Citation: 2010 TCC 193
Date: 20100412
Docket: 2008-1496(CPP)
BETWEEN:
THE TORONTO PARKING AUTHORITY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SAADATOLLAH AKBARIAN-BORUJENI, LEMMA BEDADA,
LENNOX CLARKE, KEVIN JAMES GAUTHIER,
ZEWDU GEBRE-HIWET, D. CHARMAINE HUNTER,
GEORGE MANDRAPILIAS, MARY CLARE MAYO,
JIM McMAHON, THOMAS PHILLIPS, JEMBERE SEYOUM,
TOM TSANIS, ABDOLREZA MILANINIA, MICHAEL KOO,
MANUEL CORDEIRO,
LILY LEE, MOZHTTN MARCA,
GINA TUCCIARONE, DEBORAH KEANE, ALICIA NGUYEN,
NANCY McCART and GUS GEORGAKOPOULOS
Intervenors.
Docket: 2007-4359(IT)I
AND BETWEEN:
LORNE BOLTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Docket: 2008-1522(CPP)
AND BETWEEN:
LORNE BOLTE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
THE TORONTO PARKING AUTHORITY
Intervenor.
AMENDED REASONS FOR JUDGMENT
Margeson J.
[1]
These cases were all
heard on common evidence. Neither Lorne Bolte nor any intervenors wished to
take part in the hearing although being advised of their rights to do so.
[2]
The Minister of National
Revenue assessed the Appellants for the taxation years 2003, 2004 and 2005 for
“parking benefits” on the basis that they were taxable benefits and as such
attracted Canada Pension Plan contributions, pursuant to paragraph 6(1)(a) and
subsection 12(1) of the Canada Pension Plan (the “Plan”) and
paragraph 6(1)(a) of the Income Tax Act (the “ITA”).
[3]
Except for Lorne Bolte,
the expenses relate to the Toronto Parking Authority’s share of the
contributions. Mr. Bolte’s appeal relates to both income tax and Canada Pension
Plan.
Evidence
[4]
Gwyn Thomas testified
that he has been employed by the Toronto Parking Authority (“TPA”) for 34
years. He has been President since 2007 and Vice‑President from 2003 to
2007 and before that he was a manager and other managers reported to him. The
TPA has attended parking garages and unattended parking facilities; as well, it
has on-street parking machines and formerly had parking meters.
[5]
The TPA is a city board
and operates independently from the City of Toronto.
It has its own board of directors which is appointed by the City.
[6]
The board operates as a
business and turns over 75% of its profits to the City and 25% is retained by
the board for its capital program. In 2009, it generated $50 million in
revenue.
[7]
He identified exhibits
A-1, A-2 and A-3 which were admitted by consent. The map indicates the
unattended lots (yellow), the attended lots (green) and the Toronto Transit
Commission lots (red) operated by the TPA under a management agreement.
[8]
Under the Collective
Agreement, there are two classifications of employees, attendants and
maintenance employees. Electricians and technicians are classified as M1
category, the less skilled are classified as M2 category, who look after the
equipment, and the labour level, M3 category.
[9]
The agreement provides
for the limited supply of passes to the employees to be used during their
off-time but it is silent as to parking during the employees’ work periods. It
was never discussed as a benefit to the employees. If a worker does not drive
to work he receives no allowance.
[10]
During the years in
issue, the TPA had 30 attended lots and 170 unattended lots.
[11]
The rates charged vary
according to the lots. There are monthly rates and event rates.
[12]
Sometimes the workers
are on standby and go directly to the work site. Their tools are in their
cars. They receive no allowance for this trip. Sometimes the M1s may pick up
parts on their way to a job using their own cars. Maintenance workers work five
eight-hour shifts and attendants work five eight-hour shifts or four ten‑hour
shifts.
[13]
Sometimes the workers
cannot use the TTC so if they have no car an attempt is made not to assign
those workers to that period. When a worker is acting as a “spare”, they may
have to go from one lot to another and use their own car. They are not
reimbursed.
[14]
The attendants are
rotated from one location for revenue control. They also go from one location
to another to give attendants a lunch break, use their own cars and are not
reimbursed.
[15]
There is a monitoring system
for all of their locations and a monitoring station where there are two workers
24 hours a day for seven days a week.
