REASONS
FOR JUDGMENT
Favreau J.
[1]
This is an appeal from reassessments dated July
20, 2015 made under the the Income Tax Act,
R.S.C. 1985, c. 1 (5th Supp.), as amended (the “Act”), by the
Minister of National Revenue (the “Minister”) concerning the appellant’s 2011
and 2012 taxation years.
[2]
In computing his income for the 2011 and 2012
taxation years, the appellant reported, among other things, the following:
|
|
Employment Expenses
|
Gross rental
income
|
Net rental
income/loss
|
|
2011
|
$ 52,376
|
$
1,449
|
$
(3,101)
|
|
2012
|
$ 48,045
|
$1,189
|
$
(3,545)
|
[3]
On May 7, 2012 and May 6, 2013, the Minister
initially assessed the appellant’s 2011 and 2012 taxation years respectively
and accordingly, issued notices on these dates.
[4]
By facsimile transmission dated April 24, 2015,
the appellant provided the Minister with a duly executed Form T-2029 waiving
the normal reassessment period for his 2011 taxation year.
[5]
The Minister reassessed the appellant’s 2011 and
2012 taxation years for unreported rental income and disallowed rental and
employment expenses.
[6]
In determining the appellant’s tax liability for
the 2011 and 2012 taxation years, the Minister made the following assumptions
of fact:
Employment expenses
a)
during the 2011 and 2012 taxation years, the
Appellant was employed by the Royal Bank of Canada (“RBC”);
b)
the Appellant was employed by RBC as a financial
planner;
c)
RBC remunerated the Appellant in whole or in
part by commissions according to the volume of sales made or contracts
negotiated;
d)
in 2011, the Appellant earned employment income
from RBC of $224,034, on which $218,183 was commissions;
e)
in 2012, the Appellant earned employment income
from RBC of $238,579, of which $238,282 was commissions;
f)
for the 2011 and 2012 taxation years, RBC
required the Appellant to pay for supplies, use a cell phone and use a portion
of his home not more than 20% of the time for employment purposes;
g)
RBC did not require the Appellant to rent an
office away from his employer’s place of business nor pay for an assistant;
h)
RBC required the Appellant to travel to
locations that were not its place of business or between different locations of
its places of business;
i)
the Appellant was required to be away from RBC’s
place of business for more than 12 consecutive hours 14 times in 2011 and 5
times in 2012;
Advertising and promotion expenses
j)
the Appellant claimed advertising and promotion
expenses of $8,347 and $6,876 respectively, for the 2011 and 2012 taxation
years;
k)
the Appellant did not maintain a list of the
clients to whom he allegedly advertised and promoted his services;
l)
for 2012, the Appellant included as advertising
and promotion expenses expenditures he incurred with respect to Southern
Oldtimes Football Association;
m)
the Appellant is the coach of the Southern
Oldtimes Football Association;
n)
expenditures incurred in excess of $248.81 for
each of the 2011 and 2012 taxation years were not incurred, or if incurred,
were not incurred to advertise and promote his services at RBC;.
