Citation: 2009 TCC 533
Date: 20091116
Docket: 2007-3194(IT)I
BETWEEN:
GILLES BOURGET,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Jorré J.
The
facts
[1]
The appellant
filed an appeal from reassessments concerning the 2003 and 2004
taxation years.
[2]
In making
the reassessments, the Minister made the following changes to the appellant's
income:
(a) In 2004,
he added $5,000, which was received that year, at the end of the appellant's
employment contract with Entreprises Pesamiu Ilnuts inc. (the employer). The Minister
assumed that the $5,000 was severance pay.
(b) He added
standby charges for an automobile in the amount of $4,704 in 2003 and of $2,352
in 2004.
(c) He added
$2,688 in 2003 and $1,428 in 2004 as an automobile operating expense benefit.
[3]
The
appellant is challenging the addition of those amounts to his income. According to the
appellant, those amounts should not be added to his income because he should be
entitled to the exemption set out in subsection 6(6) of the Income Tax
Act (ITA). First, he is claiming that the
amount of $5,000 was used for his board and lodging and should therefore be
exempt under paragraph 6(6)(a). Second,
according to the appellant, paragraph 6(6)(b) would exempt the
automobile benefit.
[4]
For the
reasons that follow, the appeal will be allowed in part.
[5]
The
appellant worked for the employer from September 2001 to
November 2004. He held an administrative position and was, among other
things, in charge of accounting.
[6]
At the
start of his job, he lived in Baie-Comeau for two or three months. After that, he
rented a place in Ragueneau, which was closer to his work in Betsiamites.
That place was 12 or 13 km away from
his work, while Baie-Comeau was 45 km away.
[7]
The
appellant's employer had obtained a contract concerning the construction of the
Toulnustouc Hydroelectric Dam. The contract was expected to be for
four years. The appellant was hired in relation to that project.
[8]
The employer
decided that the accounting for the project would be done at the company
headquarters in Betsiamites, not at the site of the
Toulnustouc Dam.
[9]
Originally,
the job was for about a one-year period during which the employer's work camp
would be constructed near the dam site. The job could be for a maximum of four
years, that is, the duration of the employer's contract for constructing the
dam. In June 2002, the appellant's
contract of employment was renewed. The job in
question lasted about three years.
[10]
The
appellant proposed that he be paid a $300-per-week living allowance, and the
employer ended up paying him a $250 allowance. That $250 per week was paid to
the appellant from February 8, 2002, until the end of his contract.
[11]
However,
given the appellant's costs, the appellant and the employer continued to
discuss raising the allowance.
According to the appellant, the employer finally
agreed to adjust the amount at the end of the contract, and the $5,000 payment
in question was a retroactive increase of the allowance.
[12]
However, in
cross-examination, when the appellant saw his expense account dated
October 21, 2004, he agreed that only $2,500 of the total amount of
$5,000 constituted an adjustment to the allowance. According to the expense
account, the second half of the $5,000 represented the cost of relocating to
Montréal. Relocation costs cannot be a living
allowance.
[13]
Throughout
the entire period at issue, the appellant had at his disposal a residence in Anjou, Quebec.
Analysis
[14]
The
appellant claims that if the employer had not decided to do the accounting at
the company's headquarters in Betsiamites, but rather had it done at the
construction site of the Toulnustouc Dam, which was the logical place to do it,
there would be no doubt that subsection 6(6) applies to his situation, as
was the case for the employees at the dam site, who received a benefit or an
allowance for their board and lodging. The appellant finds the fact that he did not
benefit from the provisions in subsection 6(6) to be discriminatory in
comparison with the other employees at the dam site.
[15]
Subsection
6(6) of the ITA reads as follows:
(6) Employment at special work site or remote location –
Notwithstanding subsection 6(1), in computing the income of a taxpayer for
a taxation year from an office or employment, there shall not be included any
amount received or enjoyed by the taxpayer in respect of, in the course or by
virtue of the office or employment that is the value of, or an allowance (not
in excess of a reasonable amount) in respect of expenses the taxpayer has
incurred for,
(a) the taxpayer’s board and lodging for a period at
(i)
a special work site, being a location at which the duties performed by the
taxpayer were of a temporary nature, if the taxpayer maintained at another
location a self-contained domestic establishment as the taxpayer’s principal
place of residence
(A)
that was, throughout the period, available for the taxpayer’s occupancy and not
rented by the taxpayer to any other person, and
(B)
to which, by reason of distance, the taxpayer could not reasonably be expected
to have returned daily from the special work site, or
(ii)
a location at which, by virtue of its remoteness from any established
community, the taxpayer could not reasonably be expected to establish and
maintain a self-contained domestic establishment,
if
the period during which the taxpayer was required by the taxpayer’s duties to
be away from the taxpayer’s principal place of residence, or to be at the
special work site or location, was not less than 36 hours; or
(b)
transportation between
(i)
the principal place of residence and the special work site referred to in
subparagraph 6(6)(a)(i), or
(ii)
the location referred to in subparagraph 6(6)(a)(ii) and a location in Canada or a location in the country
in which the taxpayer is employed,
in respect of a period described in paragraph 6(6)(a)
during which the taxpayer received board and lodging, or a reasonable allowance
in respect of board and lodging, from the taxpayer’s employer.