[16]
Since 1952-1953, there
has been no charge parking for attendants but not for personal use. However,
the TPA does not lose money because the lots are not full. No employee is
guaranteed a space. At the St. Lawrence lot, there are spaces blocked off
for the TPA’s vans and service vehicles and the attendants work part‑time.
The lot operates 24 hours, seven days a week.
[17]
The money collected is
put in a cash drawer and the attendant is responsible for closing, reconciling
accounts and deposit slips and delivering the money to the manager’s office.
They carry their float with them.
[18]
They collect thousands
of dollars per day and they must deliver the collections to one of five
management offices in their area. The attendants walk or drive to these
offices. There have been some robberies.
[19]
In 2003, 2004 and 2005,
they had a drop place at a bank.
[20]
At night, there is no
demand for the spaces from the public. The lots are mostly empty.
[21]
The TPA agreed to
appeal the ruling which indicated that parking privileges were taxable.
[22]
The witness opined that
the only benefit derived from the employees’ parking was to the TPA as it
facilitated the authority in responding to any situation.
[23]
In cross-examination,
he said that he does not do the scheduling and is not aware of each employee’s
circumstances at work. He was unaware of which attendants had cars.
[24]
There was no
requirement for an attendant to have a car. There was no term in the contract
that provided for free parking by the attendants.
[25]
At the City Hall
parking lot, the booth attendants may work at different booths at the same
location or in different locations.
[26]
In 200 facilities, they
have had five thefts. They have security cameras and some security officers.
The private security officers do not accompany the attendant when he/she is
making the deposit.
[27]
The attendants go
directly to their assigned location and punch in a time clock. They do not
contact headquarters. They would likely only go to other locations if they were
a “spare”. Finding a parking space did not seem to be a problem.
[28]
Most of the employees’ expenses are covered in the Collective
Agreement but not parking as it was never an issue. “Standbys” are expected to
have a car. They are not reimbursed for gas. Persons working at the monitoring
station do not receive money or meet customers but they are entitled to free
parking. The lots have a constant turnover and are never full.
[29]
In re-direct, the
witness said that supervisors are reimbursed for travel.
[30]
He did not know if TTC
services were available for those employees at the monitoring stations.
[31]
Lorne Bolte was an
attendant for 24 years and is one of the Appellants here. He is now a
maintenance worker.
[32]
At the beginning of a
shift, he was given a float of $200 which he kept with him at all times except
when he goes on vacation. He drives to work. There is no “drop safe” in the
booths, but perhaps a drawer and a cash register. They are supposed to make two
drops a shift. Until then, he puts the money in the trunk of his car. Others do
as well.
[33]
When he arrives for
work at the lot he gives himself a parking ticket and at the end of the day has
it rung off by the person taking over.
[34]
He indicated that he
cannot take the TTC at 5:30 in the morning when he arrives for work. He does
the inventory by using his car. It is fast and beneficial to the TPA.
[35]
At the end of the night
shift, there is no TTC service nor on the early morning shift on Sundays. He
has acted as a spare and he may have to go to other districts. He uses his car and
receives no reimbursement. He does not pay for parking. It is just a verbal
agreement.
[36]
He makes his first
deposit around lunch time. He is away for 45 minutes and the lunch person looks
after his booth. He usually makes two deposits during his shift depending on
the amount of business. He is not required to have a car. A person who
has no car walks. He does not use the TTC because it is slower and there is the
security factor. He wears a uniform.
[37]
Before the drop centres
were available, they used the bank or he took the deposit home.
[38]
He works at the Air
Canada Centre lot and parks there. He may park on the diagonal lines if it is
busy. Sometimes the supervisor makes the deposit.
[39]
The deposit could range
from $500 to $3,000 for the shift. He has a green deposit bag. The Parking
Authority is not losing any money because of his parking. He was assessed a
benefit in 2003 of $960. He did not complete the declaration.
[40]
In 2004 and 2005, he
was taxed on the basis of the number of days that he worked. He does not
believe that he has received a benefit. It may be a convenience. There is no
loss to the TPA.
[41]
In cross-examination,
he said that not all booths had cameras but they had a telephone and a panic
button. A supervisor came in once per shift. He was told that he had free
parking the first night that he was there. He could not get from his residence
to work without a car. The parking is a convenience to him and the security is
important. There is no expense to the TPA. He is not allowed to save a parking
space.
