Citation: 2009 TCC 5
Date: 20090105
Docket: 2007-4575(IT)I
BETWEEN:
JAMES C. GRILL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Little J.
A. Facts
[1] In May 1995, the Appellant began working at Envision
Credit Union (“Envision”) at its business location at 32711 South Fraser Way in Abbotsford, British Columbia (the “Workplace”).
[2] During the 1995 taxation year the Appellant
and his wife lived at 51575 Ferry
Road in Rosedale, British Columbia (the “Ferry Road Residence”).
[3] In early 1996, the Appellant and his wife
purchased a vacant lot located at 10303 Royalwood Boulevard in Rosedale. The Appellant and his wife constructed a new residence on
the property (the “Royalwood Residence”).
[4] In October 1996, the Appellant and his wife
moved from the Ferry Road Residence to the Royalwood Residence.
[5] The distance between the Royalwood
Residence and the Workplace was approximately 50 kilometres.
[6] On July 1, 2004, the Appellant and his wife
separated.
[7] The Appellant and his wife agreed to sell
the Royalwood Residence. It was subsequently sold in November 2005.
[8] On November 29, 2005, the Appellant moved
from the Royalwood Residence to a new residence at #2–35931 Empress Drive in Abbotsford (the “Abbotsford Residence”).
[9] The distance between the Royalwood
Residence and the Workplace was more than 40 kilometres than the distance
between the Abbotsford Residence and the Workplace.
[10] Throughout the period of the 1995 to 2005
taxation years, the Appellant continued to work at Envision and his work
location remained at the Workplace in Abbotsford.
[11] In computing his income for the 2005
taxation year, the Appellant claimed a deduction for moving expenses in the
amount of $22,984.54. These expenses include travel costs, meals, cost of
temporary accommodations, transportation and storage costs, and various legal
and real estate fees in respect of the Appellant’s move from the Royalwood
Residence to the Abbotsford Residence.
B. Issue
[12] The issue is whether the Appellant is entitled
to deduct moving expenses in the amount of $22,984.54 in computing his income
for the 2005 taxation year.
C. Analysis
[13] Subsections 62(1) and (3) of the Income
Tax Act (the “Act”) read as follows:
Moving Expenses
62. (1)
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 taxpayer’s
income for the year from the taxpayer’s employment at a new work location or
from carrying on the business at the new work location, as the case may be, 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.
[Emphasis added]
Definition of “moving expenses”
62. (3) In subsection 62(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
62(3)(f)) incurred by the taxpayer in respect of the acquisition of the new
residence.
[14] The phrase “eligible relocation” is defined
under 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);
[Emphasis added]
[15] In Bracken v. The Minister of National
Revenue, 84 DTC 1813 (T.C.C.), Chief Justice 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
Justice Christie states:
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. …
[16] I agree with the interpretation by Chief
Justice Christie of subsection 62(1). It is clear from the words in 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 relocates in
connection with “a new work location”. The definition of the phrase
“eligible relocation” under subsection 248(1) of the Act requires
that the relocation occurred “to enable the taxpayer … 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”)”.
Therefore, the words of the Act clearly contemplate, or require, that
there be a “new work location” in order for the taxpayer to qualify for
the moving expenses deduction. (Emphasis added)
[17] In Giannakopoulos v. The Minister of
National Revenue, [1995] 3 F.C. 294 (F.C.A.), the Federal Court of Appeal
also considered the deduction of moving expenses under subsection 62(1). At
paragraph 7, 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.
[18] The Appellant argued that his Workplace in
Abbotsford should be characterized as the “new work location” for the purposes
of subsection 62(1). Although the Appellant began working at Envision at the
Workplace in 1995, he argued that his move to Abbotsford in 2005 was for the
purpose of enabling him to work at the Workplace.
[19] However, the Appellant’s work location did not
change. Although the Appellant’s move from the Royalwood Residence to the
Abbotsford Residence in 2005 brought him more than 40 kilometres closer to his
Workplace, I am unable to find that the moving expenses claimed by the
Appellant can be deducted from any income earned at a “new work location”.
[20] Based on the above facts, I am unable to
stretch the words of the Act in order to find that the Appellant’s claim
for the moving expenses deduction in 2005 falls within the ambit of subsection
62(1).
[21] The appeal is dismissed, without costs.
Signed at Vancouver, British Columbia, this 5th day of January 2009.
“L.M. Little”
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