Citation: 2009 TCC 238
Date: 20090519
Dockets: 2008-4121(IT)I,
2008-4122(IT)I
BETWEEN:
FRANÇOIS BÉLANGER,
GILLES BÉLANGER,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1]
These two appeals were
heard together under the Informal Procedure.
[2]
Gilles Bélanger is
appealing from reassessments made by the Minister of National Revenue
("the Minister") on March 31, 2008, in respect of the 2004 and
2005 taxation years. By these reassessments, the Minister added $26,440 to Gilles Bélanger's
employment income for the 2004 taxation year and $5,335 to his employment
income for the 2005 taxation year, and subjected those amounts to the penalty
contemplated in subsection 163(2) of the Income Tax Act
("the Act").
[3]
In addition, François
Bélanger is appealing from a reassessment made by the Minister on
March 31, 2008, in respect of the 2004 taxation year. By this
reassessment, the Minister added $24,078 to François Bélanger's employment
income for the 2004 taxation year, and subjected that amount to the penalty contemplated
in subsection 163(2) of the Act. I would note that François Bélanger also
filed an appeal in respect of his 2005 taxation year, though no notice of
assessment had been issued for that year. Consequently, it is my opinion that
this Court could not entertain the Notice of Appeal in question.
[4]
In making and confirming
the reassessments of Gilles Bélanger for the 2004 and 2005 taxation years, the
Minister relied on the same facts as those set out in paragraph 5 of the Reply
to the Notice of Appeal:
[TRANSLATION]
(a)
During the taxation years in issue, the Appellant
worked for Mécanique P‑O‑G Inc., among others. (admitted)
(b)
Mécanique P-O-G Inc. is in the industrial
piping and work site mechanics business. (admitted)
(c)
During the taxation years in issue — specifically,
the period from January 2004 to April 2005 — the Appellant worked
as a pipefitter-plumber on the Alouette plant site in Sept-Îles for Mécanique
P-O-G Inc. (admitted)
(d)
The Appellant was a union representative
for the Commission de la construction du Québec during the taxation years in
issue. (admitted)
(e)
Following an audit of the records of Mécanique
P-O-G Inc., the Minister discovered that, for the 2004 and 2005 taxation years,
the Appellant had received compensation for, or an allowance in respect of, board
and lodging, in the amounts of $26,440 and $5,335, respectively. (admitted)
(f)
The Appellant had given the employer his
residential address as stated on his Commission de la construction du Québec
competency card, namely 3114 Lac Genest in the municipality of Baie-Trinité.
(admitted)
(g)
The distance between the Aluminerie Alouette work
site in Sept-Îles and the Appellant's residential address as stated on his competency
card is approximately 129 km. (admitted)
(h)
The daily allowances or compensation paid to the
Appellant were not entered on the annual T4 slip that the said Appellant
received from Mécanique P‑O‑G Inc. for the 2004 and
2005 taxation years. (admitted)
(i)
However, the Minister determined that the
allowances or compensation received during the taxation years in issue on
account of board and lodging, in the amounts of $26,440 and $5,335
respectively, were taxable, based on the following crosschecking:
(i)
On March 31, 2003, the Minister was informed
that the Appellant had allegedly moved to 3114 Lac Genest in the municipality of
Baie‑Trinité. (no knowledge)
(ii)
The Appellant has owned a building at 32
McCormick Street in the town of Port-Cartier since 1976. (admitted)
(iii)
The distance between the Aluminerie Alouette work
site in Sept-Îles and the property at 32 McCormick Street in [Port‑Cartier]
is approximately 49 km. (admitted)
(iv)
Rollande Bérubé-Bélanger, the Appellant's wife,
lived at 32 McCormick in Port-Cartier during the taxation years in issue. (admitted)
(v)
According to the employee information form used
by the employer Mécanique P‑O‑G Inc. at the time of
hiring, the Appellant tendered a sample cheque showing a bank account
held jointly with his wife and identifying their residence as 32 McCormick
Street in Port‑Cartier. (admitted)
(vi)
On the slips issued by Desjardins Trust (RRSP) for
the taxation years in issue, the Appellant's address is given as 32 McCormick
Street, Port-Cartier. (admitted)
(vii)
The road to 3114 Lac Genest in Baie‑Trinité
is not maintained during the winter and is accessible only by snowmobile. (admitted)
(viii)
The principal place of residence is 32 McCormick
Street in Port‑Cartier because most of the Appellant's ties (family,
economic and employment) are to that place. (denied)
[5]
In addition, the
Minister relied on the following factors, set out in paragraph 6 of the
Reply to the Notice of Appeal, in imposing on Gilles Bélanger the penalty
under subsection 163(2) of the Act in respect of the $26,440 added to his
2004 employment income and the $5,335 added to his 2005 employment income:
[TRANSLATION]
(a) Based on the conclusion that the Minister
drew from the facts set out in paragraph 5 above, the Appellant falsely
used the address of the building in Baie-Trinité so that he could be considered
eligible to receive tax-free allowances.
