Date: 19990506
Docket: 98-1905-IT-I
BETWEEN:
ROBERT M.S. KRAUS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for judgment
Bonner, J.T.C.C.
[1] This is an appeal from an assessment of income tax for the
Appellant's 1990 taxation year. On assessment the Minister of
National Revenue included in the computation of the
Appellant's income the sum of $5,132 received from his
employer as a transfer allowance. The Respondent relies on
paragraph 6(1)(b) of the Income Tax Act
("Act"). The Appellant's position is that
the amount is not taxable income. In effect he takes the position
that the costs which he incurred falling within the categories
intended to be covered by the transfer allowance are far greater
than the amount received.
[2] The Appellant was at all relevant times an employee of the
Royal Canadian Mounted Police ("RCMP"). In 1989 the
employer transferred the Appellant from Ottawa to Winnipeg. At
the time the Appellant was married. His spouse remained in Ottawa
for several months to sell the family home. She then joined the
Appellant in Winnipeg after the sale.
[3] The transfer allowance was paid under RCMP rules which
included the following:
K. 9. a. Entitlement
1. A member, including a reengaged ex-member, who qualifies
under one of the following conditions is entitled to a transfer
allowance when relocated under the provisions of the RCMP
Relocation Directive, excluding local moves and retirement
relocation;
1. three years' service in the RCMP; or
2. upon transfer from the first or subsequent place of duty
following completion of initial training and, for a Cst. or
native S/Cst., recruit field training.
2. Entitlement to the transfer allowance will be effective on
the calendar day that the member departs for the new posting or,
if the member precedes his/her dependents, on the calendar day
that the dependents depart for the new location.
3. The amount is calculated as follows:
1. For a member who moves his/her dependents, an amount equal
to one month's salary (1/12 of annual pay) at his/her
substantive rate in effect the day before his/her departure. See
App VI-2-I, subsection 1.4 for explanation of dependent.
...
[4] The evidence indicates that the RCMP indemnifies its
members in respect of the cost of moving some but not all common
household goods. As well the employer pays a fixed allowance of
$500 to cover several categories of cost such as servicing
appliances before moving, removal and installation of carpet and
curtain rods and pre-packaging of pictures and heirlooms. The
Appellant states that this allowance, which he describes as
non-taxable, has not sufficed for years.
[5] The allowance now in issue is paid in addition to the
indemnity and the $500 allowance previously mentioned. It is
intended to cover a broad range of costs for which no other
provision is made. Such costs include moving household goods
which movers will not transport, cleaning of carpets, the
purchase of window coverings and associated hardware, the
painting of present and previous residences and the decrease in
the life expectancy of household appliances resulting from moving
them. As well it is intended to cover home equity losses which do
not qualify under the employees Home Equity Assistance
Program.
[6] Paragraph 6(1)(b) of the Act reads:
Amounts to be included as income from office or
employment.
(1) There shall be included in computing the income of a
taxpayer for a taxation year as income from an office or
employment such of the following amounts as are applicable:
...
(b) Personal or living expenses. - all amounts received by him
in the year as an allowance for personal or living expenses or as
an allowance for any other purpose, except
...
The meaning of the word allowance has been considered in a
multitude of decisions including Ransom v. M.N.R., 67 DTC
5235, The Queen v. Pascoe, 75 DTC 5427 and Gagnon v.
The Queen, 86 DTC 6179. In Gagnon the meaning adopted
by the Federal Court of Appeal in Pascoe was modified
somewhat. The amount paid to the Appellant was a limited
predetermined amount fixed not by reference to specific costs
actually incurred by the Appellant as a result of the transfer
but rather by reference to an arbitrary criterion, the
Appellant's salary. The Appellant was not required to account
for the amount received. He was free to spend the money in any
way he pleased. These characteristics identify the payment as an
allowance within the meaning of paragraph 6(1)(b). I might
add that there appears to be no material difference between the
payment now in issue and payments held to be allowances within
the meaning of paragraph 6(1)(b) in several earlier cases
involving payments by the RCMP to members of the force.
I refer to Douglas McLay v. M.N.R., 92 DTC 2260,
John Oster v. The Queen, 95 DTC 104, McRae v.
Canada [1996] T.C.J. No. 847 and, finally,
Michael John Morris v. The Queen, 97 DTC 1546
(T.C.C.) aff'd 97 DTC 5531 (F.C.A.).
[7] For the foregoing reasons the appeal will be
dismissed.
Signed at Ottawa, Canada, this 6th day of May 1999
"Michael J. Bonner"
J.T.C.C.
Email this Content