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Citation: 2004TCC126
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Date: 20040206
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Docket: 2003-2292(IT)I
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BETWEEN:
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LORI DALISAY,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Rip, J.
[1] The issue in this appeal is
whether Ms. Lori Dalisay is entitled to deduct moving expenses in
computing her income for 2001.
[2] Prior to July, 2000, Ms. Dalisay
and her husband resided and worked in St. John's,
Newfoundland and Labrador. At the time, Ms. Dalisay secured
employment in Regina, Saskatchewan with Praxair Canada Inc.
("Praxair"), a corporation carrying on business in
various parts of the country. At Praxair, Ms. Dalisay
stated, employees like her had the benefit of
"mobility". In July, 2002 Ms. Dalisay moved from
St. John's to Regina to work at Praxair's Regina
facility.
[3] In Regina, Ms. Dalisay and her
husband moved into an apartment on a month-to-month lease because
she had a "feeling [we] wouldn't be there long".
The family's furniture was shipped to Regina. In the
meantime, Ms. Dalisay's husband looked for, but could not
find, employment in Regina. Ms. Dalisay and her husband decided
to leave Regina. Praxair cooperated by transferring her to
Edmonton, Alberta and, in October, 2000, Ms. Dalisay moved to
Edmonton.
[4] Ms. Dalisay's stay in Regina
was seven weeks. Her eligible moving expenses to Regina were
$14,930; she earned $4,462 from Praxair in Regina. Her eligible
moving expenses, according to the Minister of National Revenue
("Minister"), of her move from Regina to Edmonton was
$2,253. She earned $3,356 in Edmonton during 2000.
[5] One of the facts the Minister
assumed to be true when assessing was that Ms. Dalisay "did
not earn any income in the 2001 Taxation Year from the
New Work Location #1 [Regina] or New Work Location #2
[Edmonton]. At trial Ms. Dalisay acknowledged this to be
true. However, in a subsequent conference call with Ms. Dalisay
and counsel for the respondent, Ms. Margaret Irving,
Ms. Dalisay stated that in fact she was not employed by
Praxair in 2001 but, from February, 2001, was employed by another
employer in Edmonton.[1]
[6] The Minister allowed Ms. Dalisay
to deduct $6,715 in 2000 as follows:
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Location
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Amount of Expense Incurred
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Amount Allowed
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Reason
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Regina
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$14,930
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$4,462
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Limited to income in Regina
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Edmonton
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$ 2,253
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$2,253
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Expense incurred in move from Regina to Edmonton.*
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[7] Ms. Dalisay claims that her move
from St. John's to Regina and then to Edmonton was one move.
There was no "permanence" in Regina and her stay there
was "short".
"Eligible Relocation"
[8] The position of the Minister is
that Ms. Dalisay had two "eligible relocations";
one from St. John's to Regina and a second from Regina to
Edmonton. The amount of moving expenses she may deduct is limited
to her income in a work location or the amount of moving
expenses, whichever is less, that is, the expenses from St.
John's to Regina cannot exceed her employment income with
Praxair in Regina, and the amount she may deduct with respect to
her move from Regina to Edmonton is limited to her expenses
moving to that city: subparagraph 62(1)(c)(ii) of the
Income Tax Act ("Act"). She cannot carry
forward her moving expenses between St. John's and Regina to
take advantage of any employment income earned from Praxair in
Edmonton.
[9] Ms. Dalisay's work location,
according to the Minister, was the place where she actually
worked for Praxair. That is, her first "new work
location" was Praxair's facility in Regina and her
second "new work location" was Praxair's facility
in Edmonton. Paragraph 62(1)(b) in effect permits a
taxpayer to carry forward and deduct moving expenses in the year
following the move but only if the taxpayer earned income in the
"new work location" where she was employed as a result
of her move.
[10] Subsection 62(1) of the Act
states that moving expenses incurred in respect of an
"eligible relocation":
... 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) ...
(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 ...
[11] The term "eligible
relocation", as defined in subsection 248(1), 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"), ...
(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 ...
[12] One question before me is whether or
not Ms. Dalisay was "ordinarily resident" in
Regina within the meaning of paragraph (b) of the
definition of "eligible relocation" in subsection
248(1) of the Act. Another question is what is "the
new work location", as that term is defined in
subsection 248(1) and applied in subparagraph
62(1)(c)(i) of the Act.
[13] On the facts before me, I find that it
is highly probable that Ms. Dalisay and her husband never settled
in Regina. She had her doubts about Regina from the very
beginning of the move. As a result, she and her husband rented an
apartment on a month-to-month basis, realizing, I infer, that
they may soon be leaving Regina. When Ms. Dalisay's husband
could not find employment in Regina within a very short time, her
doubts were confirmed and she decided to move. The appellant was
never "ordinarily" resident in Regina. She had no
settled routine of her life in Regina and it was not in the
course of her customary mode of life.[2] Ms. Dalisay and her husband were
searching for a place where they would be "ordinarily"
resident and Regina was not it. Regina was a temporary
"way-station" to a place Ms. Dalisay would
"ordinarily" reside, Edmonton.[3] Her eligible relocation was from St.