[6]
In making and
confirming the March 31, 2008, reassessment of François Bélanger for the 2004
taxation year, the Minister relied on the following facts, set out in paragraph 5
of the Reply to the Notice of Appeal:
[TRANSLATION]
(a)
During the taxation year in issue, the Appellant
was employed by Mécanique P‑O‑G Inc. (admitted)
(b)
Mécanique P-O-G Inc. is in the industrial piping
and work site mechanics business. (admitted)
(c)
During the taxation year in issue —
specifically, from January 2004 to December 2004 — the
Appellant worked as a welder-pipefitter for Mécanique P‑O‑G Inc. on
the Alouette plant site in Sept-Îles. (admitted)
(d)
Following an audit of the records of Mécanique
P-O-G Inc., the Minister discovered that, for the 2004 taxation year, the
Appellant had received compensation for, or an allowance in respect of, board
and lodging, in the amount of $24,078. (admitted)
(e)
The Appellant had given the employer his
residential address as stated on his Commission de la construction du Québec
competency card, namely 3114 Lac Genest, in the municipality of
Baie-Trinité. (admitted)
(f)
The distance between the Aluminerie Alouette
work site in Sept-Îles and the residential address on the Appellant's
competency card is approximately 129 km. (admitted)
(g)
The daily allowances or compensation paid to the
Appellant were not entered on the annual T4 slip that the said Appellant
received from Mécanique P‑O‑G Inc. for the 2004
taxation year. (admitted)
(h)
However, the Minister determined that the
$24,078 in allowances or compensation received during the taxation year in
issue on account of board and lodging was taxable, based on the following
crosschecking.
(i)
Prior to May 1, 2004, the Appellant lived with
his parents at 32 McCormick Street in the town of Port-Cartier.
(denied)
(ii)
The distance between the Aluminerie Alouette
work site in Sept-Îles and the property at 32 McCormick Street in [Port‑Cartier]
is approximately 49 km. (admitted)
(iii)
During the period from April 1, 2004,
to March 31, 2005, the Appellant lived at 911 Giasson Street,
Apt. 3, in the town of Sept‑Îles. (admitted)
(iv)
The distance between the Aluminerie Alouette
work site in Sept-Îles and the Appellant's apartment at 911 Giasson Street in Sept‑Îles
is approximately 31 km. (admitted)
(v)
On April 26, 2004, the Minister was
informed that the Appellant had allegedly moved to 3114 Lac Genest in the
municipality of Baie‑Trinité. (no knowledge)
(vi)
The building at 3114 Lac Genest in the municipality
of Baie‑Trinité belongs to the Appellant's father, who happened to work as
a pipefitter-plumber for the same employer during the same period, and was moreover
a union representative. (admitted)
(vii)
The road to 3114 Lac Genest in Baie‑Trinité
is not maintained during the winter and is accessible only by snowmobile. (admitted)
[7]
In addition, the
Minister relied on the following factors, set out in paragraph 6 of the
Reply to the Notice of Appeal, in imposing on François Bélanger the penalty
contemplated in subsection 163(2) of the Act in respect of the $24,078 added
to his employment income for the 2004 taxation year:
[TRANSLATION]
(a) Based on the conclusion that the Minister
drew from the facts set out in paragraph 5 above, the Appellant falsely used
the address of the building in Baie-Trinité so that he could be considered
eligible to receive tax-free allowances.