[42]
He never heard of
anyone being in trouble because they did not have a car and he never heard of
anyone complaining about making a deposit without a car. His lot is at the high
end of the parking fees.
[43]
At the present time, he
is a semi-skilled worker and drives the truck owned by the TPA. He parks his
own vehicle where the TPA’s vehicle was.
[44]
If he could not park
for free on the lots, he would take the TTC but it is not normally operating.
[45]
In re-direct, he said
that he does not need a public space and only uses the lot about 160 days per
year.
[46]
Barry Martin was the
Director of Human Resources for the TPA. He has worked for the TPA for 29
years. The TPA has union and non-union employees. “No charge parking” has never
been considered by them to be a benefit. It was never discussed.
[47]
They had discussions
with the employees about the banking and deposit concerns, especially about
night deposits. The TPA has seven locations for deposits in their garages. They
also have monitored, secure deposit rooms.
[48]
They have had robberies
in the past, some of which are not on the list provided for this case. One
worker was stabbed and hospitalized and received Workers’ Compensation
benefits. The TPA had to make good by paying $218,637.09 in assessments to the
Workers’ Compensation Fund between 2002 and 2005.
[49]
Supervisors use their
own cars during the day and receive mileage. The technicians and
maintenance workers do not.
[50]
In the event of an
attendant not having a vehicle during a late shift, he will call for a
supervisor or call a family member to take him to make the deposit. Sometimes
security people will take the attendant.
[51]
In 2003 and 2004, the TPA
had an audit by Canada Revenue Agency (CRA) in regards to the free parking by
the attendants. The TPA took the position that since it was “scramble parking”
(no guaranteed space), it was not a benefit to the employees. There was always
excess space. This was shown to CRA by walking through the lot at 33 Queen Street East at 11:00 a.m. There were many empty
parking spaces. There was no loss to the TPA financially and therefore no
benefit to the employees.
[52]
CRA said that there was
no market value to the Rockcliffe lot and no benefit even though there were no
other parking lots there. They even assessed the workers at Lot 43 which is not
even open to the public.
[53]
It was his position that
the beneficiary was the TPA. It allowed them to move a person quickly from one
place to another in the collection of fees.
[54]
In cross-examination,
he said the situation has always been the same. He did not know which
attendants had a car. Each attendant had to carry his float and make deposits
whether he had a car or not if he was working.
[55]
The Collective Agreement
is comprehensive and sets out what reimbursements are available to the
attendants.
[56]
There may have been one
“day incident” in 2002. Several attendants have told him about their concerns and
getting a family member to pick them up at night to enable a deposit to be
made. The stabbing incident referred to was in the 1980s.
[57]
The document located at
Exhibit A-1 at Tab 10 was not a complete list of major criminal occurrences and
it does not refer to incidents regarding customers.
[58]
There is no way of
knowing whether more money would be stolen if the attendant did not put his
money in the trunk of his car. The attendants’ fears are somewhat alleviated if
they have a car. Some floats are left in the booth overnight.
[59]
When the Minister
assessed the workers, he took the higher monthly rates and it resulted in a
higher benefit.
[60]
With respect to Lot No.
43, there are lots near there that are typical and not operated by the TPA.
[61]
In re-direct, he said
that there is no tracking of employee parking except for the daily
reconciliations to account for all spaces used.
[62]
CRA used TPA’s rates
and did not accept their excess inventory argument.
[63]
The spaces at 33 Queen Street, Lot No. 26, were not used by the public. There is no
demand for them.
[64]
Rossana Minichiello
began working full‑time for the TPA in 1986. He was an attendant and then
became a Grade One maintenance employee. Free parking was always understood to
be the situation. At one time, he was a probationary supervisor and used his
car to perform his duties and was paid $0.23 per kilometre for the business
portion.
[65]
There were three
parking lots where they could not park: Lots 16, 34 and 108 (the St.
Lawrence Market lot). Lots 16 and 108 were very small and had a high turnover
rate. The spaces were always in use. He was required to park in nearby lots. He
was responsible for the float and all amounts collected. He had to balance all
transactions for his shift. This might take until 1:00 a.m. or 2:00 a.m., and
then he had to deposit the money to the bank at Spadina Avenue and Bloor
Street West.
