Citation: 2010 TCC 483
Date: 20101004
Docket: 2009-895(IT)I
BETWEEN:
LISA MORELAND,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bédard J.
[1]
This appeal under the informal
procedure was heard at Hamilton, Ontario, on June 3, 2010. The
Appellant was the only witness.
Context
[2]
The Appellant has been
an employee of the Royal Canadian Mounted Police (the "Employer")
since 2005. Before February 2007, the Appellant carried out her employment
duties at 255 Attwell
Drive in Etobicoke, Ontario (the "Workplace"). In February 2007, the Appellant was
assigned new employment duties, which she still performed at the Workplace, but
in a different area within it. So, at all material times during the 2007
taxation year, the Appellant carried out her employment duties at the
Workplace. On June 27, 2007, the Appellant moved from 68 Baintree Way in Cambridge, Ontario
(the "old residence") to 209 Fleming Drive in Milton, Ontario (the "new residence"). I would
point out immediately that it was admitted by the Respondent at the beginning
of the hearing that the move from the old residence to the new residence
resulted in the Appellant living at least 40 kilometres closer to the
Workplace. The evidence also established clearly that the Appellant made the change
of residence for the sole purpose of being closer to the Workplace and,
consequently, of shortening her commuting time.
[3]
The Appellant received
gross earnings of $56,763.78 in the 2007 taxation year from the Employer. In
computing her income for that taxation year, the Appellant sought to deduct
moving expenses of $26,087.90. By Notice of Reassessment dated August 25,
2008, the Minister of National Revenue (the "Minister") disallowed
the deduction for moving expenses. The Appellant objected to the reassessment
for the 2007 taxation year by Notice of Objection dated September 10, 2008
and postmarked September 15, 2008. The Minister confirmed the reassessment
by Notice of Confirmation dated February 10, 2009. In March 2009, the
Appellant appealed from the reassessment.
Issue
[4]
The only issue to be
decided is whether the Appellant moved from the old residence to the new
residence to enable herself to be employed at a location in Canada.
Respondent's position
[5]
The Respondent submits
the Appellant did not have a "new work location", within the meaning
of subsection 248(1) of the Income Tax Act (the "Act")
during the 2007 taxation year and thus did not move from the old residence to
the new residence to enable herself to be employed at a "new work
location". Therefore, the Appellant's move to the new residence is not an
"eligible relocation" within the meaning of subsection 248(1) of
the Act, and no part of the amount of $26,087.90 claimed in respect of moving
expenses is deductible pursuant to subsection 62(1) of the Act in
computing the Appellant's income for the 2007 taxation year.
Appellant's position
[6]
The Appellant submits
that she moved from the old residence to the new residence to enable herself to
be employed at a "new work location" since she "changed physical
locations (offices) of work to start a new job within the same office complex
at 255 Attwell Drive, Etobicoke".
Statutory provisions
[7]
Subsections 62(1)
and (3) of the Act read as follows:
(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;
(b) they were not deductible because of this section in
computing the taxpayer's income for the preceding taxation year;
(c) the total of those amounts does not exceed
(i) in any case described in subparagraph (a)(i) of the
definition "eligible relocation" in subsection 248(1), the total of
all amounts, each of which is an amount included in computing the taxpayer's
income for the taxation year from the taxpayer's employment at a new work
location or from carrying on the business at the new work location, or because
of subparagraph 56(1)(r)(v) in respect of the taxpayer's employment at
the new work location, and
(ii) in any case described in subparagraph (a)(ii) of the
definition "eligible relocation" in subsection 248(1), the total of
amounts included in computing the taxpayer's income for the year because of
paragraphs 56(1)(n) and (o); and
(d) all reimbursements and allowances received by the
taxpayer in respect of those expenses are included in computing the taxpayer's
income.
(3) Definition of "moving expenses" -- In subsection (1), "moving expenses" includes any
expense incurred as or on account of
(a) travel costs (including a reasonable amount expended for
meals and lodging), in the course of moving the taxpayer and members of the
taxpayer's household from the old residence to the new residence,
(b) the cost to the taxpayer of transporting or storing
household effects in the course of moving from the old residence to the new
residence,
(c) the cost to the taxpayer of meals and lodging near the
old residence or the new residence for the taxpayer and members of the
taxpayer's household for a period not exceeding 15 days,
(d) the cost to the taxpayer of cancelling the lease by
virtue of which the taxpayer was the lessee of the old residence,
(e) the taxpayer's selling costs in respect of the sale of
the old residence,
(f) where the old residence is sold by the taxpayer or the
taxpayer's spouse or common-law partner as a result of the move, the cost to
the taxpayer of legal services in respect of the purchase of the new residence
and of any tax, fee or duty (other than any goods and services tax or
value-added tax) imposed on the transfer or registration of title to the new
residence,
(g) interest, property taxes, insurance premiums and the cost
of heating and utilities in respect of the old residence, to the extent of the
lesser of $5,000 and the total of such expenses of the taxpayer for the period
(i) throughout which the old residence is neither ordinarily
occupied by the taxpayer or by any other person who ordinarily resided with the
taxpayer at the old residence immediately before the move nor rented by the
taxpayer to any other person, and
(ii) in which reasonable efforts are made to sell the old residence,
and
(h) the cost of revising legal documents to reflect the
address of the taxpayer's new residence, of replacing drivers' licenses and
non-commercial vehicle permits (excluding any cost for vehicle insurance) and
of connecting or disconnecting utilities,
but, for greater certainty, does not include costs (other than costs
referred to in paragraph (f)) incurred by the taxpayer in respect of the
acquisition of the new residence.
