Citation: 2009 TCC 518
Date: 20091019
Docket: 2008-3825(IT)I
BETWEEN:
PIERRE ST-GERMAIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Angers J.
[1]
The appellant is
appealing from a reassessment made on October 22, 2007, for the 2000, 2001,
2002 and 2003 taxation years.
[2]
The Minister of
National Revenue (the Minister) arbitrarily determined the appellant's income
tax payable for the 2000 and 2001 taxation years on April 17, 2003, and for the
2002 and 2003 taxation years on August 22, 2005. Later, the appellant produced
amended income tax returns for those taxation years in which he claimed
expenses, credits and deductions as follows:
|
|
2000
$
|
2001
$
|
2002
$
|
2003
$
|
|
(a) utilities
(rental)
(b) final loss
(c) employment
expenses
(d) non-refundable
tax credits
- equivalent
to spouse credit
- pension
credit
(e) GST rebate
(employees)
|
1,828
—
15,661
6,140
—
689
|
1,778
—
4,747
6,293
—
145
|
2,085
—
7,083
6,482
1,000
—
|
—
22,200
6,036
6,596
1,000
—
|
[3]
The Minister allowed
the amounts of $6,448, $3,800, $1,302 and $5,384 as rental loss for each of the
taxation years, respectively, and disallowed the other credits, expenses or
rebates claimed.
[4]
The respondent also
challenged the appellant's right to appeal before this court regarding the 2000
and 2001 taxation years on the ground that the Tax Court of Canada does not
have jurisdiction to hear the appeal for the 2000 and 2001 taxation years since
the reassessments for these years were made under subsection 152(4.2) of the Income
Tax Act (the Act) and no objection is allowed against these reassessments
in accordance with subsection 165(1.2) of the Act.
[5]
The evidence was
submitted based on each of the items in question. On the issue of employment
expenses, the appellant testified that until July 2002, he was the director of
client services at Vidéotron. According to the testimony, all his travel
expenses were reimbursed by Vidéotron until June 2000. At that time, Vidéotron
decided to stop paying for travel fees and refused to provide him with a T2200
form, the declaration of conditions of employment by the employer.
[6]
The appellant admits
that Vidéotron provided him with an office at its place of buisness. The
appellant claims that he had to travel to other Vidéotron buildings on a
regular basis, and sometimes to the call centres elsewhere in the province.
[7]
In July 2002, the
appellant was appointed senior director of commercial and multiple unit sales
at Vidéotron. Under the conditions of this new position, Vidéotron would
reimburse him for reasonable expenses incurred for his employment, upon
presentation of supporting documents. He would be paid 35 cents per kilometre
to a maximum of $500 a month. In March 2003, Vidéotron decided to provide him
with a car, which is considered a taxable benefit (Exhibit A‑8). The
appellant was laid off on July 14, 2003.
[8]
The appellant claimed
$15,661, $4,747, $7,083 and $6,036 respectively for each of the years in
question according to the table in paragraph 2, and $689 and $145 under the
goods and services tax (GST) rebate for employees for the 2000 and 2001
taxation years, respectively. The only T2200 form submitted was for the 2003
taxation year.
[9]
Diane Laberge is a pay
analyst for executives at Vidéotron. She answered a questionnaire on the
appellant's employment conditions and her replies, as with her testimony, do
not indicate the appellant was required to incur expenses for his employment or
that he was to perform his duties anywhere other than Vidéotron's place of
business. There was no obligation in the employment conditions for the
appellant to keep a home office and if work was carried out at the appellant's
home, it was by choice.
[10]
According to the
information Ms. Laberge collected, if the appellant had to incur travel
expenses, he could submit an expense account. The appellant allegedly made no
claim in 2000. He claimed hotel and meal expenses in 2001, 2002 and 2003, which
were reimbursed by Vidéotron (Exhibit I-6).
[11]
Section 8 of the Act
sets out what is deductable from a taxpayer's employment income. Under this
section, for the 2000 taxation year, the appellant claimed $1,146.87 in
advertising and promotion expenses, $548.48 in supplies, $1,656.13 in living
expenses, $4,000 in accommodation expenses, and 60% of the motor vehicle
expenses, or $8,310.40. For the 2002 taxation year, he claimed only the 60% of
the motor vehicle expenses, for $4,747.06.
[12]
The appellant claims
that in a unilateral decision, Vidéotron stopped reimbursing his travel
expenses in June 2000, until July 2002 when he was promoted and signed an
agreement accepting his promotion and new working conditions (Exhibit A-1). It
is very surprising to me that no written agreement describing the appellant's
working conditions existed prior to July 2002. One thing for sure is that,
notwithstanding the appellant's claim that he had the right to the
reimbursement, Vidéotron's documentation shows no reimbursement was paid to
him, but he did have the right to be reimbursed for expenses, as indicated in
the 2001 documentation (Exhibit I-6).
[13]
Ms. Laberge's testimony
also confirms that the appellant was not usually required to carry out his
employment duties anywhere other than at his employer's place of business nor
was he expected to pay expenses. The appellant could, in my opinion, claim
expenses from his employer. The Minister was therefore justified in disallowing
the employment expenses claimed for the 2000 taxation year.
[14]
The same can be said
for the motor vehicle expenses for the 2000 and 2001 taxation years. The
appellant was not usually required to carry out his employment duties anywhere
other than at the establishment or to pay expenses. On this, I accept
Ms. Laberge's testimony. The appellant therefore does not have the right
to a GST rebate for the 2000 and 2001 taxation years.