[66]
He would turn off some
lights in the booth so he could see outside. He put the money in a bag and then
drove in his car past the bank before making his deposit. His car was
invaluable to him in making his deposit. He would lock the money away in his
trunk. When he worked as a spare, he would use his car to go to the other area.
He considered that he had an advantage over those without a car. They are
responsible for the float at all times and must have it with them.
[67]
They preferred to walk
to make the deposit rather than use public transportation. If you are asked to
go to another area because someone is sick, it is much easier if you have a
car. It is faster and the sick person can leave. It benefits the Parking
Authority.
[68]
Sometimes the TPA
designated spots are used by the public. Some of the employees use the TPA
service spot for their own vehicles. It saves you from using a
revenue-generating spot.
[69]
He uses the car for
carrying his supplies and takes them home for the night, returning them to the
garage the next day or using them in his work. This is a benefit to the
employer because there is no loss of time. He also carries tools in his car
because of the call-out procedure, where he might go to a booth to meet the
attendant because the ticket machine is not working. He gives the parking
ticket to the customer free and he is happy and does not have to wait too long.
They have cleaners who clean the booths during periods when TTC services are
not available.
[70]
It is common for the
night maintenance to lock up the float and transaction money in their cars. They
are responsible for the money from the time they start until they sign off. A
lot of the night maintainers use their vehicles to go to site deposits and to check
the surroundings before they put the money in the slot. There have been
many occasions when night maintainers have been held up and assaulted.
[71]
He referred to a letter
he wrote to CRA indicating that the method of calculating the benefit was
arbitrary and he objected to being assessed retroactively.
[72]
There was no revenue
loss to the TPA when he parked his vehicle where a TPA vehicle had been.
[73]
In cross-examination,
he said that he was an attendant from 1984 to 1987 and is familiar with the
standard operating procedure which is employed at every cashier’s booth.
[74]
The extra shifts are a
benefit to him and the use of his car was a benefit to him in going to a new
location. It is also a service to him and the TPA if he has to go home and then
come back in.
[75]
He works at Lot 36 and rarely parks in the space occupied by the
service vehicles because there are usually other spaces available.
[76]
There were more occurrences
involving the money than those reported in Exhibit A‑1 at Tab 10. He
never heard of a person being fired because his money was stolen. It is not a
requirement that the money be put into the trunk of the car. He never had to
pay for parking while at work during his whole career.
[77]
He opined that if he
did not have a free parking space he would look for a free space or a cheaper
lot. It is significant for him because his wife parks free as well.
[78]
The Respondent called
Judy Graham who was an Employer Compliance Officer with CRA. She has been with
CRA for 32 years and has been a compliance officer for eight years. Her job is
to review the records of the employer to determine if all proper deductions and
remittances have been made. She tries to obtain all information from the
employer by use of interviews and correspondence.
[79]
She checked expense
amounts against the payroll records and prepared a work sheet and a spread
sheet. She spoke to the employer several times. She did a statement of account
and wrote a proposal letter. She started this work in January of 2005.
[80]
There was another
auditor involved before her. It was a routine audit. She reviewed those
declarations that the auditor and the TPA had completed.
[81]
Her interaction with
the TPA was cordial. To calculate the value of the benefit, she used the TPA
rates for the different lots. They used a minimum rate for attendants and a
full benefit rate for office staff and maintenance workers.
[82]
She referred to Exhibit
R-1 and explained how she calculated the benefits. She provided documents to
the TPA and they discussed her calculations and made some suggestions. After
discussions, she deducted the benefits for the Rockcliffe lot since it was in
an outlying area and there were no other parking lots there. Their office did
the CPP only and the income tax was done by another office.
[83]
She explained how she
calculated the benefit for the Appellant Lorne Bolte. She used a five-day week
and he used a seven-day week. She then multiplied that by the number of months.
She did not accept Mr. Bolte’s position on the number of days he used the lots.
[84]
In cross-examination,
she said that she had many meetings with Mr. Martin at his head office on Queen Street near Yonge
Street, and did a
walk-through of the lot. It was not full. They said that there was no loss of
income to the TPA. She did not talk to the maintenance people.
[85]
She was open to making
adjustments if they received information.
[86]
The TPA did not tell
her where the bank was located when they raised the security issue and
discussed the primary benefit argument.
