Date: 20020314
Docket: 1999-4687-IT-I
BETWEEN:
DON J. WILKINSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
_______________________________________________
For the Appellant: The Appellant himself
Counsel for the Respondent: Lyle Bouvier
_________________________________________________
Reasonsfor
Judgment
Sarchuk J.
[1]
In computing income for the 1997 taxation year, the Appellant
claimed expenses against employment income in the amount of
$5,221.61. In reassessing the Appellant for that taxation year,
the Minister of National Revenue (the Minister) reduced the
Appellant's claim for employment expenses by $915.49 and
assessed interest in the amount of $22.57. More specifically, the
expenses disallowed were as follows:
|
Description
|
Claimed
|
Allowed
|
Disallowed
|
|
Meals
|
$4,580.00
|
$3,778.50
|
$801.50
|
|
Power Inverter
|
113.99
|
0.00
|
113.99
|
|
Other
|
527.62
|
527.62
|
0.00
|
|
Total
|
$5,221.61
|
$4,306.12
|
$915.49
|
[2]
It is not disputed that during the 1997 taxation year, the
Appellant was employed as a truck driver by Heyl Truck Line Inc.
In performing his duties of employment, the Appellant was
required to travel away from the municipality where the
Employer's establishment was located for a period of 229 days
during the 1997 taxation year. A portion of his travel was in the
United States. The Appellant determined his claim for meals in
the amount of $4,580 as follows:
229 days x $40.00 per day x 50% = $4,580
The Minister allowed the amount of $3,778.50 determined as
follows:
229 days x $33.00 per day x 50% = $3,778.50
The only assumption pleaded by the Minister with respect to
the foregoing was that "expenses claimed for meals in excess
of the amount allowed were not reasonable in the
circumstances".
[3]
The amount of $113.99 claimed as an expense was in respect of the
purchase of a power inverter which, according to the Minister was
not deductible since it was an expenditure on account of
capital.[1]
(Delivered orally from the Bench at
Winnipeg, Manitoba, on August 18,
2000)
HIS
HONOUR:
I want to ask counsel what the basis of the Minister's $33.00
per day is, other than it is so stated in an information
guide?
MR. BOUVIER: There is no basis for the
Minister's simplified method.
HIS HONOUR: But by pleading that
it is an assumption that it is reasonable?
MR. BOUVIER: Correct.
HIS HONOUR: And the Minister now
says, "I do not know that it is reasonable"?
MR.
BOUVIER:
No, Your Honour. Every year when they prepare the information for
circulation to the general public, the Minister of National
Revenue prepares guides to be circulated with your income tax
returns.
HIS HONOUR: They obviously do
not distribute them to the civil servants.
MR. BOUVIER: No.
HIS
HONOUR:
Now will you tell me why it is reasonable for the civil servants
to be paid $48.00 a day for meals while somebody who has to go
down to the States and buy meals there is limited to the amount
of $33.00 (Canadian currency). Is that reasonable, Mr.
Bouvier?
MR.
BOUVIER:
I cannot. I cannot come before this Court and say that one is
reasonable and one is not.
All I can say is that the Minister's position in this case
is that employment expenses are published in the employment
expense guide and the amount determined in that year, by the
Minister, to be reasonable was $11.00 a meal or $33.00 a day
maximum.
I can't explain --
HIS HONOUR: And you do not
disagree that I have the right to disagree with that?
MR.
BOUVIER:
No, I am not going to disagree with your right to disagree, of
course.
HIS
HONOUR:
Quite frankly, it just boggles the mind that $33.00 would be
considered to be sufficient when somebody has travelled (in this
case, to the United States) and incurred costs, as was very aptly
pointed out, you are paying a premium and it seems to me that
that should be taken into account.
I mean $33.00 a day, I mean in the United States -- I do not
think the Minister could eat on that.
MR.
BOUVIER:
No, and I can't say much. All I can state is the employment
guide is published, for some reason they picked $33.00 for that
taxation year and that's what truckers across the country
have been claiming, the $33.00 a day.
HIS HONOUR: Well, they may start
claiming more after this.
MR. BOUVIER: Well, they may start
claiming more after this one.
They haven't, the government or the Minister of National
Revenue hasn't put a regulation in the back of the Income
Tax Act that would say, you know, "$33.00 a day is a
prescribed rate", they haven't done that.
They have just included it in an employment expense guide.
Now there is no way that I can argue that --
HIS
HONOUR:
In all fairness, considering that the vast proportion of this
appellant's travel is in the United States, I just do not see
$33.00 per day as being nearly what I would call reasonable in
the circumstances.