[8]
François Bélanger and Gilles
Bélanger testified in support of their position. Luc Villeneuve, the auditor
from the Canada Customs and Revenue Agency ("the Agency")
who audited the Appellant's returns for the taxation years in issue, was the
only witness to testify in support of the Respondent's position.
Background
[9]
Under subsection 6(6)
of the Act, no tax is payable on the value of board, lodging or transportation
provided by the employer, or on a reimbursement of, or allowance in respect of,
reasonable board, lodging or transportation expenses, where the employee
is carrying out temporary duties at a special work site or at a remote location
to which the employee must travel. However, under subsection 6(6),
the employee at the special work site must have maintained a self-contained
domestic establishment as his or her principal place of residence, the
residence must have been available for
his occupancy (i.e. not rented out) throughout the period in which the employee
was being reimbursed (or receiving an allowance) for board and lodging
expenses, and, by reason of the distance, the employee could not
reasonably have been expected to have returned to the residence daily from the
work site. In the case at bar, the Appellants submit that
(i)
the self-contained
domestic establishment serving as their principal residence during the period
in which they worked at the Aluminerie Alouette work site in Sept-Îles ("the
work site") was located at 3114 Lac Genest in the municipality of Baie-Trinité;
(ii)
the distance between
3114 Lac Genest in Baie‑Trinité and the work site is approximately 129
km;
(iii)
by reason of distance,
they could not reasonably have been expected to return to that self-contained
domestic establishment daily; and
(iv)
consequently, the
allowances that they received during the years in issue are exempt from taxation
under subsection 6(6) of the Act.
[10]
For his part, the
Minister submits that
(i)
the self-contained
domestic establishment serving as the Appellants' principal residence during
the periods in which they worked at the work site was not located in the
municipality of Baie‑Trinité;
(ii)
the self-contained
domestic establishment serving as the Appellants' principal residence during
the periods in issue was located in a municipality or town that was not distant
from the site and, by reason of this fact, they could reasonably have been
expected to return to their domestic establishment daily; and
(iii)
consequently, the
allowances that they received during the years in issue are not exempt from taxation
under subsection 6(6) of the Act.
The testimony of Gilles Bélanger
[11]
Gilles Bélanger
testified as follows:
(i)
Prior to 1998, he lived
in his residence at 32 McCormick Street in Port‑Cartier ("the
McCormick Street residence") with his wife and their three children.
(ii)
In 1998, Mr. Bélanger and
his wife separated. He testified that the separation was amicable and that they
remained on good terms. He explained that when they separated, they agreed
that she would have custody of the three children, and that she would live free
of charge in the McCormick Street residence for as long as she had custody of
the children, provided she paid the heating, electrical and telephone bills associated
with that residence. Mr. Bélanger explained that the part of his pay that
was deposited into the bank account that he held jointly with his wife was used
by her to cover some of the costs related to the custody of their three
children. Mr. Bélanger also explained that in order to thank his wife for
having sole custody of the three children after their separation, he designated
his wife as the payee of his RRSPs and the beneficiary of the life insurance
policies that he held as the insured.