Motor vehicle expenses
o)
in 2011 and 2012, the Appellant received motor
vehicle allowances of $396.00 and $408.32, respectively, which were not
included in the Appellant’s employment income by RBC;
p)
the Appellant did not maintain a mileage log
with respect to the motor vehicle(s) purported to be driven for employment
purposes;
q)
the Appellant owned multiple vehicles which were
driven by other family members;
r)
the Appellant claimed motor vehicle expenses
totaling $13,915 and $12,487 for the 2011 and 2012 taxation years,
respectively;
s)
the Appellant incurred motor vehicle expenses
(net of the motor vehicle allowances paid by RBC) not exceeding $946.23 and
$933.91, respectively, in regard to his employment for the 2011 and 2012
taxation years;
Meals and entertainment
t)
the Appellant claimed meals and entertainment
expenses totaling $6,615 and $6,408 for the 2011 and 202 taxation years,
respectively;
u)
claimed meals and entertainment expenses
included meals for a single person;
v)
the Appellant did not maintain a log of the
individuals he allegedly entertained;
w)
the Appellant incurred meals and entertainment
expenses not exceeding $1,507.78 per year for the 2011 and 2012 taxation years
in respect of his employment at RBC;
Lodging
x)
expenditures incurred for lodging in Seattle,
Washington and in the Appellant’s city of residence (Lethbridge, Alberta) were
personal expenditures;
y)
the Appellant incurred lodging expenses not
exceeding $541.06 per year for the 2011 and 2012 taxation years in respect of
his employment at RBC;
Supplies
z)
expenditures claimed by the Appellant as
supplies included capital items such as computers, monitors and printers;
aa)
the Appellant incurred supplies expenses not
exceeding $467.71 per year for the 2011 and 2012 taxation years in respect of
his employment at RBC;
Other expenses
bb)
the Appellant claimed other expenses totaling
$19,108 and $19,583 for the 2011 and 2012 taxation years, respectively;
cc)
The Appellant’s children, Emily and Evan, did
not provide the Appellant with any services related to his employment at RBC
for the 2011 and 2012 taxation years;
dd)
RBC did not require the Appellant to pay for an
assistant;
ee)
the Appellant did not pay Emily or Evan for any
purported services they provided with respect to his employment at RBC for the
2011 and 2012 taxation years;
ff)
the Appellant’s contributions to Emily’s or
Evan’s post-secondary education, their Registered Retirement Savings Plans,
Tax-Free Savings Accounts or cash payments to them in 2011 or 2012 were not
made in relation to his employment at RBC;
Workspace-in-home
gg)
the Appellant claimed workspace-in-home expenses
totaling $1,051 and $1,061, respectively, for the 2011 and 2012 taxation years;
hh)
RBC did not require the Appellant to use a
portion of home for more than 50% of the time for employment;
ii)
the Appellant did not use a portion of his home
exclusively to meet customers or other persons on a regular and continuous
basis in performing the duties of his employment with RBC;
Total employment Expenses
jj)
the Appellant did not make or incur any claimed
expenses, in excess of the amounts allowed by the Minister of $4,198 and
$4,185, for the purpose of gaining or producing income for employment from RBC
for the 2011 and 2012 taxation years, respectively, as detailed in Schedule “A”
attached;
Rental Property
kk)
in or about August 2001, the Appellant and his
spouse, Janice Brown, jointly purchased a condominium located at 802 – 880
Northstar Drive, Kimberly (sic), British Columbia for $79,900 (the
“Condo”);
ll)
the Condo is located near Kimberley Alpine
Resort;
mm) the Condo provides all season resort accommodation;
nn)
rentals of the Condo were managed by a
management company;
oo)
the Appellant and his spouse each reported
rental activity respecting their one-half interest of the Condo on their
individual income tax returns for the 2011 and 2012 taxation years;
pp)
in 2011, the Appellant and his spouse each
reported a net rental loss of $3,101 respecting one-half interest of the Condo;
qq)
in 2012, the Appellant and his spouse each
reported a net rental loss of $3,545 respecting their one-half interest of the
Condo;
rr)
gross rents respecting the Condo were $5,933.39
and $4,789.60, respectively, for the 2011 and 2012 taxation years;
ss)
the Appellant used the Condo for personal use in
addition to renting it;
tt)
the Appellant owns only one rental property (the
Condo) away from the metropolitan area where he resides;
uu)
travel expenses claimed in 2011 and 2012 of
$1,113 and $2,046, respectively, were not incurred to earn rental income of the
Condo or were the Appellant’s personal expenditures;
vv)
“other expenses” claimed by the Appellant as
rental expenses of the Condo totaling $3,045 and $3,044 for the 2011 and 2012
taxation years, respectively, were not incurred or were not incurred to earn
rental income; and
ww)
rental expenses respecting the Condo did not
exceed $1,352.06 and $1,311.19 for the 2011 and 2012 taxation years as detailed
in Schedule “A” attached.