[87]
The Collective Agreement
did not come into play as far as she was concerned. She returned to the spread
sheets and said that she became aware that there would be vacations involved
which would change the figures but she received no information about the
vacations. She used the $220 figure which was based on the highest monthly rate
for twelve months. She did not think that this was unreasonable. She had to do
the best she could with what information she had.
[88]
She talked to Mr.
Martin about an Air Canada standby charge but did not get back to him because
she believed it to be irrelevant.
[89]
She used a reduced rate
when people were working at night. If she knew they were working at night, she
used the lower rate.
Argument on Behalf of the Appellant
[90]
The evidence given by
the witnesses called by the Appellant was accurate, current and relevant to
this case.
[91]
The no-charge parking
had been in effect for a long time and was not negotiated as a benefit and was
not considered to be a benefit at all. It was not a form of extra remuneration
where people who did not use it got anything in lieu thereof.
[92]
It was not a form of
remuneration. The Collective Agreement covered all aspects of the relations
between the workers and the TPA and no charge-parking was not mentioned. There
was not even a written policy about it. It was an understanding only. This has
to be given some weight.
[93]
There was no guaranteed
space and there was no loss to the TPA because there were always available
spaces.
[94]
The methodology for
calculating the benefit was unfair and arbitrary, according to the letter at
Tab 14 of Exhibit R-1. If the worker had known that he would have been assessed
a benefit he could have made other arrangements or parked at a lot with lower
rates. The workers were told not to park at the high turnover lots where the
TPA would have lost revenue.
[95]
If it was scramble
parking there was no benefit according to the CRA bulletins. Here the
characteristics are the same. The issue should not turn on whether it is
scramble parking or not.
[96]
With respect to the
maintenance workers, they use their vehicles for storing their tools and also
to pick up supplies. Mobility is important as well as efficiency.
[97]
It is a quid pro quo
situation because there is no reimbursement for using their vehicle and the
benefit goes to the TPA.
[98]
There is a tight schedule
for the different jobs. Maintenance people have to attend some lots before
transit service is available. The night maintainers start at different times.
There can be no market value for the garages because there is no demand for the
spaces. The cars are used for security reasons, for the storing of money and to
enable the deposits to be made in safety by checking out the deposit sites
before making the deposit. Sometimes there is upwards of $2,000 involved.
[99]
There is a risk of
crimes being committed against the workers. The crime events list provided was
not an exhaustive one. The workers were aware of the danger.
[100]
The use of a car by
spares is a necessity or requisite or at least a great convenience to them.
Their work is done more efficiently.
[101]
This is not an employee
benefit or quirk, nor part of the compensation package.
[102]
The Court should find
that the TPA is the primary beneficiary of the relationship and that the
employees obtain no benefit except in an ancillary way. When one is not reimbursed,
it is only a privilege. No one has ever associated it with a benefit.
[103]
The so-called benefit
has not been calculated properly. The CRA have used such a “broad brush” in
calculating the benefit that it cannot be relied upon. It was an arbitrary
calculation. There is no way that they can be assessed retroactively.
[104]
There was no market
value because there were no takers for the spaces.
[105]
The CRA used twelve
months as a punishment for those who did not provide information about their
vacation days or sick days. Further, the CRA representative did not talk to a
single maintenance worker. It underscores an arbitrariness that is not subtle.
[106]
Mr. Bolte said that the
CRA agent was not prepared to listen. The fundamental decision was made
and it was not changed. It produced unreliable results.
[107]
Counsel cited and
relied upon the case of Adler v. Canada, 2007 TCC 272, 2007 DTC
783, and said that in the present case as well as there, there was evidence
that the primary beneficiary was the TPA and not the workers.
[108]
Here there was no economic
advantage to the workers. They had to pay their gas, insurance and operating
expenses. The benefit could not be measured.
[109]
In Lowe v. Canada,
[1996] 2 C.T.C. 33 (FCA), the question of whether the advantage
accrued primarily to the employer or the worker was considered. In the case at
bar, the primary benefit was to the TPA.
[110]
As in Saskatchewan Telecommunications v. Her Majesty the
Queen, 99 DTC 1306,
there was a quid pro quo in the case at bar. They got back what they
gave. There was no basis for making an assessment. It sorted itself out over
the years.
