Date:
20010525
Docket:
2000-2552-IT-I
BETWEEN:
DENIS
LAMOTHE,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasons
for Judgment
Alain
Tardif, J.T.C.C.
[1]
This is an appeal for the 1995, 1996
and 1997 taxation years.
[2]
The points at issue are, first, whether the appellant's
income for the years in issue was employment income or business
income and, second, whether the respondent was correct in
disallowing the expenses claimed by the appellant for those same
years.
[3]
After being sworn, the appellant admitted a number of facts
assumed in making the assessments, and in particular the
following facts stated in the Reply to the Notice of Appeal (the
"Reply"):
[TRANSLATION]
(a)
for the 1995 taxation year, the appellant reported gross business
income of $41,852 and net income of $35,249 as well as
unemployment insurance benefits of $10,158 and a union dues
refund of $485;
(b)
for the 1996 taxation year, the appellant reported gross business
income of $57,767.65 and net income of $51,532.46 as well as
employment insurance benefits of $6,391;
(c)
for the 1997 taxation year, the appellant reported employment
income of $47,136, employment insurance benefits of $2,065 and
workers' compensation benefits of $11,751.12;
(d)
the Minister determined that the income reported by the appellant
as business income was employment income for the years in
issue;
(e)
the appellant claimed union dues amounting to $922 for the 1995
taxation year, $1,339.28 for 1996 and $1,020 for 1997;
(f)
the appellant works as a freelance equipment installer on movie
sets;
(g)
the appellant is a member of the Syndicat des techniciennes et
techniciens du cinéma et de la vidéo du
Québec (hereinafter the "STCVQ");
. .
.
(j)
STCVQ members may draw employment insurance benefits when they
are unemployed;
(k)
the appellant submitted no T2200 form that could have shown his
conditions of employment during the years in issue, nor did he
submit any letter concerning such conditions from the production
companies for which he worked and which issued him T4 slips in
accordance with subsection 8(10) of the Income Tax
Act (hereinafter the "Act");
. .
.
(m)
the appellant has not demonstrated:
(i)
that he was ordinarily required to perform the duties of his
employment away from his employer's place of business or in
different places, and
(ii)
that he was required under his contract of employment to pay his
expenses within the meaning of subsection 8(1) of the
Act and that he was allowed under subsection 8(2) of
the Act to deduct the expenses claimed from his employment
income.
[4]
As his only testimony, the appellant read a text which he had
prepared with the help of his spouse. It is appropriate to
reproduce its content here:
[TRANSLATION]
TO WHOM IT
MAY CONCERN,
Properly understood, the issue here is whether I received
employment income or business income in 1995, 1996 and
1997.
That is indeed the heart of the matter. If I have taken the
trouble to defend myself in this case it is because I imagine
there must be something in the tax laws that opens the door to a
fair and reasonable analysis of exceptional cases.
The various aspects of my employment place me on the borderline
between the two definitions. The Act recognizes our status
as employees of the production companies. Yet how can it be
explained that employees continually, year after year, have so
many employers? What do you think of employment that provides no
sick leave days? As for statutory holidays, they are an exception
since, whenever possible, filming weeks are scheduled so as to
avoid them. In the circumstances, I would therefore describe
myself as a worker-employee who offers a service (just as a
business would do). Would logic not dictate that this ambiguity
give us instant status as an exceptional case?
Allow me to take the time to show how my conditions of employment
are different from those of other workers. I will then explain
why it was impossible in 1998 to provide the many supporting
documents required for 1995, 1996 and 1997.
Seen from the perspective of an armchair at home or from a seat
at a movie theatre, film shoots seem to be ideal and incredibly
exciting work. That may once have been true, but I was not around
in the days when a feature film would be shot in eight or twelve
weeks. Most films shot in Montréal are now done in four or
five weeks.
Including travel time, you can easily spend 15 to 18 hours a
day on the job. Schedules are not the same for an entire week.
Indeed, the collective agreements provide that workers must have
10 hours of recovery time before a new call. Consequently,
the next day's call is postponed accordingly, so that the
workweek regularly goes beyond the traditional five days.
Workers' biological clocks are constantly being upset: apart
from the lack of sleep, they never sleep or eat at the same
times. They start a week working days and finish it working
nights. This is hard both physically and emotionally.
As regards travelling expenses, most workers in everyday life
know where they work and choose accordingly how close they want
to live to their place of work. This is not the case with workers
in the film industry, who never know where they will be working
the next day. You know as well as I do that, in the movie
business, your workplace can be anywhere at all and it is not
always that easy to live nearby. Then there are the days when
scenes are filmed on different sites. This increases travel and
parking expenses. Forget special flat parking rates, public
transit and carpooling. You do not know where, with whom or on
what schedule you will be working in two days,
two weeks or two months.
