Docket: 2008-2473(IT)I
BETWEEN:
KEVIN TRIGG,
Appellant,
and
HER MAJESTY THE QUEEN,
Appeal heard on January 22, 2009 at Calgary, Alberta
Before: The Honourable
Justice G. A. Sheridan
Appearances:
|
For the Appellant:
|
The
Appellant himself
|
|
Counsel for the Respondent:
|
Valerie Meier
|
AMENDED JUDGMENT
In accordance with the attached Amended Reasons
for Judgment, the appeal from the reassessment made under the Income Tax Act
for the 2006 taxation year is allowed, and the matter is referred back to the
Minister of National Revenue for reconsideration and reassessment on the basis
that the Appellant is entitled to moving expense deductions for:
1.
car rental expenses of $547.84 and
$302.61; and
2.
asbestos removal and insulation
costs of $9,892.15; and
3.
property taxes and
utilities in the amount of $1,685.49.
IT IS FURTHER ORDERED that the filing fee of $100 be
refunded to the Appellant.
This
Amended Judgment and Amended Reasons for Judgment are issued in substitution
for the Judgment and Reasons for Judgment issued the 9th day of
April, 2009.
Signed at Ottawa, Canada, this 20th day of May, 2009.
“G. A. Sheridan”
Citation: 2009TCC194
Date: 20090520
Docket: 2008-2473(IT)I
BETWEEN:
KEVIN TRIGG,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
AMENDED REASONS FOR JUDGMENT
Sheridan, J.
[1] The Appellant,
Kevin Trigg, is appealing the reassessment of the Minister of National Revenue
disallowing a deduction for certain costs he incurred during his move from
Quebec to take up new employment in Alberta.
[2] At the hearing
of the appeal, an Amended Reply to the Notice of Appeal[1] was filed on consent.
[3] In dispute are
costs incurred by the Appellant for car rental and for the removal and
replacement of asbestos from his old residence in Montreal. Each
of these costs is dealt with separately below.
Car
Rental Expenses
[4] The Appellant
moved to Alberta in 2005. The sale of his old residence in Montreal was
not completed until 2006. In March of that year he had to return to Montreal to complete
the negotiations on the sale of the old residence and again, in June to close
the deal. On both occasions he rented a car to travel between Montreal and
his summer residence north of the city where he was staying while tying up the
sale of the old residence. The car rental contracts[2] provided unlimited mileage and showed kilometers
driven under each contract of 1161 and 859, respectively.
[5] The Minister
conceded that the Appellant was entitled to rental car cost expenses based on a
maximum of 720 kilometers.
[6] The Appellant
argued that he was entitled to the full cost on the basis that, but for moving
to Alberta for work, he would not have needed a rental car in Montreal.
[7] Subsection 62(1)
provides generally for the deduction of “amounts paid by the taxpayer as or on
account of moving expenses” which are defined in subsection 62(3) of the Income
Tax Act as follows:
(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, and
(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 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
use of the word “includes” in subsection 62(3) has been held to mean that the
list is not exhaustive[3].
[9] The cost of renting a car is not specifically listed
under subsection 62(3) but nor is it expressly excluded. In these circumstances, the question is whether the
car rental costs were “… a direct consequence of the change in residence
imposed by the change in employment”[4].
In my view they were, an opinion the Minister shared, at least to the extent of
720 kilometers. The rental car contracts provided unlimited mileage; thus, the
number of kilometers driven did not affect the Appellant’s cost. Accordingly, the
issue is whether the rental expenses of $547.84 and $302.61 were reasonable. I
am satisfied they were. But for the move to Alberta, the Appellant would not
have needed to return to Montreal to finalize the sale of his former home. Because it
took such a long time to sell the old residence, by the time the sale was
concluded, he had no transportation in Montreal to permit him to take care of all the final details
of the sale. In my view, the rental car expenses were a direct consequence of
the move and the amounts claimed are reasonable.
Asbestos
Replacement Costs
[10] The Appellant
claimed a deduction for $9,892.15 for costs he incurred to remove asbestos from
his old residence and replace it with insulation.
[11] The Minister
disallowed the deduction on the basis that it did not come within the meaning
of “a taxpayer’s selling costs in respect of the sale of the old residence”
under subsection 62(3)(e) of the Act. In support of the
Respondent’s position, counsel for the Respondent cited Faibish v. R.[5] In that case, the Tax Court of Canada upheld the
Minister’s refusal to allow a moving expense deduction for the removal of mold
from and related repairs to the old residence prior to its being listed for
sale.
[12] In my view,
however, the Appellant’s situation is easily distinguishable from that in Faibish.
The Appellant’s evidence, which I accept, was that it had taken several months
to find a buyer for their old residence in Montreal. After he and his family had moved to Alberta, they
finally received an offer. However, it was made conditional upon the replacement
of the asbestos with suitable insulation[6].
In Faibish, the property had not yet been listed for sale; the costs
incurred to remove the mold (and then, regrettably, to repair the flood damage
that ensued) arose only because of the taxpayer’s “belief”[7] that removing mold would enhance its chances for
sale. In these circumstances, the Court quite understandably concluded that the
mold removal and repair costs were remedial and preparatory to the move rather
than “moving expenses” as contemplated by subsection 62(3).
[13] The Court
referred in Faibish to another decision of the Tax Court of Canada, Collin
v. Minister of National Revenue[8],
in which Bonner, J. distinguished between preparatory costs and the costs of
changing the terms of a mortgage to facilitate a sale, the latter being a
legitimate moving expense. In my view, the costs incurred by the Appellant to
fulfill the conditions for the sale of his old residence are analogous to the
mortgage costs in Collin. Unlike the taxpayer in Faibish, the
Appellant did not take on such costs merely in the hope that they might bring
about a sale or enhance the price; they were the direct response to the demands
of a long-awaited buyer in a slow market. As such, they were part of his
selling costs in respect of the old residence and ought to be deductible.
[14] For the reasons
set out above, the appeal of the assessment for the 2006 taxation year is
allowed and the matter is referred back to the Minister for reconsideration and
reassessment on the basis that the Appellant is entitled to moving expense
deductions for:
1. car rental expenses of $547.84 and $302.61;
and
2.
asbestos removal and insulation
costs of $9,892.15; and
3.
property taxes and
utilities in the amount of $1,685.49.
This Amended Judgment and Amended Reasons for Judgment
are issued in substitution for the Judgment and Reasons for Judgment issued the
9th day of April, 2009.
Signed at Ottawa,
Canada, this 20th day of May, 2009.
“G. A. Sheridan”
Email this Content