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Citation: 2004TCC462
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Date: 20040625
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Docket: 2003-2313(IT)I
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BETWEEN:
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SHARON MOODIE,
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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
Mogan J.
[1] The issue in this appeal is
whether the Appellant is permitted to deduct in computing income
for 1999 certain moving expenses which she incurred and paid in
1997. The result will depend upon the interpretation of section
62 of the Income Tax Act. The Appellant has elected the
informal procedure.
[2] The Appellant resided for many
years in Montreal where she was employed by the National Film
Board. Her employment ended in May 1997. She was not bilingual
and so she decided to seek employment in Ontario. She found the
cost of houses in Toronto too high. In September 1997, she signed
an agreement to purchase a house in Guelph, Ontario. The closing
date was in October 1997 because the house was vacant. The
Appellant had gone to Ohio on Labour Day weekend to look after
her mother who was ill. She returned to Guelph in October to
close her purchase and move in her furniture which had been in
storage. She found a tenant to rent the basement apartment in her
new home. She rented a studio in Guelph starting January 1, 1998
where she intended to start a business making artistic creations
for gardens.
[3] Her attempt at a new business was
not a success and she was obliged to give up her studio in April
1998. For the calendar year 1998, her only income was the rent
from her basement apartment and the residue of some employment
insurance. She had no earned income from employment or business.
When she asked a person at Revenue Canada about the deduction of
her 1997 moving expenses, she was told that such expenses could
be applied against only employment or business income at her new
work location (Guelph).
[4] The Appellant's total moving
expenses in 1997 were in the range of $17,000. In 1999, she
obtained temporary casual work at the University of Guelph where
she earned $3,466. When filing her 1999 income tax return, she
deducted $3,466 of her moving expenses and applied them against
her employment income from the University of Guelph. Revenue
Canada disallowed the deduction of the $3,466, and that is the
amount in issue in this appeal.
Analysis
[5] The deduction of moving expenses
is governed by subsection 62(1) of the Act which, prior to
1998, provided as follows (the "old provision"):
62(1) Where a taxpayer has, at any time,
commenced
(a) to carry
on a business or to be employed at a location in Canada (in this
subsection referred to as his "new work location"), or
(b)
...
and by reason thereof has moved from the residence in Canada
at which, before the move, he ordinarily resided (in this section
referred to as his "old residence") to a residence in Canada at
which, after the move, he ordinarily resided (in this section
referred to as his "new residence"), so that the distance between
his 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, in computing his income for the
taxation year in which he moved from his old residence to his new
residence or for the immediately following taxation year, there
may be deducted amounts paid by him as or on account of moving
expenses incurred in the course of moving from his old residence
to his new residence, to the extent that
(c) they were
not paid on his behalf by his employer,
(d) they were
not deductible by virtue of this section in computing the
taxpayer's income for the preceding taxation year,
(e) they
would not, but for this section, be deductible in computing the
taxpayer's income,
(f) the
aggregate of such amounts does not exceed
(i) in any
case described in paragraph (a), the taxpayer's income
for the year from his employment at his new work location or from
carrying on the new business at his new work location, as the
case may be, or
(ii) in any case
described in paragraph (b), the aggregate of amounts
required to be included in computing his income for the year by
virtue of paragraphs 56(1)(n) and (o), and
(g) any
reimbursement or allowance received by him in respect of such
expenses is included in computing his income.
The old provision was amended and replaced with a fresh
provision (the "new provision") which took effect after
1997 and stated:
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) ...
(d) all
reimbursements and allowances received by the taxpayer in respect
of those expenses are included in computing the taxpayer's
income.
To make the new provision effective, the phrase "eligible
relocation" had to be defined:
248(1) In this Act,
"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) ...
(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);
[6] Under the old provision, it was
clear from the words following paragraph 62(1)(b) that
moving expenses could be deducted only "for the taxation
year in which he moved ... or for the immediately following
taxation year". On the facts of this appeal, under the old
provision, the Appellant would be restricted to deducting her
moving expenses in 1997 (the year she moved) and 1998. It is
important to note, however, that the old provision was replaced
by the new provision which is applicable after 1997. The taxation
year under appeal is 1999. Therefore, the new provision applies
to the facts of this appeal.
[7] The words in the old provision
which restricted the deduction of moving expenses to the taxation
year "in which he moved" or the immediately following
year do not appear in the new provision or in the new definition
of "eligible relocation". I conclude that such
restriction was intentionally omitted. In other words, Parliament
intended that, for any taxation year after 1997, moving expenses
may be deducted in the year of the move or any subsequent year to
the extent that the taxpayer had employment or business income at
a new work location against which the residual moving expenses
could be applied. In a recent decision from this Court:
Dalisay v. The Queen (February 6, 2004), Rip J. stated at
paragraph 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. ...
[8] In the circumstances of this
appeal, there are two significant statutory conditions. First,
under subparagraph 62(1)(c)(i), moving expenses may be
applied against only employment or business income at a new work
location. And second, under paragraph 62(1)(b), moving
expenses are deductible in any year only to the extent that they
were not deductible because of section 62 in computing income for
the preceding taxation year. The Appellant satisfies both
conditions because (i) the deduction of $3,466 is applied against
1999 employment income in Guelph; and (ii) the Appellant had no
employment or business income in 1998 against which moving
expenses could be deducted. The appeal is allowed, with
costs.
Signed at Ottawa, Canada, this 25th day of June, 2004.
Mogan J.
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