[16]
For
subsection 6(6) to apply, the appellant must fulfill several conditions. First, the place
of work must be
(a) at a
special work site or
(b) at a
remote location, that is, at a location at which, by virtue of its remoteness
from any established community, the appellant could not reasonably be expected
to establish and maintain a self-contained domestic establishment.
[17]
Although
there were no lodgings in Betsiamites proper, the appellant was able to rent a lodging in Ragueneau,
which was 12 or 13 km away from his job. Betsiamites is at least 60
km away from Baie-Comeau, and Ragueneau is 45 km from Baie-Comeau.
[18]
The
appellant had a self-contained domestic establishment, and his job was not at a
remote location within the meaning of subparagraph 6(6)(a)(ii) of the
ITA.
Was it a special work site?
[19]
In Alain
Guilbert v. M.N.R., [1991] T.C.J. 127 (QL), Judge Dussault wrote the
following:
The
principle set out in paragraph 6(1)(a) of the Act is that there shall be
included in computing the income of a taxpayer "the value of board, lodging
and other benefits of any kind whatever received or enjoyed by him in the
year in respect of, in the course of, or by virtue of an office or
employment, ...".
On the
other hand, subsection 6(6) of the Act provides an exception to this principle
of including the value of benefits in income from an office or employment, in
the case of employment at a special work site or at a remote location. The part
of subsection 6(6) of the Act which is relevant to this case . . . .
Since 1985, paragraph (a) has read:
(a) his
board and lodging for a period at
(i) a
special work site, being a location at which the duties performed by him were
of a temporary nature, if he maintained at another location a self-contained
domestic establishment as his principal place of residence
(A) that
was, throughout the period, available for his occupancy and not rented by him
to any other person, and
(B) to
which, by reason of distance, he could not reasonably be expected to have
returned daily from the special work site, ...
Essentially, the appellant argues that during the years in
question his work in Québec City was "of a temporary nature", his place of work at Le
Soleil must be considered to be analogous to a "special work site"
and he always maintained his principal place of residence in Domaine Cherbourg,
in Orford township in the Eastern Townships.
Counsel for the respondent argued that the appellant's work for Le
Soleil was of a permanent nature, the newspaper's premises were not a
"special work site" and the appellant's principal place of residence
was in the Jardins Merici in Québec
City, in the apartment provided by Le Soleil.
With respect to the meaning of the word "chantier"
["work site"], counsel for the respondent referred to the usual
meaning as found, inter alia, in the Petit Robert, which defines it as follows,
using its modern meaning in context:
Lieu ou sont entassés materiaux. V. Atelier, entrepôt. Chantier
de construction; de démolition. Travailler sur un chantier. Chantier
d'exploitation. d'abattage d'une mine. - Chantier naval, Ancienn. Au
Canada, Exploitation forestière. - Habitation pour les bûcherons dans la forêt.
Homme de chantier (Pop). Ouvrier forestier. V. Bûcheron. Faire
chantier: abattre et acier des arbres.
(Translation)
Place
where materials are stockpiled. See Shop, warehouse. Construction site:
demolition site. Work on a site. Mine workings. - Shipyard. Archaic. In Canada, Forestry. -
Lodging for lumberjacks in the forest. "Homme de chantier" (Pop).
Forestry worker. See Lumberjack. "Faire chantier": cut down
and saw trees.
Counsel for the respondent also submits that in the context of the
tax reform that applied starting in 1972 the scope of the earlier provision,
which applied only to construction workers working on remote sites, was considerably
broadened, and on this point referred to the Summary of 1971 Tax Reform
Legislation, The Honourable E.J. Benson, Minister of Finance, Summary of
1971 Tax Reform Legislation, page 10, and particularly to the following
paragraphs:
Away from home expenses
Under
existing law, construction workers at distant work sites may receive tax-free
from their employers amounts covering expenses of transportation, board and
lodging. The bill extends this to all employees.