[111]
In the case at bar, as
in Chow et al v. Her Majesty the Queen, 2001 DTC 164, the
economic advantage was to the employer and not the worker.
[112]
The onus is on the
Minister to identify a set of facts that can give rise to a proper analysis. He
could have taken into account the list of factors referred to at paragraph 159
of the Adler case in determining if the benefit was primarily to the
worker or to the employer.
[113]
In effect, there is
scramble parking, even though the employees are always able to park. The
employees use their vehicles regularly for business.
[114]
The Minister’s
determinations are full of suppositions. The calculations cannot be relied
upon. The appeals should be allowed with costs.
Argument on behalf of the Respondent
[115]
Counsel said that there
are two legal issues here:
(i) Was the parking a taxable benefit;
and
(ii) If it was taxable,
was the amount paid to the employees by the employer?
[116]
There were 255 full-time
employees at the TPA but only 66 cases are before the Court. Only the maintenance
workers and the attendants are in issue. The CPP assessment should be upheld
against those listed in the Reply.
[117]
The workers were not
required by their employer to have a car and use it in their work. Any use of
the cars was incidental and not a duty that could be enforced. The Collective Agreement
was the whole agreement between the TPA and the workers and it did not address
the issue.
[118]
There were many other
workers at the TPA that did not use a car and did not need one. There was
nothing in the Collective Agreement about making deposits. It is a neutral
factor.
[119]
The TPA did not know
who had cars and the workers did not have to say whether they had a car or not.
If having a car was so important to the employer, why did they not keep track
of who had one so that they could assign them to certain places? It was a
neutral factor.
[120]
Insofar as security at
the deposit chute was concerned, whether you walked or drove you ended up there
alone.
[121]
There was no evidence
that the employer complained about any worker not having a car, whether the
TPA’s insurance rates went up if there was no car used, or whether there was a
saving to the TPA when the employees used a car.
[122]
It was more of a
concern that deposits were lost in the bank chute rather than security that led
to the establishment of deposit centres on the property of the TPA.
[123]
According to Exhibit
A-1, Tab 10, the major criminal occurrences took place at the lots and not on
the way to do the deposit.
[124]
The use of the car did
not facilitate overtime or standby services. It was more convenient but did not
amount to a benefit to the employer. It was a convenience to the employee.
[125]
Mr. Bolte’s evidence
about the Air Canada Centre lot is not germane to his appeal because he did not
work there.
[126]
Scramble parking is not
an issue here because there were always spaces available. The system used here
was not akin to scramble parking.
[127]
There were some lots
that were off-limits to the employees. If a car was so important to the
employer, why would it not ensure a space for the workers there?
[128]
The prime motive of the
TPA was profit and therefore any benefit accruing to the employer was mainly
ancillary.
[129]
Exhibit A-3 was not
definitive of the availability of buses or other public transportation to the
lots early in the morning or late at night. The Appellants have not established
that public transportation was not available.
[130]
In the Adler
case above, 14 out of 16 claimants had their cases dismissed. In every such
case, the Court found it was a benefit to the employee. This was not a “quid
pro quo” case, it was a case of “primary benefit”. Only two employees in
the case at bar gave evidence about benefits. In Richmond v. Her Majesty the Queen, 98 DTC 1804, it was decided that if there
was a value to it, it was a benefit.
[131]
With respect to the CPP
issue, the Court must find that the payment was a direct payment from the
employer to the employee. There is no issue about that in this case. The
property (the spaces) were held by the TPA and were transferred directly to the
workers.
[132]
With respect to
evaluations, there is no better indication of rates that those charged by the TPA
to the public. CRA charged the night rate and asked for feedback from the TPA but
there was none given respecting valuation.
[133]
This is a
self-assessing system and the taxpayer must provide information to ensure the
best treatment possible.
[134]
The question of
valuation was considered in the case of Schutz v. Canada, 2008 TCC 523,
[2009] 2 C.T.C. 2183. There the Court held that the onus is on the Appellant to
show that the method used by the Minister was either inaccurate or
inappropriate or that another mechanism or formula was more reasonable
(adopting the reasoning in Dunlap v. Canada, [1998] 4 C.T.C. 2644).
[135]
In the case at bar,
there was no evidence tendered about a more appropriate method.