[7]
At the hearing, the parties made the following
concessions:
For 2011
|
|
Advertising & promotion
$
|
Lodging
$
|
|
Initial assessment
|
8,347.00
|
1,461.00
|
|
Amount allowed after
audit
|
284.81
|
541.06
|
|
Adjustment
|
8,062.19
|
919.94
|
|
Amount conceded
|
2,950.00
|
554.00
|
|
Revised adjustment
|
5,112.19
|
365.94
|
For 2012
|
|
Advertising & promotion
$
|
|
Initial assessment
|
6,876.00
|
|
Amount allowed after
audit
|
284.81
|
|
Adjustment
|
6,591.19
|
|
Amount conceded
|
2,150.00
|
|
Revised adjustment
|
4,441.19
|
For 2011
|
|
Condo Expenses - Travel
$
|
|
Initial assessment
|
1,113.00
|
|
Amount allowed after audit
|
0
|
|
Adjustment
|
1,113.00
|
|
Amount conceded
|
1,113.00
|
|
Revised adjustment
|
0
|
For 2012
|
|
Condo Expenses - Travel
$
|
|
Initial assessment
|
2,046.00
|
|
Amount allowed after
audit
|
0
|
|
Adjustment
|
2,046.00
|
|
Amount conceded
|
2,046.00
|
|
Revised adjustment
|
0
|
For 2011
|
|
Property taxes
$
|
Utilities
$
|
Other expenses
$
|
|
Initial
assessment
|
1,710.00
|
1,544.00
|
3,045.00
|
|
Amount allowed after
audit
|
795.00
|
317.06
|
0
|
|
Adjustment
|
915.00
|
1,226.94
|
3,045.00
|
|
Amount conceded
Revised adjustment
|
795.00
120.00
|
1,226.94
0
|
3,045.00
0
|
For 2012
|
|
Property taxes
$
|
Utilities
$
|
Other expenses
$
|
|
Initial
assessment
|
1,768.00
|
1,254.00
|
3,044.00
|
|
Amount allowed after
audit
|
803.91
|
339.28
|
0
|
|
Adjustment
|
964.09
|
914.72
|
3,044.00
|
|
Amount conceded
Revised adjustment
|
803.90
160.19
|
914.72
0
|
3,044.00
0
|
[8]
The appellant testified at the hearing. He
explained that, during the 2011 and 2012 taxation years, he was an employee of
the Royal Bank of Canada and held the position of regional financial advisor.
He was paid on a commission basis. He covered the territory of southern Alberta
and was responsible for all his expenses. His only permanent office was at home
in Lethbridge, Alberta. The Declaration of Conditions of Employment (Form
T2200) which was completed by the RBC Royal Bank for each of the appellant’s
2011 and 2012 taxation years, were filed as evidence in court.
[9]
During his testimony, he explained that in his professional
career, he has been audited twice by the Canada Revenue Agency (“CRA”) and that
his claims for expenses for prior years were accepted by the CRA. To support
his assertion, the appellant filed as an exhibit, Form T777, Comparative
Summary of Employment Expenses for the 2007 to 2011 years inclusively. This
time the situation is different because he lost all his documents when his
house was flooded in July 2013.
[10]
The only documentary evidence presented by the
appellant concerning the flood, is a letter dated August 28, 2014 from Mr.
Austin Stephens, a licensed broker of Young Insurance. The author of the letter
says, among other things, on June 24, 2013, Young Insurance received a phone
call from Mr. Lance Brown regarding a potential water damage claim to his
dwelling and contents located at 6 Sheridan Place West, Lethbridge, Alberta and
that Mr. Brown was advised not to submit a claim because seepage and flooding
were not insured perils under his insurance policy. There would be no insurance
coverage for the damage to his dwelling and its contents and Mr. Brown was
responsible for the loss sustained. Mr. Stephens was not called as a witness
at the hearing.
