REASONS
FOR JUDGMENT
Smith J.
[1]
Ms. Nazih is appealing the assessment made by
the Minister of National Revenue (hereinafter the “Minister”) for the
2013 taxation year. The hearing was held following the informal procedure on
December 10, 2015.
[2]
Two issues are in dispute in this case. First,
was the appellant permitted to deduct eligible net moving expenses of $17,884 and,
second, was she permitted to claim a tax credit for charitable donations of
$2,240.
Moving expenses
[3]
When she resided in the City of Longueuil,
Quebec, the appellant accepted an employment offer in the National Capital
Region. In March 2013, she moved with her family to Gatineau, Quebec.
[4]
It is understood that this is an “eligible
relocation” within the meaning of subsection 248(1) of the Income Tax Act
(hereinafter the “Act”) because the distance between the old residence
and the new work location is clearly greater than 40 kilometres.
[5]
Eligible moving expenses can be determined by
reviewing pertinent legislation:
Moving expenses
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 total of all amounts, each of
which is an amount included in computing the taxpayer’s income for the taxation
year from the taxpayer’s employment at a new work location or from carrying on
the business at the new work location, or because of subparagraph 56(1)(r)(v) in
respect of the taxpayer’s employment at the new work location, and
(ii) in any case described in subparagraph (a)(ii) of the definition eligible
relocation in subsection 248(1), the total of amounts included in
computing the taxpayer’s income for the year because of paragraphs 56(1)(n) and
(o); and
(d) all reimbursements and allowances received by the taxpayer in
respect of those expenses are included in computing the taxpayer’s income.
Moving
expenses of students
(2) . . .
(3) In subsection 62(1), moving
expenses includes any expense incurred as or on account of
(a) travel costs (including a reasonable amount expended for meals and
lodging), in the course of moving the taxpayer and members of the taxpayer’s
household from the old residence to the new residence,
(b) the cost to the taxpayer of transporting or storing household
effects in the course of moving from the old residence to the new residence,
(c) the cost to the taxpayer of meals and lodging near the old
residence or the new residence for the taxpayer and members of the taxpayer’s
household for a period not exceeding 15 days,
(d) the cost to the taxpayer of cancelling the lease by virtue of which
the taxpayer was the lessee of the old residence,
(e) the taxpayer’s selling costs in respect of the sale of the old
residence,
(f) where the old residence is sold by the taxpayer or the taxpayer’s
spouse or common-law partner as a result of the move, the cost to the taxpayer
of legal services in respect of the purchase of the new residence and of any
tax, fee or duty (other than any goods and services tax or value-added tax)
imposed on the transfer or registration of title to the new residence,
(g) interest, property taxes, insurance premiums and the cost of
heating and utilities in respect of the old residence, to the extent of the
lesser of $5,000 and the total of such expenses of the taxpayer for the period
(i) throughout which the old residence is neither ordinarily occupied
by the taxpayer or by any other person who ordinarily resided with the taxpayer
at the old residence immediately before the move nor rented by the taxpayer to
any other person, and
(ii) in which reasonable efforts are made to sell the old residence, and
(h) the cost of revising legal documents to reflect the address of the
taxpayer’s new residence, of replacing drivers’ licenses and non-commercial
vehicle permits (excluding any cost for vehicle insurance) and of connecting or
disconnecting utilities,
but, for greater certainty, does not include costs (other than costs
referred to in paragraph 62(3)(f)) incurred by the taxpayer in respect of the
acquisition of the new residence.
[6]
It is not disputed that the appellant was
eligible for reimbursement of moving expenses by her new employer up to a
maximum of $5,000, and she did receive that amount. The appellant argued that
she was not required to submit detailed receipts to obtain that amount, but the
fact remains that this was a reimbursement of her moving expenses within the
meaning of paragraph 62(1)(a) of the Act. It is therefore necessary to
account for that amount when calculating the net deductible moving expenses.
[7]
During the hearing, the appellant submitted a
table containing the following amounts (the table has been reproduced excluding
details):
|
|
Claimed amounts
|
Description
|
|
Travel and
lodging costs while house hunting
|
$1,486.71
|
|
|
Travel and
lodging costs for moving – paragraphs 62(3)(a) and (c)
|
$2,513.40
|
|
|
Moving company
costs - paragraph 62(3)(b)
|
$1,587.00
|
|
|
Sale of old
residence - paragraph 62(3)(e)
|
$804.77
$748.00
|
Advertising
Legal costs
|
|
Purchase of new
residence - paragraph 62(3)(f)
|
$526.00
$1,472.00
$2,595.00
$450.00
$7,423.00
$3,278.00
|
Central vacuum
Legal costs
Transfer tax
Inspection
CMHC insurance
Down payment
|
|
Subtotal
|
$22,884.00
|
|
|
Reimbursements
- paragraph 62(1)(a)
|
($5,000.00)
|
|
|
Total
|
$17,884.00
|
|
[8]
The Minister disallowed expenses of $9,916 and
allowed deductible net moving expenses of $7,968, as indicated in the notice of
confirmation dated May 20, 2015.