(iii)
During the period in
which he worked at the work site, he rented a room from Marie Alors (who
allegedly died recently) in her residence at 21 Lemaire Street in
Sept-Îles. Mr. Bélanger explained that the $100 weekly rent for the room was
always paid in cash. Lastly, in connection with this rental, Mr. Bélanger said
that he lived in the room on weekdays during the period when he worked at the
site. I would immediately note that this part of Mr. Bélanger's testimony
was contradicted by the witness Mr. Villeneuve, and there was no reason
to question Mr. Villeneuve's credibility in the case at bar. Specifically, Mr. Villeneuve
testified that Mr. Bélanger told him in a telephone conversation (while
the audit was under way) that he lived at his son François's residence on
Giasson Street in Sept‑Îles on weekdays while working at the work site.
[12]
The evidence regarding Gilles Bélanger
further showed the following:
(i)
On
December 17, 1998, Gilles Bélanger notified the Société de
l’assurance‑automobile du Québec (SAAQ) (Exhibit A‑1) that,
effective that date, the self-contained domestic establishment which served as
his residence was located on Lac Genest in Baie‑Trinité.
(ii)
On the same date, Gilles
Bélanger notified Regional Office #93 (North Shore) of the Commission
de la construction du Québec (Exhibit A‑1) that, effective that
date, the self-contained domestic establishment which served as his residence
was located at Lac Genest in Baie‑Trinité.
(iii)
In his 2005, 2006 and
2007 tax returns (Exhibits I-1, I-2 and I‑3), Mr. Bélanger reported
that he was married, even though he had been living apart from his wife since
1998. In this regard, Gilles Bélanger said that he did not personally fill out
his tax returns for the years in issue and that he thought that the family
status information on the returns was accurate when he signed them because he
was neither divorced nor legally separated from his wife. In other words, he
thought that the box next to "separated" was only to be checked in
the event of a legal separation.
(iv)
It was only on
March 31, 2003, that the Minister was informed that Gilles Bélanger had
apparently moved to 3114 Lac Genest in Baie‑Trinité.
The testimony of François Bélanger
[13]
François Bélanger testified
as follows:
(i)
He resided with his
mother at the McCormick Street residence until he completed his studies
(June 2001).
(ii)
He left that residence
in June 2001, mainly because his relationship with his mother was very tense at
the time.
(iii)
As of June 2008, the
self-contained domestic establishment that served as his residence was at 3114
Lac Genest in Baie-Trinité. As we have seen, this was also the self-contained
domestic establishment that served as the residence of his father Gilles
Bélanger.
(iv)
On the weekdays when he
was working at the work site, he lived in the following places:
(a)
at his friend Stéphane
Harrison's place in Sept-Îles from January through March 2004;
(b)
with Kim Martine
St-Julien, a friend, from April 1, 2004, to March 31, 2005, in
an apartment at 911 Giasson Street in Sept-Îles, which they rented for 12
months (Exhibit A‑7); and
(c)
at his friend
Simon-Pierre Thibault’s place in Sept-Îles after March 31, 2005.
(v)
On April 25, 2003
(Exhibit A‑8), he notified Regional Office #93
(North Shore) of the Commission de la construction du Québec that,
effective that date, the self-contained domestic establishment which served as
his residence was located on Lac Genest in Baie‑Trinité.
(vi)
Upon purchasing his car
in July 2002, he notified the SAAQ of his new address. I would note that
Mr. Villeneuve testified that he checked with the SAAQ and found out that
the address change was made in 2003, not 2002.
Analysis and determination
[14]
The Appellants bore the
burden of proof. They had to adduce evidence that showed, on a balance of probabilities,
that the self-contained domestic establishment that served as their residence
was located at 3114 Lac Genest in the municipality of Baie-Trinité during
the period when they were working on the work site.
