Date: 20020130
Docket: 2001-909-IT-I
BETWEEN:
NORMAN FERGUSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
P.R. Dussault, J.T.C.C.
[1] These are appeals from assessments
for the 1997 and 1998 taxation years. In assessing the Appellant,
the Minister of National Revenue (the "Minister")
included in his income, the amounts of $3,807 and of $4,153 for
each year respectively as a standby charge and operating expense
benefit related to an automobile provided by his employer Crown
Protection Incendie Inc. (the "employer" or the
"company").
[2] In assessing the Appellant, the
Minister relied on the assumptions of fact stated in paragraphs
5a) to 5k) of the Reply to the Notice of Appeal. These paragraphs
read as follows (Annex 1 omitted):
A. STATEMENT
OF FACTS
5. In order to
establish the above-mentioned assessments, the Minister relied on
the following assumptions of fact:
a) the
appellant was an employee of the employer to provide emergency
services for the employer, during the 1997 and 1998 taxation
years;
b) the
employer provided the appellant with an automobile in order to
carry out the services he provided to the employer;
c) on January
11, 1997 the employer leased an 1997 Volkswagen Jetta
(hereinafter the "automobile") for use by the
appellant;
d) the lease
for the automobile expired December 11, 1998;
e) the monthly
lease payments including GST and TVQ totalled $306.53;
f) at
the signature of the lease, January 11, 1997 the employer paid on
the lease $2,340.52 comprising $1,499.71 on account, $306.53 for
the first month lease, $325.00 guarantee deposit $104.98 GST,
$104.30 TVQ;
g) the
employer made the automobile available for the use by the
appellant for a period of 11 and 12 months for 1997 and 1998
respectively;
h) following
an audit of the employer it was concluded that the employer had
not included in the T4 Information slip for the employee a
benefit related to the standby charge and operation benefit
enjoyed by the employee during the 1997 and 1998 taxation
years;
i) the
Minister calculated the standby benefit, in accordance with
paragraph 6(1)(e) of the Income Tax Act
(hereinafter the "Act"), for 1997 and 1998 at
$2,267.13 and $2,473.24 respectively, (Annex 1);
j) the
Minister calculated the operating benefit, in accordance with
paragraph 6(1)(k) of the Act, for 1997 and 1998 at
$1,540.00 and $1,680.00 respectively (Annex 1);
k) the total
benefit for the automobile provided by the employer as calculated
by subparagraph 5(i) and 5(j) is $3,807.13 and
$4,153.24 for 1997 and 1998 respectively.
[3] The Appellant testified briefly.
Counsel for the Respondent cross-examined him even more briefly.
The Appellant, who is also the owner of the company, a fire
sprinkler and fire alarm service company, stated that he is
required to have the automobile at his disposal for his work 24
hours a day, seven days a week in order to respond to emergency
calls from clients and fire departments. The Appellant brought to
Court numerous contracts confirming that he needed the automobile
at all times for that purpose.
[4] In his Notice of Appeal to which
he attached a map, the Appellant indicated that his home is close
to the company's place of business in Châteauguay
(Québec). The Notice of Appeal states that the personal
use of the automobile would have amounted to 2.5 kilometres
a day for a total of 912 kilometres a year on an average of
18,750 kilometres travelled each year with the automobile.
Although, the question of the minimal use is thus raised in the
Notice of Appeal, it is not addressed in the Reply to the Notice
of Appeal in any way.
[5] The automobile is a "fire
red" Jetta (the Appellant submitted pictures to the Court)
identified with the name and logo of the company. During his
testimony, the Appellant stated that the car is used almost
exclusively, that being more than 90% of the total kilometres
travelled for the business of the company and that his maximum
use for personal purposes, going to the office and coming back
home as well as the odd stop for cigarettes would have amounted
to a maximum of 125 kilometres a month. The Appellant said
that he has never used the car for a pleasure trip or holidays.
However, the Appellant admitted that he has not kept a logbook
during the years in issue.
[6] The testimony of the Appellant is
uncontradicted and I have no reason to doubt its
truthfulness.
