Date: 20020204
Docket: 2001-2555-IT-I
BETWEEN:
SYED HASSAN JAFFAR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Beaubier, J.T.C.C.
[1] This appeal pursuant to the
Informal Procedure was heard at Toronto, Ontario on January
25, 2002. The Appellant testified. He was born in 1938 and has a
B. Admin. He is a systems analyst.
[2] Paragraphs 3 to 10 inclusive of
the Reply to the Notice of Appeal describe the issue in dispute.
They read:
3. In filing
his income tax return for the 1999 taxation year, the Appellant
reported income from employment in the amount of $92,642.16
[$62,731.69US*1.476800174] and claimed expenses from employment
in the amount of $37,166.63 [$25,167.00 US*1.476800174].
4. By Notice
of Assessment dated September 5, 2000, the Minister of National
Revenue (the "Minister") assessed the appellant for the
1999 taxation year and disallowed the expenses from employment
claimed in the amount of $37,166.63.
5. By Notice
of Reassessment dated December 18, 2000, the Minister reassessed
the Appellant's income tax return for the 1999 taxation year
and allowed expenses from employment in the amount of $37,394.14
[$25,167.00US*1.48584024].
6. By Notice
of Reassessment dated April 6, 2001, the Minister further
reassessed the Appellant's income tax return for the 1999
taxation year and disallowed the said expenses from employment in
the amount of $37,394.14.
7. The
Appellant served on the Minister a Notice of Objection dated
April 24, 2001 with respect to the 1999 taxation year on the
basis that the amount of $37,166.63 received should not be
included in computing his income from employment.
8. By Notice
of Confirmation dated June 12, 2001, the Minister confirmed that
the amount of $37,166.63 received is income from employment and
is therefore included in computing his income from
employment.
9. In so
confirming the reassessment of the Appellant, the Minister made
the following assumptions of fact:
(a) during the 1999
taxation year, the Appellant was an employee of Computec
International (the "Employer") from January 1, 1999 to
October 31, 1999;
(b) during the 1999
taxation year, the Appellant worked for the Employer in the
United States of America;
(c) during the 1999
taxation year, the Appellant received income from employment in
the amount of $92,642.16 from the Employer;
(d) during the 1999
taxation year, the Appellant reported income from employment in
the amount of $92,642.16;
(e) during the
period of his employment for the Employer for the 1999 taxation
year, the Appellant did maintain a self-contained domestic
establishment with the meaning assigned by subsection 248(1) of
the Income Tax Act ("the "Act") located at 6096
Farmstead Lane, Mississauga, Ontario, as his principal place of
residence;
(f) during the
period of his employment for the Employer for the 1999 taxation
year, the Appellant did maintain at another location (Rochester,
New York) a self-contained domestic establishment within the
meaning assigned by subsection 248(1) of the Act;
(g) the said income
from employment in the amount of $92,642.16 did include an
allowance for expenses in the amount of $37,166.63;
(h) the said
expenses were identified as apartment and furniture rental, meals
and gas/electricity for the maintenance of a second residence in
the city of employment and car mileage to and from Canada;
(i) the said
allowance was an allowance for personal or living expenses of the
Appellant;
(j) during the
1999 taxation year, the Appellant was hired by the Employer to
work originally in Philadelphia, Pennsylvania;
(k) during the 1999
taxation year, the Appellant worked for the Employer out of the
Rochester, New York office; and
(j) the work
location where the Appellant was employed during the period of
his employment for the Employer for the 1999 taxation year was
not a special work site or remote location within the meaning of
subsection 6(6) of the Act.
B. ISSUES TO
BE DECIDED
10. The issue to be
decided is whether the amount received by the Appellant as an
allowance for personal or living expenses for the 1999 taxation
year of $37,166.63 is to be included in computing his income from
employment.
[3] Assumptions 9(a) to (i) inclusive
were confirmed by the evidence.
[4] Assumptions 9(j) and (k) are
wrong: Exhibit R-2, the Appellant's employment agreement with
the Employer specifies that the Employee is to work "at the
Company's designated offices at the location specified in
paragraph 3 of the Schedule or, if directed to do so, at the
office of clients". He was originally hired to work at the
Employer's premises in Malvern, Pennsylvania, U.S.A. After he
had been in Malvern a few days, his Employer directed him to go
to Rochester, New York to carry out his profession at the
offices of one of the Employer's clients. He did so for
approximately one year and three months.
[5] In Rochester the Appellant rented
furniture and an apartment and on week-ends he drove back and
forth from Rochester to his family in Mississauga, Ontario. His
Employer reimbursed him for all of this and for his vehicle
mileage to and from Mississauga. In 1999 this amounted to the
$37,166.63 Canadian at issue.
[6] The contract specified that the
Appellant's salary was to be "$274.46 per day (260 days
for $71,437.88 per annum)" - U.S. (R-2, Schedule, p.
6). However, the Employer would not execute a form
"W-2" for Revenue Canada's purposes.
[7] Despite the lack of the
appropriate form, the sum of $37,166.63 in dispute appears to
fall within the provision of paragraph 6(6)(a) of the
Income Tax Act ("Act"), which reads:
Employment at special work site or remote location
(6) Notwithstanding
subsection (1), in computing the income of a taxpayer for a
taxation year from an office or employment, there shall not be
included any amount received or enjoyed by the taxpayer in
respect of, in the course or by virtue of the office or
employment that is the value of, or an allowance (not in excess
of a reasonable amount) in respect of expenses the taxpayer has
incurred for,
(a) the
taxpayer's board and lodging for a period at
(i) a special
work site, being a location at which the duties performed by the
taxpayer were of a temporary nature, if the taxpayer maintained
at another location a self-contained domestic establishment as
the taxpayer's principal place of residence,
(A) that was, throughout
the period, available for the taxpayer's occupancy and not
rented by the taxpayer to any other person, and
(B) to which, by reason of
distance, the taxpayer could not reasonably be expected to have
returned daily from the special work site, or ...