Now let us talk about the purchases necessitated by this
employment. Remember the cold spells in winter. I look at my
wife, who, like most workers, runs to her car and comes home from
work complaining of the cold. I work outside, 12 to 18 hours
a day, in eight-hour blocks, in the middle of winter, often at
night. Have you ever considered the fact that, even to film an
interior scene, we have to install lighting outside? We then stay
outside to do the visual effects, changes in atmosphere, the
effect of a car passing in the street and so on. When we are not
being soaked by rain, the cold pierces us or the heat overwhelms
us, and the hours drag on interminably. We need superior-quality
clothing. To be able to work efficiently we must have clothing
that, in addition to insulating well, is light and comfortable
and draws off perspiration. (Time is money in the movies. If your
coat or heavy boots hamper you and waste your energy, it may be
decided to hire someone who is more effective.) I would point out
that the work is physically demanding, consisting in carrying and
setting up heavy and cumbersome equipment in snow, on ice, in
mud, and so on. To give you an idea of the order of magnitude of
the standard equipment, a connecting cable, for example, weighs
80 pounds and a spotlight more than 100 pounds. Try to
be agile when handling these kinds of loads in sometimes awkward
and cluttered places, in conditions favourable to wear and tear,
soiling and breakage. The distances involved in these
installations are often great: entire blocks where spotlights are
set up on the roofs of buildings, or vast interior spaces spread
over a number of floors. You would be surprised to see how fast
shoes wear out. Again, lightness and comfort are essential. There
are also special purchases. For example, if you have to work on
the ice surface of an arena for a few days, you appreciate the
grip of broomball shoes. Is this a luxury or an additional safety
measure?
Lastly, as you can see from the number of T4 slips I send you
each year, I work as a freelance for various film production
companies. The fact that I am working today does not mean that I
will not need a contract tomorrow. This is the case when I am not
in the regular crew of a film production. I also frequently work
on various contracts and for various employers in a single week.
I would point out that an employer that pays me for
150 hours of work in one year may also have paid for those
hours under five or 10 separate contracts spread out over time.
As a result of changing schedules, people cannot always reach me
easily at my home. And yet I must always be accessible, otherwise
they will call someone else. Communication tools are therefore
indispensable for me if I want to work.
In short, I believe you will now have to agree with me that, as a
freelance in the film industry, I have the same insecure status
as a self-employed worker, which justifies the telecommunications
expenses and the expenses incurred to ensure that I made a
favourable impression, which I claimed. I must purchase more
expensive clothing, footwear and accessories than for everyday
use and replace them regularly because of wear and tear. I have
more unforeseen transportation and parking expenses than the
average person.
T2200
Now with regard to the T2200. If I understand correctly, the main
reason for disallowing the deductions I claim is that I have not
filed these forms.
I draw your attention to the fact that the everyday reality of
freelances has changed a great deal over the years. In addition,
everyone is talking about the American productions that are now
being filmed here. These productions cause, for limited periods,
increased demand, which creates a surplus of workers during the
rest of the year. Competition is more fierce and the
precariousness of our situation increases to the same degree.
Every day we must confirm our value to those who hire us. The
Income Tax Act places us in an awkward position by
requiring us to file T2200 forms.
During a film production, everyone works under pressure for very
long consecutive hours, during which the stress on people often
approaches critical levels. For an employee to come and request
forms which add to office employees' already heavy workloads
is an irritant. Considering the extremely temporary nature of our
employment and the fact that we must make sure that the
production company will want to rehire us for a future
production, it becomes a risky business to insist on getting
T2200 forms.
I propose a solution:
Why does the government not ask employers to indicate as
"additional earnings" on our T4 slips the expenses they
may have incurred for such things as communication, travelling,
parking, specialized equipment and work clothing. This practice
has been implemented in the past two or three years for
meals taken on the job. It makes life easier for us. Extending it
to the other aspects would prevent workers from running the risk
of being perceived as troublesome when they request duly
completed forms. They would no longer be afraid of being
overlooked for future productions. It goes without saying that
expenses not assumed by the employer are defrayed by the
employee.
Finally, let us talk now about the other supporting documents
that were requested from me in September 1998: copies of
contracts, number of days worked and number of days unemployed,
daily mileage record and places where the various sets were
located. Where were you on the same date three years ago? Our
schedules are constantly being changed and the scheduled film
locations may also vary. You must therefore admit that, to
provide all this different information, one would have had to
record it along the way and carefully preserve documents which,
at first glance, I thought were of no importance. I would like to
emphasize that I was never told it was preferable to keep them. I
do not see why I would have engaged in that kind of exercise
since, as stated above, when filming is being done, it is
difficult even to ensure you get an adequate number of hours of
sleep. As a result, the request made of me years after the
contracts in question were performed amounted to mission
impossible; it is not that there was any lack of good will on my
part. In the circumstances, I feel that the request so made was
an abuse of the situation for the purpose of putting me in a
no-win position.