[136]
Several witnesses
testified that they worked twelve months. The monthly rate was the most
reasonable according to the witness called by the CRA. There was no evidence
that it would result in an over-valuation of the benefit.
[137]
Because the employer
also enjoys an advantage, that does not reduce the value of the benefit to the
employee.
[138]
In the Chow case
above, the parking spaces were full sometimes but that is not the case here. The
spaces were always available. If the employee parked in a non‑parking
space, it was a convenience for him.
[139]
In the Adler and
Chow cases, there was evidence that they could not get to work by public
transit.
[140]
The appeals should be
dismissed.
[141]
In reply, counsel for
the Appellants said that the witness did not say that he never used a car pool
with his wife. He said he uses the car and not his wife so this is not evidence
that the car is not too important to him.
[142]
Counsel for the
Respondent said that the car was not required by the TPA but that does not mean
that there was not a benefit to the Authority. The evidence was that it was a
benefit and it was a primary benefit.
[143]
From Exhibit R-2 at
Tabs 1, 2 and 3 you can see who have cars and who do not. The majority of the
workers had cars and used them.
[144]
The supervisors know
who have cars and those who do not were not assigned to the Air Canada Centre
lot and could not act as spares.
[145]
To say that the
security factor is neutral is not correct. There is a big decrease in risk when
making a deposit by using their cars.
[146]
It is more efficient to
have a car when doing overtime or when on standby as they can go directly to
their work and the Authority gains more revenue.
[147]
The transportation
schedule was introduced in a TTC document and from it you can see that
employees have to work at times when service is not available.
[148]
Regarding the
valuation, to say that there were nine or ten adjustments does not mean that
the assessments were correct.
[149]
For everyone who did
not respond, the Minister assumed that they worked twelve months.
Analysis
and Decision
[150]
There are two legal issues in
these appeals:
(i) Was
the parking a taxable benefit?
(ii) If so, what was the value of
the benefit? Has the Minister properly calculated the value of that benefit?
[151]
The appropriate portion of the Income
Tax Act that is in play in these appeals is paragraph 6(1)(a) which
without defining benefit says:
Amounts to be included
as income from office or employment
6(1) There
shall be included in computing the income of a taxpayer for a taxation year as
income from an office or employment such of the following amounts as are
applicable:
Value of benefits
(a) the value of board,
lodging and other benefits of any kind whatever received or enjoyed by the
taxpayer in the year in respect of, in the course of, or by virtue of an office
or employment, except any benefit …
[152]
This is obviously a wide ranging
and very inclusive provision. The Courts have tried to apply this section in many
cases and the results are as varied as the factual situations in each of those
cases dictate.
[153]
Professor Vern Krishna in his
book, Fundamentals of Canadian Income Tax (9th ed.) (Carswell,
1996) at pages 229-230 attempted to define the term a little more precisely
than any guidance given in the section itself by saying:
A benefit is
an economic advantage or material acquisition, measurable in monetary terms,
that one confers on an employee in his or her capacity as an employee.
[154]
One of the elements considered by
Professor Krishna was the question, was the economic advantage for the benefit
of the employee or for the benefit of his or her employer?
[155]
This element has been relied upon heavily
by counsel for the Appellants in this case. He took the position that the key
question was, who is the primary beneficiary of the payment? But there is
difficulty in the cases at bar by relying too heavily on that question, because
here, there were benefits to both the employer and the employee and it is
impossible to say who benefited most from it.
[156]
Of considerable importance is the
consideration as to whether the personal element is incidental (see McGoldrick
v. Canada, 2003 TCC 427, 2003 DTC 1735).
[157]
This Court agrees with Rowe D.J.
in the case above at paragraph 159 when he said:
159 With
regret, I doubt any magic formula or template is capable of resolving the
central issue in most circumstances but there are some factors that could be
considered by employers prior to providing a benefit to an employee if the matter
of taxation is a matter of concern.
[158]
In the cases at bar, no
consideration was given by the employer to any of the factors listed by Rowe D.J.
because the matter was never discussed between the employer and the workers and
the matter of parking was always considered to be a privilege that each worker
who had a car was entitled to enjoy, neither the employer nor the workers
considered it to be a benefit and it was not the subject matter of any clause
in the Collective Agreement.