In French, the same paragraph reads:
Emploi sur un chantier particulier ou en un endroit
éloigné
(6) Malgré le paragraphe (1), un contribuable
n'inclut, dans le calcul de son revenu tiré, pour une
année d'imposition, d'une charge ou d'un
emploi, aucun montant qu'il a reçu, ou dont il a joui,
au titre, dans l'occupation ou en vertu de sa charge ou de
son emploi et qui représente la valeur des frais -- ou une
allocation (n'excédant pas un montant raisonnable) se
rapportant aux frais -- qu'il a supportés pour:
a) sa pension et son logement, pendant une période
donnée:
(i) soit sur un chantier particulier qui est un endroit
où le travail accompli par lui était un travail de
nature temporaire, alors qu'il tenait ailleurs et comme lieu
principal de résidence, un établissement domestique
autonome:
(A) d'une part, qui est resté à sa
disposition pendant toute la période et qu'il n'a
pas loué à une autre personne,
(B) d'autre part, où on ne pouvait raisonnablement
s'attendre à ce qu'il retourne quotidiennement
étant donné la distance entre
l'établissement et le chantier,
[8] The Appellant was hired to work at
the Employer's place of business in Malvern, Pa. The
Employer's business was to place experts, such as the
Appellant, temporarily with other firms at their premises where
the Employees would apply their expertise to the problems at hand
for a temporary period. The Employer would reimburse the
Appellant for his board and lodging. That is what happened when
the Appellant was assigned and transferred to Rochester, New
York.
[9] Subparagraph 6(6)(a)(i)
allows the expenses for "the taxpayer's board and
lodging for a period at ... a special work site". Using
The Oxford English Dictionary, 2nd Ed. definitions of the
words "special work site": A "special" place
is an unusual or exceptional place. To work is to perform or
execute one's task. A site is a place. Thus the English
version of the paragraph refers to an unusual place where an
employee does his or her task. In this case the work site was
established in evidence to be another firm's plant or factory
in Rochester, New York, at which the Appellant performed
temporary duties for a limited period of time. For that purpose
his Employer paid for his board and lodging. The Appellant was
initially hired to work at the Employer's place of business
at Malvern, Pa. He went there to work and was assigned to another
firm's premises in Rochester, New York. That in itself would
be an unusual work place for an employee of a business. The fact
that the Employer agreed to pay for his food, lodging and mileage
in respect to this work establishes that the Employer considered
it to be so.
[10] In comparison with the foregoing, the
French version of subparagraph (6)(a)(i) describes:
a) sa pension et son logement, pendant une période
donnée:
(i) soit sur un chantier particulier qui est un endroit
où le travail accompli par lui était un travail de
nature temporaire, alors qu'il tenait ailleurs et comme lieu
principal de résidence, un établissement domestique
autonome:
...
Le Grand Robert de la langue Française, 2nd
Ed. describes "un chantier" as having the
meaning described by Dussault, J. of this Court in Guilbert v.
Canada, 91 DTC 737 and 740 being, for example, a remote
construction site where employees' board and room are
supplied on the premises.
[11] The English words "special work
site" have a much broader meaning than the French version.
Section 13 of The Official Languages Act, Chapter 0-3.01
S.C. reads:
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Both versions simultaneous and equally
authoritative
13. Any journal, record, Act of Parliament, instrument,
document, rule, order, regulation, treaty, convention,
agreement, notice, advertisement or other matter referred
to in this Part that is made, enacted, printed, published
or tabled in both official languages shall be made,
enacted, printed, published or tabled simultaneously in
both languages, and both language versions are equally
authoritative.
|
Valeur des deux versions
13. Tous les textes qui sont établis,
imprimés, publiés ou déposés
sous le régime de la présente partie dans les
deux langues officielles le sont simultanément, les
deux versions ayant également force de loi ou
même valeur.
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Thus, each language version is to be read and interpreted for
its own meaning. As a result "special work site" is to
be interpreted based upon its English meaning.
[12] The words "board and lodging"
do not restrict the breadth of the meaning ascribed to
"special work site". In particular, they are not the
vernacular or traditional English phrase: "board and
room". "Lodging" broadens the meaning of
"board and lodging" to a remarkable extent. Lodging is
defined in The Oxford English Dictionary, 2nd Ed. as
"dwelling, abode ... to take up one's (temporary)
abode". In the third definition it is in "hired rooms
or in a lodging-house".
[13] In this day, when carpenters, oilfield
roughnecks, nurses, mechanics, engineers, computer technicians,
civil servants, judges, lawyers and people in all sorts of
callings do temporary work at sites remote from their homes or
their places of business, a special work site is not the northern
bush or a construction camp. A special work site may be any place
in the world, including a large metropolitan city such as
Toronto, New York or New Delhi; or it may be a place such as
Afghanistan or Rochester, New York. Expertise in the modern world
has become a contractual commodity for which the contract -
like the Appellant's contract of employment - is not for a
lifetime. Rather, it is often from job to job at work places
other than the employer's place of business, that is, at
"special work sites" such as where the Appellant worked
in Rochester, New York.
[14] The appeal is allowed. The Appellant is
awarded costs of $100 on account of his out of pocket
disbursements for items such as postage and copying which were
incurred to prosecute the appeal.
Signed at Ottawa, Canada this 4th day of February, 2002.
J.T.C.C.
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