[11]
Concerning the advertising and promotion
expenses, the appellant explained that he had to give seminars with particular
groups of interest. For this purpose, he had to rent space at a convenient
location and advertise the events. The appellant also explained that he was
giving approximately $1,000 per year to employees of the Royal Bank of Canada as
rewards for referring potential clients to him. This was accomplished by
remitting gift certificates of less than $100 each. He also stated that these
expenses were not reimbursed by the Royal Bank of Canada.
[12]
Concerning the motor vehicle expenses, the appellant
claimed $13,915 in 2011 and $12,487 in 2012. CRA allowed $946.23 and $933.41
respectively. The appellant explained that he was driving 40,000 kilometres per
year for business purposes and that his claim was based on 44 cents per
kilometre, e.g. the rate used by the Royal Bank of Canada for its employees.
The appellant was driving a 2008 Mitsubishi Outlander and was taking only a
two-week vacation per year. His spouse, a high school teacher had her own car.
The appellant explained that these motor vehicle expenses were not reimbursed
by the Royal Bank of Canada except for the trips required by the bank. In 2011
and 2012, the appellant received motor vehicle allowances in the amounts of
$396 and $408.32 respectively from the bank
[13]
The appellant claimed meals and entertainment
expenses in the amounts of $6,615 in 2011 and $6,048 in 2012 and the CRA
allowed $1,507.78 in each year. The appellant explained that he was taking
clients for lunch two or three times per week and also when he hosted seminars
with prospective clients.
[14]
The appellant claimed lodging expenses in the
amounts of $1,461 in 2011 and $664 in 2012. The CRA allowed $541.06 in each
year. The appellant conceded $554 to attend a football game in Seattle in 2011.
The adjustments under litigation for 2011 and 2012 are $365.94 and $49.29
respectively. The appellant explained that he would spend the night away from
home if the roads were closed due to bad weather conditions or if his seminars
finished late.
[15]
The appellant claimed office supplies in the
amounts of $1,429 in 2011 and $517 in 2012. The CRA allowed $467.71 in each
year. The appellant explained that these expenses were primarily for the
purchase of a printer and a charger for his laptop
[16]
The appellant also claimed expenses in relation
to workspace-in-home in the amounts of $1,051 in 2011 and $1,060 in 2012. The
CRA did not allow any of these amounts. The appellant explained that he was
required to use a portion of his home for work as indicated in the Royal Bank
of Canada’s Form T-2200 and he indicated 20% as the percentage of the duties he
performed at his home office as estimated by the bank on the said form.
[17]
The appellant also claimed $19,108 in 2011 and
$19,583 in 2012 under “Other expenses” which were both disallowed by the CRA.
The appellant explained that these amounts were paid to his daughter, Emily,
and to his son, Evan, for services they provided at the home office. Their
duties consisted of opening clients’ files, preparing documents for his
signature, conducting research on competitive products and organizing mail for,
among other things, transfers of funds. In 2011, Emily was paid $12,000 and
Evan was paid $6,000. In 2012, Emily was paid $6,000 and Evan was paid
$12,000. Payments were made in a number of ways which included cash payments
and contributions to their Registered Retirement Savings Plans and to their
Tax-Free Savings Accounts. According to the appellant, this was done after his
accountant had consulted with the CRA on the issue. The appellant further
alleged that the amounts paid to his children were reported as income in their
respective tax returns and they paid Canada Pension Plan premiums on these
amounts.