[8]
The phrase
"eligible relocation" is defined in subsection 248(1) of the Act
as follows:
"eligible relocation" means a
relocation of a taxpayer where
(a) the relocation occurs to enable the taxpayer
(i) to carry on a business or to be employed at a location in Canada (in section 62 and this subsection
referred to as "the new work location"), or
(ii) to be a student in full-time attendance enrolled in a program
at a post-secondary level at a location of a university, college or other
educational institution (in section 62 and in this subsection referred to as
"the new work location"),
(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
except that, in applying subsections 6(19) to (23) and section 62 in
respect of a relocation of a taxpayer who is absent from but resident in Canada, this definition shall be read
without reference to the words "in Canada" in subparagraph (a)(i), and without reference to
paragraph (b).
Analysis and conclusion
[9]
In Bracken v.
Minister of National Revenue, 84 DTC 1813 (T.C.C.), Chief Judge
Christie (as he then was) established four conditions that a taxpayer must meet
in order to qualify for a deduction for moving expenses under
subsection 62(1). On page 1819, Chief Judge Christie stated the following:
My reading of subsection 62(1) is that it contemplates the existence
of four separate elements: old work location, new work location, old residence
and new residence, and the comparison of two distances, i.e. the distance from
the old residence to the new work location with the distance from the new
residence to the new work location the former of which must exceed the latter
by 40 or more kilometres in order for the moving expenses to be deductible.
. . .
[10]
In the case law subsequent
to Bracken there is a disagreement on the correctness of this
interpretation (see, for example, Templeton v. Canada, [1997] F.C.J.
No. 396 (F.C.T.D.) (QL) and Gelinas v. The Queen, 2009 DTC 479,
but agreement with the approach set forth in Bracken (see, for example, Grill
v. Canada, 2009 TCC 5 (informal procedure) and Jaggers v.
Canada, [1997] T.C.J. No. 477 (QL).
[11]
Giannakopoulos v. M.N.R., [1995] 3 F.C. 294 (F.C.A.), is
the only case in which the Federal Court of Appeal has considered the deduction
of moving expenses under subsection 62(1). At page 297, Justice
Marceau stated:
Subsection 62(1) permits a taxpayer to deduct moving expenses when
he moves closer to a new workplace. An employee must live within a reasonable
distance of his work. When he accepts a new position, the employee may have to
move in order to remain within a practical commuting distance of his job.
Subsection 62(1) recognizes that relocation is a legitimate work-related
expense. In order to prevent the provision from being invoked when a taxpayer
simply desires a change in residence, the provision requires that the move
bring the taxpayer at least forty kilometres closer to work. . . .
In that case, the "straight line" or
"as the crow flies" approach was repudiated by the Federal Court of
Appeal. I would add that in so doing the Federal Court of Appeal did not cast
any doubt upon the correctness of the approach set forth in Bracken.
[12]
I agree with Chief Judge
Christie's interpretation of subsection 62(1). It is clear from the wording
of subparagraph 62(1)(c)(i) that a taxpayer is only entitled to
deduct moving expenses from his or her employment and/or business income if he
or she has relocated to a "new work location". The definition
of the phrase "eligible relocation" in subsection 248(1) of the
Act requires that the relocation have occurred "to enable the taxpayer
. . . to carry on a business or to be employed at a location in Canada (in section 62 and . . . subsection [248(1)]
referred to as "the new work location")". Therefore, the
wording of the Act clearly contemplates, or requires, that there be a "new
work location" in order for the taxpayer to qualify for the moving
expense deduction.
[13]
In the present case,
the Appellant changed physical work locations (offices) to perform new duties
(assigned by the same employer) within the same office complex at 255 Attwell Drive in Etobicoke, Ontario. So the question to be answered is the following: Does this
constitute a move to a "new work location"? I am of the opinion that
the term "new work location" means the actual business location, that
is, the actual place, building or site at which the taxpayer is employed. Even
if the phrase "new work location" is not to be interpreted rigidly, I
cannot imagine that Parliament's intent was to permit a taxpayer who goes from
a job on the seventh floor of a building to a new job (with the same employer)
on the sixth floor of the same building to deduct moving expenses. In the
present case, the Appellant did not met the "new work location"
requirement, consequently none of the moving expenses totalling $26,087.90 claimed
by the Appellant were deductible pursuant to subsection 62(1) of the Act
in computing her income for the 2007 taxation year.
[14]
For these reasons, the
appeal is dismissed.
Signed at Montreal, Quebec, this 4th day of October 2010.
"Paul Bédard"
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