[7] Mr. Maurice Faubert testified for
the Respondent more particularly on the calculation of the
benefit included in the Appellant's income for the years in
issue. He admitted that, given the Appellant's testimony, it
was not reasonable to have assessed the standby charge and the
operating expense benefit without any reduction.
[8] However, counsel for the
Respondent maintained his position and requested that the appeals
be dismissed by relying exclusively on a decision I rendered in
1990 in the case of Lavigueur v. Canada [1990] T.C.J. 1137
also reported at 91 DTC 448. Counsel referred more
particularly to the analysis of subsection 6(2) of the
Act and to the assumption, in the last part of that
provision, that the personal use is 1000 kilometres a month or
12,000 kilometres a year unless the taxpayer established
otherwise in prescribed form, i.e., on form TD5. Counsel noted
that in the present case, the Appellant had not maintained a
logbook and that he had not provided the information required on
the prescribed form TD5.
[9] In Lavigueur, supra, the
years in issue were 1984 and 1985. In 1988, subsection 6(2) has
been considerably modified and now provides besides other
changes, an arithmetic formula to compute the value of the
benefit. The former requirement of subsection 6(2) "in
fine" with respect to the filing of a prescribed form no
longer exists and form TD5 has long disappeared. To put it
simply, subsection 6(2) now provides that if all or substantially
all of the distance travelled by the automobile in the total
available days is in connection with or in the course of the
office or employment, the value of benefit will be reduced to a
proportion of 1,000 kilometres a month or 12,000 kilometres
a year if the total number of kilometres driven (otherwise than
in connection with or in the course of the taxpayer's office
or employment) during the total available days is less than
1,000 kilometres a month or 12,000 kilometres a year.
[10] In my opinion, the evidence as
presented indicates that both conditions have been satisfied in
the present case. First, substantially all of the distance
travelled meaning 90% or more of the distance travelled, during
the years in issue was in connection with or in the course of the
Appellant's employment with the company. Second, the distance
travelled otherwise than in connection with the Appellant's
employment was an average of 125 kilometres a month.
[11] From the foregoing, the appeals are
allowed and the assessments are referred back to the Minister for
reconsideration and reassessment pursuant to paragraph
6(1)(e) and subsection 6(2) as well as under paragraph
6(1)(k) of the Act on the basis that substantially
all of the distance travelled with the automobile was in
connection with or in the course of the Appellant's
employment and that the distance travelled otherwise than in
connection with or in the course of that employment was
125 kilometres a month for 11 months in 1997 and 12 months
in 1998.
Signed at Ottawa, Canada, this 30th day of January 2002.
J.T.C.C.
COURT FILE
NO.:
2001-909(IT)I
STYLE OF
CAUSE:
NORMAN FERGUSON,
and Her Majesty The Queen
PLACE OF
HEARING:
Montreal, Québec
DATE OF
HEARING:
January 17, 2002
REASONS FOR JUDGMENT BY: The Honourable
Judge P.R. Dussault
DATE OF
JUDGMENT:
January 30, 2002
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the Respondent: Claude
Lamoureux
COUNSEL OF RECORD:
For the Appellant:
Name:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada.
2001-909(IT)I
BETWEEN:
NORMAN FERGUSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on January 17, 2002, at Montreal,
Québec
by the Honourable Judge P.R. Dussault
Appearances
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Claude Lamoureux
JUDGMENT
The appeals from the assessments made under the Income Tax
Act for the 1997 and 1998 taxation years are allowed, in
accordance with the attached Reasons for Judgment, and the
assessments are referred back to the Minister of National Revenue
for reconsideration and reassessment pursuant to paragraph
6(1)(e) and subsection 6(2) as well as under
paragraph 6(1)(k) of the Act on the
basis that substantially all of the distance travelled with the
automobile was in connection with or in the course of the
Appellant's employment and that the distance travelled
otherwise than in connection with or in the course of that
employment was 125 kilometres a month for 11 months in 1997
and 12 months in 1998.
Signed at Ottawa, Canada, this 30th day of January 2002.
J.T.C.C.
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