[9]
According to the jurisprudence, although the
list of expenses detailed in subsection 62(3) is not exhaustive, expenses
incurred as a result of an eligible relocation must be associated with a
physical relocation and not incidental expenses; Seguin v. Canada,
[1998] 2 C.T.C. 13 (FCA), (QL). Consequently, expenses associated with
travel to find a new residence are not eligible; Olney v. R.,
2014 CarswellNat 3383 (TCC), at paragraph 29. I therefore find that the claim
of $1,486.71 is not eligible as a moving expense.
[10]
Regarding travel costs, including reasonable
expenses for meals and lodging, the appellant had the choice, according to the
administrative position of the Canada Revenue Agency, to make calculations
using the detailed or simplified method. Given that she did not have all the
receipts required to support her claim, the Minister made the calculation using
the simplified method for 8 days of travel for 4 people (maximum of $51 per day
per person), plus the cost of lodging (with supporting receipts) and travel
costs. According to these calculations, I find that the total amount claimed
should be reduced from $2,513.40 to $2,264.00 (an adjustment of $249.40).
[11]
As indicated above, the appellant was not
entitled to incidental expenses. The amount claimed for a new central vacuum
($526.00) should be rejected along with fees for the Canada Mortgage and
Housing Corporation ($7,423.00) incurred during the negotiation of a mortgage
for the new residence (which the appellant acknowledged during the hearing).
The same applies to fees for the inspection of the new residence ($450.00) and
the amount reflecting, according to the appellant, the difference between the
5% down payment and the amount paid as a penalty for redeeming the mortgage on
the old residence ($3,278). In my opinion, none of these amounts is eligible
within the meaning of subsection 62(3). Therefore, I would have reduced the
eligible travel costs to $9,470.89 and, accounting for the $5,000
reimbursement, would have reduced the deductible net moving expenses to
$4,470.89.
[12]
Although I have reached this conclusion, the
Minister has already allowed deductible net moving expenses of $7,968, as
stated in the notice of confirmation dated May 20, 2015, and our Court
does not have jurisdiction to increase the tax payable. This principle was also
acknowledged in the case of Valdis v. The Queen, [2001] 1 C.T.C. 2827,
where Justice Hamlyn noted in paragraph 21:
21 In Millette v. The Queen,
Judge Lamarre Proulx reaffirmed that this Court cannot entertain an appeal that
contemplates increasing an Appellant's tax liability. She stated at paragraph
72:
It is
accepted in the case law that this Court cannot increase the amount of the
Minister's assessment because that would be tantamount to the Minister
appealing the assessment, which he cannot do. The Minister cannot appeal his
own assessment: Harris v. M.N.R, 64 D.T.C. 5332, at p. 5337; Shiewitz
v. M.N.R., 79 D.T.C. 340, at p. 342; and Abed v. The Queen, 82
D.T.C. 6099, at p. 6103.
[13]
In light of the above, I find that the appellant
is entitled to deductible net moving expenses of $7,968 for the taxation year
in question.
Charitable
donations
[14]
The appellant claimed a non-refundable tax
credit for charitable donations in the amount of $2,240.00, which is detailed
as follows:
|
|
Appellant
|
Minister
|
|
The Mosque of
Aylmer
|
$370
|
$370
|
|
Arabic
language school
|
$930
|
$0
|
|
Miscellaneous
|
$940
|
$0
|
|
Total
|
$2,240
|
$370
|
[15]
Evidently, taxpayers can, at their discretion,
make a donation to whomever, in any amount. There is no limit. Moreover, the
appellant was of the opinion that she had paid the amounts claimed, had
provided evidence and, for her, they constituted charitable donations. I reject
that argument because she is seeking a tax credit. It must therefore be
determined whether the donation complies with the Act.
[16]
In order to claim a non-refundable tax credit
for a taxation year, the donation must be made to a “registered charity” or
other donee listed in subsection 118.1(1) of the Act.
[17]
Supporting evidence is also required in
accordance with the Act. Subsection 118.1(2) states:
Proof of gift
(2) An eligible amount of a gift is not
to be included in the total charitable gifts, total cultural gifts or total
ecological gifts of an individual unless the making of the gift is evidenced by
filing with the Minister
(a) a receipt for the gift that
contains prescribed information;
[18]
The prescribed information appears in the Income
Tax Regulations (the “Regulations”) part XXXV, 3500 and 3501. If
there is no receipt, the donation does not meet the requirements of subsection
118.1(1), and if the receipt does not meet the form requirements listed in
subsection 3501(1) of the Regulations, the application for a credit for a
charitable donation is irremediably invalid: Castro v. The Queen,
2015 FCA 225.
[19]
In this case, only the receipt for $370 meets
the requirements in subsections 118.1(1) of the Act and 3501 of the
Regulations.
[20]
I should add that the appellant produced five
receipts totalling $1,510 (there was no receipt for $360) for the amounts
donated to an association and a language school. Given that the names of her children
appear on the receipts, I find that these entities provided services, namely
language courses. Evidently, a simple receipt given in exchange for a sum of
money to pay for a given product or service does not satisfy the definition of
a donation. Considering that the appellant benefited from the sum paid, through
her two children, it cannot be a charitable donation within the meaning of the
Act.
[21]
For these reasons, I am dismissing the appeal.
Signed at Ottawa, Canada, this 22nd day of March 2016.
“Guy Smith”
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