Date:
20020823
Docket:
2002-71-IT-I
BETWEEN:
ARTHUR
HISCOE,
Appellant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Reasons for
Judgment
Bowie
J.
[1] Mr. Hiscoe appeals from
reassessments for income tax for the 1998 and 1999 taxation
years. The appeals were conducted under the Court's informal
procedure.
[2] Mr. Hiscoe is a long distance
transport truck driver. At the relevant time, he and his wife
worked together driving a transport between California and
Ontario. They were each limited by law to 10 hours driving per
24-hour day, and so they each drove five-hour shifts; after five
hours driving they stopped and changed drivers, usually taking a
meal at the same time. There were two bunk beds behind the seats
in the cab, so that when not driving, they could sleep in the
truck. However, they did also sleep in motels from time to time.
Mr. Hiscoe's contract with his employer required him to pay
for his own meals while away from home. When he slept in motels
he was required to pay for the first night on each trip; the
employer reimbursed him for the second and subsequent
nights.
[3] The only issues in the appeals
before me are as to the amounts that Mr. Hiscoe is entitled
to deduct as expenses under paragraph 8(1)(g) of the
Income Tax Act. That paragraph read:
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:
...
(g) where
the taxpayer was an employee of a person whose principal business
was passenger, goods, or passenger and goods transport and the
duties of the employment required the taxpayer,
regularly,
(i) to
travel, away from the municipality where the employer's
establishment to which the taxpayer reported for work was located
and away from the metropolitan area, if there is one, where it
was located, on vehicles used by the employer to transport the
goods or passengers, and
(ii) while so away
from that municipality and metropolitan area, to make
disbursements for meals and lodging,
amounts so
disbursed by the taxpayer in the year to the extent that the
taxpayer has not been reimbursed and is not entitled to be
reimbursed in respect thereof;
Whatever amount is
established for meals under paragraph 8(1)(g) must be
further limited by subsection 67.1(1).
67.1(1)
For the purposes of this Act, other than sections 62, 63
and 118.2, an amount paid or payable in respect of the human
consumption of food or beverages or the enjoyment of
entertainment shall be deemed to be 50% of the lesser
of
(a) the
amount actually paid or payable in respect thereof,
and
(b) an
amount in respect thereof that would be reasonable in the
circumstances.
[4] Mr. Hiscoe claims the
following:
Lodging: At the hearing of the
appeals, he limited his claim to that for which he could produce
receipts. He had no receipts at all for 1999, and so makes no
claim. His receipts for 1998 total US$652.07. The
Respondent's counsel challenged two of these on the basis
that they were for consecutive nights, raising the inference that
the Appellant was not working but on vacation for at least two of
the nights in question. The Appellant's log books would have
settled this issue, but he did not have them available at the
hearing, and he was, understandably, unable to remember the
specific occasions.
Meals: The
Appellant's claim for meals is based on US$40 per day for
320 days in 1998 and for 250 days in 1999. In assessing him,
the Respondent made the assumption that he worked away from home
for only 196 days in 1999. This assumption was based on an
examination of the Appellant's log books for 1999. Again,
this dispute is capable of resolution through an examination of
the Appellant's log books, which he did not bring to the
hearing. The Respondent also disputes the Appellant's claim
that he spent, on average, US$40 daily for meals while travelling
in 1998 and 1999. The Respondent, through an Information
Circular, has taken the position
that taxpayers must either keep a written record of the cost of
each meal that they claim, or else be content with a deduction
based on $11 per meal, which totals C$33 per day. This is only
slightly more than one-half of the Appellant's claimed amount
at the then prevailing exchange rate of C$1.50 =
US$1.00.
[5] Additional
Amount: The
Appellant claims $6.00 per day for incidental expense while
travelling. In evidence, he said that the reason for this claim
is that on the days when he did not sleep in a motel, but in the
cab, he paid US$5.00 per day to shower at truck stops. This, he
says, amounts to C$7.50 per day. Under this head, he claimed
$1,920 in 1998, but he made no claim in 1999. The
Respondent's position is that the Act permits
deductions only for meals and lodging, and so no additional
amount for showers, or any other type of expense, can be
deducted. The Appellant was not able to support this claim with
receipts.
[6] Before I deal with the
Appellant's specific claims, it will be appropriate to say a
few words about the principles to be applied. First, it is for
the Appellant to prove his claim. The Minister of National
Revenue, in assessing, has allowed him deductions of $5,280 in
1998 and of $3,234 in 1999 for meals. He has allowed nothing for
lodging. The Appellant is only entitled to deduct more than that
if he can establish that he spent more than that. I agree with
the following statement made by Garon J., as he then was, in
Marcoux (D.) v. M.N.R., 91 DTC 485 at page
488:
With
respect to meal expenses, no supporting documents were submitted,
as I said earlier. I do not believe that the Income Tax
Act requires that supporting documents be provided in respect
of each expense item, particularly in cases where taxpayers spend
most, if not practically all their time travelling on behalf of
their employer. In the absence of a legislative provision
requiring a receipt as a condition for deduction of an expense,
we must rely on the general rules of evidence. I do not believe
that the best evidence rule necessarily applies, in view of
subsection 14(2) of the Tax Court of Canada Act.