I am not some rich guy benefiting inordinately from tax
avoidance. I am a worker who is already paying his share of tax.
I pay the GST and QST on all the expenditures for which I request
tax deductions and those expenditures, I repeat, have enabled me
to perform my work efficiently and safely. I therefore persist in
believing that my position is fair and reasonable.
[5]
In cross-examination, the appellant admitted that he had not
submitted T2200 forms or filed any documents in support of the
expenses claimed.
[6]
In his final submissions, the appellant indicated that the
expenses claimed represented approximately 10 percent of his
income and that it seemed normal and reasonable to him that he
should have had to incur expenses of that order. He therefore
argued that it was unreasonable and inappropriate to demand
supporting documents.
[7]
The appellant's testimony was certainly engaging and spoke to
the special conditions facing workers in the film industry.
However, that is not sufficient for him to succeed in his
appeal.
[8]
The appellant clearly believed that this Court had the power to
amend the Income Tax Act (the "Act") to
make it, according to him, more modern, more human, more
appropriate and, above all, more attuned to the working
conditions in the important sector of economic activity that is
the film industry.
[9]
I obviously do not have any such authority and must follow and
apply the Act as enacted by Parliament. In this regard,
the relevant statutory provisions are very clear. It is
appropriate to reproduce subsection 8(10) of the
Act:
(10)
Certificate of employer. An amount otherwise deductible
for a taxation year under paragraph (1)(f), (h) or
(h.1) or subparagraph (1)(i)(ii) or (iii) by a
taxpayer shall not be deducted unless a prescribed form signed by
the taxpayer's employer certifying that the conditions set
out in that provision were met in the year in respect of the
taxpayer is filed with the taxpayer's return of income for
the year under this Part.
[10] The
requirement in subsection 8(10) may seem superfluous to the
appellant but, until such time as Parliament finds it fit and
appropriate to amend it, persons subject to it will have to
comply with it, failing which they must suffer the consequences,
no matter how painful.
[11] The Tax
Court of Canada does not have authority or jurisdiction to
interpret or alter the Act on the basis of the sympathy
that certain cases may inspire. Only Parliament can amend the
Act. Consequently the appellant, if he believes his cause
to be just, would be well-advised to take whatever steps are
necessary in order to have the leaders in his sector of economic
activity make representations to the competent authorities. Those
authorities have absolutely nothing to do with this Court, whose
mission is essentially to apply and follow the Act as
enacted by Parliament.
[12] The
requirement to provide supporting documents is a fundamental one.
When a taxpayer claims an expense, he must be able to prove that
it is fair and relevant. For that, it is essential to have the
appropriate documentary evidence, failing which, once again, a
person who has incurred expenses runs a very great risk of seeing
them disallowed, and rightly so.
[13] In the
instant case, the appellant may have been entitled to deduct
certain expenses from his employment income by virtue of an
exception provided for by Parliament, since such entitlement is
generally granted to entrepreneurs, who must however be able to
provide all supporting documents on request.
[14] The
appellant deliberately chose not to comply with the requirements
to which he was subject under the Act. He did so for various
reasons, referring in particular to the following:
·
the particular
characteristics and requirements of his work;
·
according to him,
the Act did not take into account the new reality in the
film production industry;
·
the unreasonable
and inappropriate nature of the requirements of the
Act.
[15] The
various grounds cited by the appellant to justify his behaviour
may be quite legitimate in his view, but they have no legal merit
and may not be considered by this Court, which is essentially
bound to follow and apply the provisions of the
Act.
[16] In view
of the evidence, I must dismiss the appeal.
Signed at
Ottawa, Canada, this 25th day of May 2001.
J.T.C.C.
Translation certified
true on this 24th day of October 2002.
Erich Klein,
Revisor
[OFFICIAL
ENGLISH TRANSLATION]
2000-2552(IT)I
BETWEEN:
DENIS
LAMOTHE,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeal heard
on May 16, 2001, at Montréal, Quebec, by
the
Honourable Judge Alain Tardif
Appearances
For the
Appellant:
The Appellant himself
Counsel
for the
Respondent:
Diane Lemery
JUDGMENT
The appeal from the assessments made under the Income Tax
Act, for the 1995, 1996 and 1997 taxation years is dismissed
in accordance with the attached Reasons for Judgment.
Signed at
Ottawa, Canada, this 25th day of May 2001.
J.T.C.C.
Translation certified
true on this 24th day of October 2002.
Erich Klein,
Revisor
[OFFICIAL
ENGLISH TRANSLATION]
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