[15]
As for the 2002
taxation year, the respondent informed the Court that she agrees to grant the
$7,083 the appellant claimed as motor vehicle expenses.
[16]
As for the 2003
taxation year, the appellant admits that this was not an employment expense
related to his work at Vidéotron. Rather, they were expenses related to his job
search. They were therefore not employment expenses and the appellant cannot
claim the deduction.
[17]
Under the heading
rental loss, the Minister disallowed the utilities expenses for the 2000, 2001
and 2002 taxation years. At the trial, the Minister agreed to allow this
expense for the 2000 and 2001 taxation years for $1,828 and $1,778 respectively
if the appellant had the right to appeal for those two years. The Minister
maintained the refusal to allow the 2002 expense on the ground that the
appellant did not show, on a balance of probabilities, that he was responsible
for this expense according to the rental agreements. The appellant testified
that he rented turnkey accommodations and he had to pay the utilities. I will
allow this expense for the 2002 taxation year.
[18]
I informed the
appellant at the trial that the evidence heard does not permit me to allow the
wholly dependent person tax credit for the tax years in question in regard to
his son, under section 118 of the Act on the ground that he paid child support
during the years in question (see paragraph 118(1)(b) and
subsection 118(5) of the Act).
[19]
The same can be said
for the tax credit claims for the 2002 and 2003 taxation years for pension
income. The appellant made a withdrawal from his RRSP in 2002 and received a
retirement benefit in 2003. This is not considered eligible pension income
under section 118 of the Act.
[20]
The Minister amended
his calculation regarding the final loss claimed by the appellant for the 2003
taxation year. At the hearing, the Minister also amended the new calculation of
the final loss and the capital loss regarding the appellant's rental building
in Longueuil. This is the amendment:
|
|
Building
$
|
Land
$
|
|
1.
proceeds of
disposition (allocation)
2.
minus adjusted cost
base
3.
loss
4.
minus non-rental
period (3/7)
5.
final loss
6.
capital loss
7.
deductible capital
loss
|
68,600
84,140
15,540
6,660
8,880
—
—
|
29,400
36,060
6,660
2,854
—
3,806
1,903
|
[21]
In the end, the
appellant no longer challenges the above calculation. He asks, however, to
deduct the capital loss from the capital gain earned on the sale of another
building. This request does not involve the validity of the assessment before
me, and therefore, I cannot address this request.
[22]
These reasons address
all the points in question regarding the deductions, credits and expenses the
appellant is claiming. The respondent also raised as preliminary means the
issue of whether the Court has jurisdiction to hear the appeal regarding the
2000 and 2001 taxation years. The respondent relies on sections 165 and 169 of
the Act on the ground that the reassessments dated October 22, 2007, for the
years in question, were made under subsection 152(4.2) and no objection is
allowed against these reassessments pursuant to subsection 165(1.2) of the Act.
[23]
The original assessment
for the 2000 and 2001 taxation years was made on April 17, 2003. The Minister
made reassessments on request of the appellant for these two years on October
22, 2007, and the request was made further to an amended tax return filed on
January 12, 2004. The legal effect of an amended tax return was reviewed by
Sharlow J.A. of the Federal Court of Appeal in Armstrong v. Canada, 2006
FCA 119, at paragraph 8:
An amended return for a taxation year that has
already been the subject of a notice of assessment does not trigger the
Minister's obligation to assess with all due dispatch (subsection 152(1) of the
Income Tax Act), nor does it start anew any of the statutory limitation
periods that commence when an income tax return for a particular year is filed
and then assessed. An amended income tax return is simply a request that the
Minister reassess for that year.
[24]
The normal reassessment
period is three years (subsection 152(3.1) of the Act) when it is for an
individual. This period begins on the date of the original assessment, which,
in this case, was April 17, 2003. If the Minister wishes to reassess after the
normal reassessment period, generally, he can only do so if he establishes that
a taxpayer made a misrepresentation that is attributable to neglect,
carelessness or wilful default when filing his or her income tax returns or if
the taxpayer files a waiver with the Minister using the prescribed form.
[25]
In this case, however,
the taxpayer requested the reassessments and this request was made within the
normal reassessment period. Subsection 152(4.2) of the Act allows a taxpayer to
ask the Minister to make a reassessment to reduce the income tax payable or
grant a tax rebate for the prescribed year after the normal reassessment
period. In my opinion, this is not the case here. The appellant's request
(amended return) was made before the normal reassessment period ended and the
fact reassessments were made by the Minister after the normal reassessment
period does not result in assessments within the meaning of subsection
152(4.2).
[26]
The evidence does not
clearly establish that the income tax returns the appellant filed for the 2000
and 2001 taxation years are amended returns. I make this statement because the
evidence is that the original assessments for 2000 and 2001 were made
arbitrarily by the Minister on the ground that no income tax return had been
produced by the appellant for those years. It could simply have been a matter
of returns that were filed late.
[27]
In my opinion, the
appellant had the right to object to the assessments in question and appeal to
this court.
[28]
The appeals are allowed
in part and the assessments are referred back to the Minister of National
Revenue for reconsideration and reassessment.
Signed at Montréal, Quebec,
this 19th day of October 2009.
"François Angers"
Translation
certified true
on this 25th day
of November 2009.
Elizabeth Tan,
Translator
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