I am going to allow the appeal, as you may have gathered from
my comments.
MR. BOUVIER: Yes. Well, I think enough
is said.
HIS
HONOUR:
This is the same type of issue that I dealt with in a recent
appeal when the Minister allowed 8 cents per kilometre[2] while paying the
Department's own employees 35 cents, or whatever it is, per
kilometre, to make the same trip, for the same purpose.
It just boggles the mind that these kinds of aberrations can
occur.
MR. BOUVIER: Unfortunately, I had to
argue that case in front of you.
HIS HONOUR: Yes, you did.
All right, the appeal is allowed.
MR. BOUVIER: With respect to the power
inverter.
HIS HONOUR: Oh, yes, I need to
hear you on the power inverter.
MR. BOUVIER: There is a power inverter
expense of $113.00.
HIS HONOUR: Where is that
deductible?
MR. BOUVIER: It's not a deductible
expense under section 8(1).
HIS
HONOUR:
I want to hear from you or your wife on where in the Income
Tax Act you can find a section that permits an employee to
deduct a power inverter.
MR.
WILKINSON:
It states in the letter from the Minister, if it's in the
Act I'm not sure, that an employee going to work will
not be required to pay out of pocket expense for things that cost
him to go to work.
HIS HONOUR: What section?
Show it to counsel.
MRS.
WILKINSON:
He's got a copy of it.
MR.
WILKINSON:
He has a copy already, Your Honour.
HIS HONOUR: What is the
reference to, Mr. Bouvier?
MR.
BOUVIER:
It's actually a letter from The Honourable Paul Martin to Mr.
Don Wilkinson, setting out why he shouldn't be allowed more
than $33.00 a day.
MR.
WILKINSON:
Mr. Martin, in his letter, states that --
HIS HONOUR: Let me see it,
rather than you paraphrasing it.
I do not see anything here so far. What is it that you are
specifically referring to?
MR.
WILKINSON:
"In the private sector travelling and other business
expenses incurred in the course of carrying out
their ..."
MRS.
WILKINSON:
It's page 2.
HIS HONOUR: One at a time,
please. What are you reading now?
MR.
WILKINSON:
I'm reading out of the letter from Paul Martin.
HIS HONOUR: This one?
MR.
WILKINSON:
Yes.
MRS.
WILKINSON:
Page 2.
MR.
WILKINSON:
Page 2.
HIS HONOUR: Paragraph?
MR.
WILKINSON:
Paragraph 5.
HIS HONOUR: Yes?
MR.
WILKINSON:
"In the private sector travelling and other business
expenses incurred in the course of carrying out their duties
are not expected to be paid with taxable personal income. The pay
and benefits arranged for members reflect ..."
HIS
HONOUR:
My only comment to Mr. Martin is where in the Income Tax
Act does he find that power inverters are deductible?
This is just a -- I hate to put it bluntly, but I will, this
is a politician's letter, it has nothing to do with the
Income Tax Act. It will get the --
MR. WILKINSON: It seems that --
HIS HONOUR: I will give it the
weight it deserves.
MR.
WILKINSON:
That's where we have a problem when we're filling out our
income tax, because they have all these policies and they have
this and they have that and --
HIS HONOUR: Counsel, what is
your position on the power inverter again?
MR.
BOUVIER:
There is no section in the Income Tax Act that would allow
an employee to deduct the expense of a power inverter, quite
simply put.
HIS HONOUR: Employee deductions,
you find them in section what, 8?
MR. BOUVIER: Section 8.
HIS
HONOUR:
And section 6 and they are all listed there in detail and if they
are not in that section they are not deductible, it is as simple
as that.
That may be a hard and cold statement, but as you heard me say
to the previous witness, unless there is a specific section that
provides for a deduction for a class of items or whatever it
might be, you are not entitled to deduct it from income, it is
just as simple as that.
You win your case on the meals, you lose it on the power
inverter.
Signed at Ottawa, Canada, this 14th day of March, 2002.
"A.A. Sarchuk"
J.T.C.C.
COURT FILE
NO.:
1999-4687(IT)I
STYLE OF
CAUSE:
Don J. Wilkinson and
Her Majesty the Queen
PLACE OF
HEARING:
Winnipeg, Manitoba
DATE OF
HEARING:
August 18, 2000
REASONS FOR JUDGMENT BY: The
Honourable Judge A.A. Sarchuk
DATE OF
JUDGMENT:
August 24, 2000
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Lyle Bouvier
COUNSEL OF RECORD:
For the
Appellant:
Name:
N/A
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
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