Nonetheless, the evidence must be strong enough for the Court to
be firmly convinced.
[7] Second, I
should make it clear that the Minister's counsel took the
position not only that the Appellant had not proved the amount he
spent for meals, but in the alternative, that any amount greater
than C$33 per day does not pass the test of reasonableness
imposed by subsection 67.1(1). Reasonableness, however, is not
governed by the Minister's opinion, or even the Court's.
The question to be asked is whether anyone in the Appellant's
circumstances, acting reasonably, could pay the amount in
question for meals.
[8] Third, the Minister's counsel
did not argue in the present case that the word "and"
in subparagraph 8(1)(g)(ii) must be read conjunctively, so
that no claim for meals can be made without a claim for lodging
in respect of the same trip. For that reason, my recent decision
in Crawford et al v. The Queen has no
application here.
[9] I turn now to the specific claims
made by the Appellant. Mr. Hiscoe stated candidly that he had his
log books for 1999 at home, but had not brought them with him to
Court. Had he done so the matter of the number of days he worked
away from his place of residence in 1999 would have been
resolved. He has not discharged the onus of showing that he had
more than 196 days away from home in 1999. There is no dispute
that he is entitled to meals for 320 days in 1998.
[10]
I accept the Appellant's evidence that he spent, on average,
US$40 per day for meals in 1998 and 1999. While he could not
recall every meal, nor be expected to, I believe his estimate to
be reasonably accurate. Nor do I think it an unreasonable amount
to have spent each day in 1998 and 1999. It is in line with US$40
allowed by Hamlyn J. in Dummitt v. The Queen,
(unreported), and also with the decision of Sarchuk J. in
Wilkinson v. The Queen, [2002] 2. C.T.C. 2662.
[11]
The amounts to be allowed for meals therefore are:
For
1998: US$40 x 320 days x 50% = US$6,400
or C$9,600
For
1999: US$40 x 196 days x 50% = US$3,920
or C$5,880
[12]
For lodging, the Appellant's receipts for 1998 total
US$652.07 or C$978.10. This amount will be allowed. The fact that
on two occasions the Appellant stayed for two consecutive nights
in the same California municipality does not mean that he was not
required to be away from home on any of those nights. There are
several reasons why this could happen in the course of work. The
Appellant suggested that he may have reached his limit of hours
for that week. It does not surprise me that he was unable to
recall, more than three years later, what were the specific
reasons. Nor does the fact that one motel bill was paid by his
wife's credit card lead me to believe that it was not an
expense of the Appellant, and ultimately paid by him.
[13]
Showers: The amount claimed is for
1998 only, and it is 320 x C$6 = C$1,920. This is less than the
amount that the Appellant said that he paid for showers (320 x 5
x 1.5 = C$2,400). In my view, the word "lodging" must
be taken to include within it all the constituent elements of
what is commonly included in the meaning of that word. Those
include not only the use of a room with a bed, but the bathing
and toilet facilities that go with that room. The Appellant, when
he was not staying in a motel, purchased the bathing and toilet
component of lodging separately, and is entitled to a deduction
for it. What is not known is the number of days during 1998 that
he did not stay at a motel. His evidence was that on each trip he
had to pay for the first night he stayed at a motel; thereafter
his employer reimbursed him. As he made no attempt in his
evidence to establish the number of nights that he was away from
home and did not sleep in a motel, I have no evidentiary basis to
support any estimate. As Garon J. put it, the evidence is not
strong enough that I could be firmly convinced as to the
correctness of any estimate of the number of nights.
[14]
The Appellant is therefore entitled under paragraph
8(1)(g) to deduct, in total:
1998:
Meals
C$9,600.00
Lodging
978.10
Total
C$10,578.10
1999:
Meals
C$5,880.00
Lodging
Nil
Total
C$5,880.00
The appeals are
allowed, and the reassessments are referred back to the Minister
for reconsideration and reassessment accordingly.
Signed at Ottawa, Canada,
this 23rd day of August, 2002.
J.T.C.C.
COURT FILE
NO.:
2002-71(IT)I
STYLE OF
CAUSE:
Arthur Hiscoe and Her Majesty the Queen
PLACE OF
HEARING:
Kitchener, Ontario
DATE OF
HEARING:
August 14, 2002
REASONS FOR JUDGMENT
BY: The Honourable Judge E.A. Bowie
DATE OF
JUDGMENT:
August 23, 2002
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent: Justine Malone
COUNSEL OF
RECORD:
For the
Appellant:
Name:
N/A
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-71(IT)I
BETWEEN:
ARTHUR
HISCOE,
Appellant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Appeals heard on August
14, 2002, at Kitchener, Ontario, by
the Honourable Judge
E.A. Bowie
Appearances
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Justine Malone
JUDGMENT
The appeals from reassessments of tax made under the Income
Tax Act for the 1998 and 1999 taxation years are allowed and
referred back to the Minister of National Revenue for
reconsideration and reassessment on the basis that in computing
income, the Appellant is entitled to deduct for meals and lodging
the amounts of $10,578.10 and $5,880, respectively, pursuant to
paragraph 8(1)(g) of the Act.
Signed at Ottawa, Canada,
this 23rd of August, 2002.
J.T.C.C.
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