John's to Edmonton.
"The New Work Location"
[14] The second problem before me is what
does "the new work location" mean? The term "the
new work location" refers to a relocation by a taxpayer that
enables the taxpayer to carry on business or to be employed at a
location in Canada: subsection 248(1). As previously stated, the
Minister is of the view that the term "the new work
location" means the actual business location, the actual
place, the certain building or site where a taxpayer carries on
business or is employed. Respondent's counsel relies on the
Federal Court of Appeal's decision in Giannakopoulos v.
M.N.R.[4]
[15] The Federal Court of Appeal considered
the definition of "the new work location" in subsection
62(1) of the Act, as that provision applied before 1998,
to determine whether the distance between a taxpayer's
"old residence and his new work location is not less than 40
kilometres greater than the distance between his new residence
and his new work location" should be calculated along a
straight line or along the shortest normal route.
[16] I do not believe the
Giannakopoulos case is of any assistance in deciding the
appeal at bar. In Giannakopoulos, the Court was concerned
with the measurement of length between specific points, an old
residence, a new work location and a new residence.
[17] The phrase "the new work
location" is not to be interpreted with any rigidity. The
words "to carry on a business or to be employed at a
location in Canada" have a very broad meaning. The words
allow for flexibility in interpretation depending on the facts.
For example, if the term "new work location" in the
context of the facts at bar refers to an actual business location
only, then the taxpayer who moves to enable herself to carry on a
business or to be employed at a location in Canada must remain
employed at that actual business location until such time as her
employment income earned at that site equals her moving expenses.
Otherwise she will not have sufficient income to deduct the whole
of her moving expenses. For example, if her employer becomes
bankrupt or if she is fired from her job or she is forced to
resign from her job or changes employment or starts a business
and subsequently works at a different work site in this city,
town or village, then, if the Crown is correct, she would not be
permitted to deduct moving expenses from the income earned from
her new employment or business. She would be bound to her
original employer until her income earned from this employer
equalled her moving expenses.
[18] This could not have been the intent of
Parliament. If a person moves from St. John's to Edmonton and
immediately is employed by employer "A", it is not the
purpose of tax legislation to force that person to remain in
A's service of employment in order to get a tax deduction. So
long as the person continues to work in Edmonton as an employee
or in her business, moving expenses to get to Edmonton to work
should be deductible from income earned from that employment or
business.
[19] The words "work location" and
the phrase "the new work location" are elastic,
depending on the context in which they are applied. When one
"zooms in" on a map to find the location of a
street address, one may first be directed to a province, then to
a city, then to a district, then to a street, and finally to the
address. Similarly, a person who works in Edmonton may inform a
person of her work location depending where the person making the
inquiry is from. If the person is from outside the country, she
may describe her work location to be in Canada or Alberta. To
someone in New Brunswick, she may tell them her work
location is in Alberta or Edmonton; to someone in Alberta, she
may describe her work location to be in Edmonton or in some area
of Edmonton; but to an Edmontonian she may inform that person
that her work location in a specific area of the city or
volunteer the specific building or site. In all cases the person
is describing her "work location". Therefore in
Giannakopoulos, where a measure is required, the term must
be restrictive. But on the facts before me, the term must have a
wide connotation. When a person moves her employment from one
city to another, the cities refer to different work locations and
when one moves her employment from neighbourhood to
neighbourhood, the neighbourhoods describe the different work
locations. Ms. Dalisay relocated to Edmonton to enable herself to
be employed at a location in Canada, that is, Edmonton, within
the meaning of section 62 and subsection 248(1) of the
Act. In the case at bar, when Ms. Dalisay changed her
employment from St. John's to Edmonton, her new work
location was Edmonton.
[20] Although at trial Ms. Dalisay admitted
the Minister's assumption of fact that she "did not earn
any income in the 2001 Taxation Year" from her work location
in either Regina or Edmonton, in the conference call she stated
she was in fact employed in Edmonton in 2001 and earned
employment income in that year. Subsection 62(1)(b) would
permit her to carry forward her moving expenses from 2000 to 2001
but only if she earned employment or business income in Edmonton
during 2001 and to the extent she earned such income. It is clear
that Ms. Dalisay was employed in 2001 while in Edmonton, but
not with Praxair. She is nevertheless eligible to carry forward
her moving expenses from 2000 to 2001. As I have concluded, her
"new work location" in 2000 and 2001 was Edmonton.
[21] The appeal is allowed with costs, if
any.
Signed
at Ottawa, Canada, this 6th day of February, 2004.
Rip, J.
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