[18]
The appellant explained that the revenues
generated by his condominium unit located in Kimberley, British Columbia, were
reported as income based on his one-half share and that the goods and services
tax collected on the rent was remitted to the Receiver General of Canada. The
gross rent reported in 2011 and 2012 were $1,449 and $1,189 respectively. In
the course of the audit, the CRA determined that the gross rent were $5,933.39
and $4,789.60 respectively for the 2011 and 2012 taxation years. The reason for
the adjustments was due to the fact that an amount of $300 was being deposited
every month into a special bank account for the condominium operations. This
amount was being deposited around the 24th of each month and is described as
“transfer 42270002”.
[19]
The appellant alleged that he had to transfer an
after-tax amount into the rental property account to cover the shortfall in the
condominium fees because the rental income was not sufficient to cover the
condominium fees entirely. To support his allegations, the appellant filed as
evidence, the rental property account for the 2011 and 2012 taxation years.
[20]
As a result of the various concessions made by
the parties, the rental expenses respecting the condominium are not contested
anymore.
Legislation
[21]
The following provisions of the Act are
relevant for the purpose of this appeal:
8(1)
Deductions allowed In computing a taxpayer's
income for a taxation year from an office or employment,
there may be deducted such of the following amounts as are wholly applicable to
that source or such part of the following amounts as may reasonably be regarded
as applicable thereto:
. . .
(h) travel expenses where
the taxpayer, in the year,
(i) was ordinarily required to carry on the
duties of the office or employment away from the employer's place of business
or in different places, and
(ii) was required under the contract of employment
to pay the travel expenses incurred by the taxpayer in the performance of the
duties of the office or employment,
amounts expended by the taxpayer in the year (other than motor
vehicle expenses) for travelling in the course of the office or employment,
except where the taxpayer
(iii) received an allowance for travel expenses
that was, because of subparagraph 6(1)(b)(v), (vi) or (vii), not included in
computing the taxpayer's income for the year, or
(iv) claims a
deduction for the year under paragraph (e), (f) or (g);
(h.1) motor vehicle travel expenses where the taxpayer, in
the year,
(i) was ordinarily required to carry on the
duties of the office or employment away from the employer's place of business
or in different places, and
(ii) was required under the contract of employment
to pay motor vehicle expenses incurred in the performance of the duties of the
office or employment,
amounts expended by the taxpayer in the year in respect of motor
vehicle expenses incurred for travelling in the course of the office or
employment, except where the taxpayer
(iii) received an allowance for motor vehicle
expenses that was, because of paragraph 6(1)(b), not included in computing the
taxpayer's income for the year, or
(iv) claims a deduction for the year under paragraph
(f);
. . .
(i) dues and other expenses of performing duties an amount
paid by the taxpayer in the year, or on behalf of the taxpayer in the year if
the amount paid on behalf of the taxpayer is required to be included in the
taxpayer's income for the year, as
(i) annual professional membership dues the
payment of which was necessary to maintain a professional status recognized by
statute,
(ii) office rent, or salary to an assistant or
substitute, the payment of which by the officer or employee was required by the
contract of employment,
(iii) the cost of supplies that were consumed
directly in the performance of the duties of the office or employment and that
the officer or employee was required by the contract of employment to supply
and pay for,
. . .
8(2) General limitation Except limitation
Except as permitted by this section, no deductions shall be made in computing a
taxpayer's income for a taxation year from an office or employment.
. . .
8(4) Meals An amount expended
in respect of a meal consumed by a taxpayer who is an officer or employee shall
not be included in computing the amount of a deduction under paragraph (1)(f)
or (h) unless the meal was consumed during a period while the taxpayer was
required by the taxpayer's duties to be away, for a period of not less than
twelve hours, from the municipality where the employer's establishment to which
the taxpayer ordinarily reported for work was located and away from the
metropolitan area, if there is one, where it was located.
. . .
8(10) Certificate of employer An amount
otherwise deductible for a taxation year under paragraph (1)(c), (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 the applicable provision were met in the year in respect
of the taxpayer, is filed with the taxpayer's return of income for the year.
. . .