[15]
Gilles Bélanger's evidence
consisted essentially of his testimony and of some documentary evidence (Exhibits
A-1 and A-4) that was contradicted by the Minister's documentary evidence (Exhibits I‑1
to I‑4). I should emphasize from the outset that I accorded very
little weight to Gilles Bélanger's testimony owing to his assertions regarding
the place where he lived on weekdays when working on the work site; those
assertions were completely contrary to his prior statements to Mr. Villeneuve
in this regard. Thus, it is very difficult to lend credence to his other
assertions, which are not supported by serious documentary evidence or by
credible independent testimony. Moreover, Gilles Bélanger could have
substantiated his assertions (particularly with regard to his very special
relationship with his spouse, which, as I stated, served as his explanation for
just about all the disputed points raised by the Minister) by means of credible
independent testimony. Indeed, it would have been very interesting to hear his
wife or any other credible independent witness corroborate Gilles Bélanger's
testimony regarding his very unusual relationship with his spouse, from whom he
had allegedly been separated de facto since 1998. Gilles Bélanger could
have adduced such evidence. He did not do so, and the inference that
I draw from this is that the evidence would have been unfavourable to him. I
therefore find that Gilles Bélanger did not prove, on a balance of probabilities,
that the self-contained domestic establishment that served as his residence was
located at 3114 Lac Genest in Baie‑Trinité. I conclude that Gilles Bélanger
knowingly and falsely used the Baie‑Trinité building address in order to qualify
for tax-free compensation, and thus, that the Minister was entitled to impose
the penalties contemplated in subsection 163(2) of the Act.
[16]
François Bélanger's evidence
consisted essentially of his testimony and some documentary evidence (Exhibits A‑7
and A-8). I should emphasize from the outset that I accorded little weight to François
Bélanger's testimony for several reasons. First, he testified that he left the
McCormick Street residence in 2001 to live with his father in Baie‑Trinité.
In the course of his testimony, he added that he only notified the SAAQ of his
new address in July 2002 (upon purchasing a new vehicle). However, the
documentary evidence (Exhibit I‑5) shows that he only notified the
SAAQ of the address change on April 17, 2003. At the very least,
François Bélanger's testimony in this regard created a serious doubt in my mind
as to his credibility. Moreover, Gilles Bélanger could have substantiated
his assertions (particularly with respect to his very difficult relationship
with his mother and the three places where he allegedly lived on weekdays while
working on the work site) by means of credible independent testimony. Indeed,
it would have been very interesting to hear his mother or any other credible
independent witness corroborate François Bélanger's testimony about his very
difficult dealings with his mother, which supposedly prompted his departure
from the McCormick Street residence in Port‑Cartier in 2001. It would
also have been very interesting to hear Kim Martine St-Julien's testimony to
the effect that the Giasson Street apartment in Sept‑Îles, which they
rented, was not the self-contained domestic establishment serving as François
Bélanger's residence for the period from April 1, 2004, to
March 31, 2005. It would have been very interesting to hear Stéphane
Harrison and Simon-Pierre Thibault's testimony about the period in which
François Bélanger was allegedly their roommate. Lastly, it would have been
very interesting to hear the testimony of Baie‑Trinité residents who
could have confirmed that François Bélanger was indeed a permanent resident of
Baie‑Trinité. François Bélanger could have provided such evidence. He did
not do so, and my inference from this omission is that the evidence would have
been unfavourable to him. Based on this, I find that François Bélanger has not
proven, on a balance of probabilities, that the self-contained domestic
establishment that served as his residence was located at 3114 Lac Genest
in the municipality of Baie‑Trinité, during the period when he was
working at the work site. I deduce from this that François Bélanger knowingly
and falsely used the Baie‑Trinité building address in order to qualify
for tax-free compensation, and that the Minister was therefore entitled to
impose the penalty contemplated in subsection 163(2) of the Act.
[17]
For these reasons, the
appeals are dismissed.
Signed at Ottawa,
Canada, this 19th day of May 2009.
"Paul Bédard"
Translation
certified true
on this 10th day
of June 2009.
Brian McCordick,
Translator
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