
well be capable of establishing a taxpayer had ordinarily resided in a
particular location. That is not the case here. With only one bedroom available
for habitation, Mr. Myles’ sons could not stay with them during university
breaks. Living cheek by jowl with packing boxes, denied access to a quarter
century’s belongings, unable to enjoy any of their normal hobbies or social
pursuits, Mr. and Mrs. Myles had not yet realized their goal of relocating to Victoria. In
these circumstances, it can hardly be said that because the Victoria Flat was
as close to Mr. Myles’ workplace as the Victoria House, it was equally
beneficial to his health. As for the mail delivery and newspaper subscription,
I do not find these factors significant; as Mr. Myles submitted, he could
have arranged for the same services had he been living in a hotel while he and
his wife were house-hunting. The fact that he notified the Minister of his
temporary address at the Victoria Flat shows only that he is a taxpayer who
complies with his obligations under the Act. All in all, the evidence
leads to the conclusion that the time the Myles spent at the Victoria Flat was
merely part of their transition from their “old residence” in Abbotsford to a
more tranquil lifestyle in the Victoria House, their “new residence” in Victoria.
[20] Counsel for the
Respondent quite correctly reminded the Court that the purpose of the moving
expense deduction is to facilitate Canadians in seeking employment in all parts
of the country; it is not geared to underwrite casual, local moves. Nothing in
the evidence supports the conclusion that Mr. Myles was out to abuse the
statutory provisions. Indeed, I agree with his speculation that had his move
not spanned two taxation years, the Minister might never have been troubled by
the deductions claimed. And I note, in conclusion, that none of the amounts
claimed are disputed by the Minister.
[21] The appeal is
allowed and referred back to the Minister of National Revenue for
reconsideration and reassessment on the basis that Mr. Myles is entitled to
moving expenses, as claimed, for 2007.
Signed at Toronto,
Ontario, this 2nd day of February, 2010.
“G. A. Sheridan”
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