8(13) Work space in home Notwithstanding
paragraphs (1)(f) and (i),
(a) no amount is deductible in computing an individual's income for a
taxation year from an office or employment in respect of any part (in this
subsection referred to as the “work space”) of a self-contained domestic
establishment in which the individual resides, except to the extent that the
work space is either
(i)
the place where the individual principally
performs the duties of the office or employment, or
(ii)
used exclusively
during the period in respect of which the amount
relates for the purpose of earning income from the office
or employment and used on a regular and
continuous basis for meeting customers or other persons in the ordinary course
of performing the duties of the office or employment;
(b) where the conditions set out in subparagraph (a)(i) or (ii) are met,
the amount in respect of the work space that is deductible in computing the
individual's income for the year from the office or employment shall not exceed
the individual's income for the year from the office or employment, computed
without reference to any deduction in respect of the work space; and
(c) any amount in respect of a work space that was, solely because of
paragraph (b), not deductible in computing the individual's income for the
immediately preceding taxation year from the office or employment shall be
deemed to be an amount in respect of a work space that is otherwise deductible
in computing the individual's income for the year from that office or
employment and that, subject to paragraph (b), may be deducted in computing the
individual's income for the year from the office or employment.
9(1) Income Subject to this
Part, a taxpayer's income for a taxation year from a business or property is
the taxpayer's profit from that business or property for the year.
18(1) General limitations In
computing the income of a taxpayer from a business or property no deduction
shall be made in respect of
(a) an outlay or expense except to the extent that it was made or
incurred by the taxpayer for the purpose of gaining or producing income from
the business or property;
. . .
(h) personal or living expenses of the taxpayer,
other than travel expenses incurred by the taxpayer while away from home in the
course of carrying on the taxpayer's business;
248(1) Definitions
“Personal or living expenses” includes
(a) the
expenses of properties maintained by any person for the use or benefit of the
taxpayer or any person connected with the taxpayer by blood relationship,
marriage or common-law partnership or adoption, and not maintained in
connection with a business carried on for profit or with a reasonable
expectation of profit,
. . .
Analysis
[22]
The income tax system is based on
self-monitoring and the burden of proof for deductions and claims rests with
the taxpayer. The taxpayer must have detailed information available and keep
documentation in support of the claims he makes.
[23]
In this instance, the books and records kept by
the appellant were just non-existent allegedly due to a flood that occurred in
his home office in July 2013. The only documentary evidence of the flood
submitted by the appellant is a letter from his insurance broker dated one year
after the event. The letter refers to the appellant’s phone call made to his
insurance company in the month preceding the alleged flood. The insurance
broker did not testify at the hearing to confirm whether or not he had personal
knowledge of the call and if the information in the letter is true. The
appellant could also have provided photos of the damages and copies of the
invoices for repairs done to his dwelling which the appellant estimated to be
in excess of $40,000.
[24]
In the circumstances, I do not find the
appellant’s testimony on this issue credible.
[25]
The T2200 forms that were submitted as exhibits
for the appellant’s 2011 and 2012 taxation years showed that the appellant was
not required, under his contract of employment, to pay for an assistant. That
form is a statutory condition precedent to the claiming of certain employment
expense deductions and provides evidence of the terms of employment. The form
is not conclusive or determinative if the evidence proves it to be wrong.
Nevertheless, the requirement in subparagraph 8(1)(i)(ii) of the Act in
respect of the salary paid to an assistant is only satisfied if it is essential
that the expenditure be incurred in order for the appellant to carry out the
duties of his employment.
[26]
In this instance, the appellant has failed to
meet his burden of proof on this point. The appellant’s testimony that his
children’s duties consisted of opening client files, preparing documents for
his signature, conducting research on competitive products and organizing mail,
do not show that his children’s services were necessary for the appellant to be
able to carry out the duties of his employment as a financial advisor.
[27]
Furthermore, the appellant did not call his
children to substantiate his testimony nor did he call his supervisor who would
have been able to explain the reasons why his children’s assistance was
implicitly required.