The
revision recognizes that many people besides construction workers must leave
their normal residence and live and work temporarily at a place where they
cannot reasonably be expected to establish homes for their wives and families.
The
provision will apply, as it does now, only to an employee who leaves his
ordinary residence. It will not apply to a single individual who does not
maintain a permanent residence in which he supports a dependant. It is
necessary that the employee be away from his ordinary residence for at least 36
hours and the work site must be far enough away that he could not reasonably be
expected to return home daily.
Among
those who will benefit are lumber and mining workers, oil well drillers,
exploration crews, employees at isolated bases and those who work at remote
construction sites but do not qualify as "construction workers".
The Act is indeed complex, and contains numerous definitions.
However, we cannot assume, in the absence of a special statutory definition,
that the usual words used by Parliament must have a meaning different from the
generally recognized meaning set out in current dictionaries. A "work
site" is a "work site" and this expression cannot refer to just
any place of work. The newspaper's premises are not, in my humble opinion, a
work site, or a "special work site", within the meaning intended by
Parliament. By analogy, we could refer to the decision in Graham L. Harle.
M.L.A.. and Calvin E. Lee. M.L.A. v. M.N.R., 76 DTC 1151, cited by
counsel for the respondent, which refused to recognize that provincial legislative
buildings were "a special worksite", or in French, "un chantier
particulier",
I will further add that a careful reading of paragraph 6(6)(a)
of the Act indicates that expenses for board and lodging must have been
incurred "at a special work site", [In French, the expression used is
"sur un chantier particulier".]. It provides for the situations in
which there are at the work site or at least in the relatively immediate
vicinity, appropriate premises for employees' board and lodging, situations which
are completely different from the one we must decide here.
[20]
I agree
with Judge Dussault that a "special work site" cannot be equivalent
to any "place of work".
By choosing the words "special work site"
in English and "chantier particulier" in French, Parliament wanted to
restrict the scope of the exemption.
[21]
Regardless
of the scope of the meaning of the words "special work site", it does
not include the appellant's employer's headquarters in Betsiamites.
[22]
Consequently,
it cannot be a special work site, and the exemption in subsection 6(6)
does not apply.
[23]
Parliament
made a distinction between workers at a special work site and those who, like
the appellant in this case, work elsewhere; it is a choice that Parliament can
make.
Calculation of a reasonable standby charge
for an automobile
[24]
Before
closing, I must examine the calculation of a reasonable standby charge. In her
testimony, Marie-Cécile Partel of the Canada Revenue Agency explained that, as
shown in Exhibit I‑2, an automobile operating expense benefit was
calculated and that the reasonable cost was based on an automobile rental fee
of $700 per month. She explained that the
amount of $700 was prescribed by subsection 7307(3) of the Income Tax
Regulations.
[25]
However,
that subsection sets the maximum amounts under section 67.3 of the ITA. It does not
apply to paragraph 6(1)(e) or to subsection 6(2) of the ITA,
which pertain to a reasonable standby charge for an automobile. We must determine the rental fee for the purposes the
calculation under subsection 6(2), particularly, item E of the formula.
[26]
I accept
the appellant's testimony, in which he reveals rather different facts with
respect to the automobile.
[27]
First,
although the appellant agreed that, at the start of his employment, renting the
vehicle cost around $700 per month, the rent was later renegotiated down to
$650 per month. I am satisfied
that that renegotiation took place before January 1, 2003. The automobile was rented for a short term.
[28]
Second, in
April 2003, in order to reduce the costs, the employer purchased a vehicle for
$13,500. That vehicle was the appellant's automobile until the end
of his employment.
[29]
Consequently,
the reasonable standby charge must be recalculated by substituting the rental
fee of $650 for three months in 2003 and taking into account the use of a
vehicle purchased for $13,500 for nine months. In addition, the
calculation for 2004 must be redone taking the purchased vehicle into
consideration.
The result is that the standby charges should be
$2,713.12 in 2003 and $1,360.80 in 2004 instead of $4,704 and $2,352
respectively.
Conclusion
[30]
Accordingly,
the appeal is allowed, and the case is referred back to the Minister for
reconsideration and reassessment on the basis that
(a) for 2003,
the reasonable standby charge for the automobile must be $2,713.12 instead of
$4,704;
(b) for
2004, the reasonable standby charge for an automobile must be $1,360.80 instead
of $2,352.
Signed at Ottawa, Canada, this 16th day of November
2009.
"Gaston Jorré"
on this 16th day
of December 2009
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