[159]
In Pezzelato v. Her Majesty the
Queen, 96 DTC 1285 at page 1288, Bowman J. (as he then was) said:
It is easy to
point to extremes at either end of the spectrum, but the cases that come with
increasing frequency before the courts are not at either end. They fall
somewhere in between. The courts must decide on which side of the line each
case falls.
[160]
To do that the Court must look at
the facts in each particular case and give to each factor the weight that it
deserves in the context of the total set of facts elicited from the evidence.
From the evidence given in the cases at bar, it is clear that the workers were
not required by their employers to take their car to work or even to have a
car. Some did not. They were not required to use their car in their work. The
use of the car facilitated their work and was of some benefit to the employer
but that benefit to the employer was merely incidental because otherwise the
employer would have made the availability and use of the cars mandatory.
[161]
It was clear that if the employee
did not have a car he was able to carry out his responsibilities satisfactorily
and no person was ever refused employment or fired because he did not have a
car at his disposal.
[162]
With respect to the security
issue, the Court is satisfied that the workers probably felt more secure in
driving to the deposit stations in their own cars, rather than walking, but
some workers obviously walked and the employer and the employees must have
accepted any risk as part of their work routine because they could choose to
have a car or not and the employer accepted their decision.
[163]
Under the circumstances, the Court
has difficulty in deciding that the security factor could help it decide
whether it was a benefit or not.
[164]
Further, the Court has difficulty
in concluding that the use of a car was a benefit to the employer because in
the end the employer received the same service from the employer whether he had
a car or not. If the security factor was so important to the employer then
surely he would have made the use of a car mandatory.
[165]
The most that can be said is that
the use of the car was a convenience for the employer in scheduling employees
at different work locations, in providing standby services and in arranging
overtime.
[166]
The Court is satisfied that the so
called “scramble parking” is not relevant here because this was not scramble
parking. There was always a space available for the employees except on rare
occasions when the lots might have been full.
[167]
As argued by Counsel for the
Respondent, the main motive of the TPA was profit and therefore any other
benefit it received by virtue of the employees using their cars was ancillary.
[168]
The evidence did show that
sometimes public transportation was not readily available to the employees but
this does not mean that the availability of the free parking space was any the
less a benefit.
[169]
The ease or difficulty of going to
work was a matter that could have been addressed by the parties in their
Collective Agreement and certainly at the time of hiring if it was a concern to
either party.
[170]
The Court is satisfied that the
workers in this case received a free parking space at work and this allowed
them to drive to work and back home without paying for their parking space. It
is immaterial that neither the employer nor the employee considered it to be a
form of extra remuneration and did not include it in their Collective
Agreement.
[171]
The Court is satisfied that what
the workers enjoyed was more than an understanding. They had the right or
privilege to park at the lots free of charge except on the rare occasion when
the lot was full.
[172]
Further, the Court sees no merit
in the Appellants’ argument that there was no economic loss to the TPA because
the lots were never full. The Court does not accept the “quid pro quo”
argument of the Appellants as being relevant. If they used their cars and were
not reimbursed and incidentally the employer received a benefit then that does
not mean that the workers did not receive a benefit. Both parties are
capable of receiving a benefit at the same time.
[173]
The Court is satisfied that the
primary beneficiaries were the employees and that any benefit obtained by the
employer was ancillary. The Court is satisfied that what the workers obtained
was indeed a “quirk” even though not covered in the Collective Agreement.
[174]
The Court does not accept the
Appellants’ argument that any benefit received was not calculated properly.
There was no evidence given which would allow the Court to conclude that some
other method of calculation was preferable or that the result was inaccurate. As
the agent from CRA indicated, they used the best information and method
available and they gave a reasonable opportunity for the Appellants to have
input that might have changed the calculations.
[175]
The Court is satisfied that the
employees did enjoy or receive an economic advantage. That economic advantage
was the value of the parking spaces that they occupied and is measurable in
economic terms. There can be no doubt that their economic advantage was
conferred upon the employees in respect of, in the course of, or by virtue of
the employment relationship with the employees.
[176]
With respect to the C.P.P. issue,
the Court is satisfied that the payment was a direct payment from the employer
to the employee.
[177]
The appeals are dismissed and the
Minister’s assessments are confirmed, with costs to the Respondent.
Signed at
New Glasgow, Nova Scotia, this 12th day
of April 2010.
“T.E. Margeson”
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