[28]
Despite the fact that the appellant’s testimony
indicated that his children may have genuinely provided some assistance, he did
not provide sufficient evidence to establish the element of necessity. The
appellant did not keep a record of the number of hours his children worked in any
given year and he has admitted that the amounts paid to them were arbitrarily
determined and have no correlation with the duties actually performed.
[29]
Pursuant to subsection 8(13) of the Act,
no amount is deductible in computing an individual’s income for a taxation year
from an office or employment in respect of any part (the “work space”) of a
self-contained domestic establishment in which the individual resides, except
to the extent that the work space is either:
(i)
the place where the individual principally
performs the duties of the office or employment, or
(ii)
used exclusively during the period for the
purpose of earning income from the office or employment and used on a regular
and continuous basis for meeting customers in the ordinary course of performing
the duties of the office or employment.
[30]
The forms T2200 submitted indicate that the
appellant performed his duties of employment at home only 20% of the time and
the appellant has admitted that he was not meeting clients at home.
Consequently, the two conditions of subsection 8(13) are not met which means
that no amount is deductible by the appellant in computing his income in
respect of his work space-in-home.
[31]
The forms T2200 submitted indicate that:
-
the appellant was required to pay his own
expenses while carrying out the duties of his employment;
-
the appellant had no specific territory where he
was required to travel during the course of performing the duties of his
employment;
-
the appellant was required to be away for at
least 12 consecutive hours from the municipality where the appellant normally
reported for work, 14 times in 2011 and 5 times in 2012; and
-
the appellant received motor vehicle allowances
of $396 in 2011 and $408.32 in 2012 which were not included in the appellant’s
employment income by the Royal Bank of Canada.
[32]
The appellant’s testimony is to the effect that
he used one vehicle exclusively for employment purposes and that he drove
40,000 kilometres per year. The appellant claimed motor vehicle expenses
totalling $13,915 and $12,487 for the 2011 and 2012 taxation years
respectively, by using a rate of 44 cents per kilometre. The appellant did not
maintain a mileage log with respect to the motor vehicle that he drove for
employment purposes nor a list of clients or potential clients he met or of the
seminars he gave while away from home. The appellant did not submit any invoice
showing the real fuel and maintenance costs that he incurred in performing the
duties of his employment.
[33]
In the absence of any supportive receipt or any
reasonable alternative method of calculating the motor vehicle expenses, I can
only conclude that the amounts allowed by the Minister (net of the motor
vehicle allowances paid by the Royal Bank of Canada are reasonable in the
circumstances.
[34]
The appellant claimed meals and entertainment
expenses totalling $6,615 and $6,408 for the 2011 and 2012 taxations years
respectively and the Minister allowed $1,507.78 per year. In the absence of a
list of individuals who the appellant allegedly entertained and receipts and
credit card statements, I can only conclude that the amounts allowed by the
Minister are reasonable in the circumstances.
[35]
The appellant claimed expenses for supplies
totalling $1,429 and $517 for the 2011 and 2012 taxation years respectively and
the Minister allowed $467.71 in each year. In the absence of invoices showing
the purchases of capital items such as computers, monitors and printers, I can
only conclude that the amounts allowed by the Minister are reasonable in the
circumstances.
[36]
The other employment expenses in respect of
advertising and promotion, lodging and rental expenses respecting the
condominium, claimed by the appellant, were adjusted as a result of concessions
made by the parties. I do not intend to make changes to these items.
[37]
Concerning the undeclared income generated by
rental of the condominium, the appellant was given the opportunity to show the
source of the $300 monthly deposits in his condominium bank account but he
failed to provide any evidence that these deposits were made by transfers from
his personal bank account. As an employee of the Royal Bank of Canada, I am
persuaded that the appellant could have easy access to his banking documents.
[38]
Based on the foregoing, the appellant failed to
establish on a balance of probabilities that he was entitled to adjustments
other than those described above with respect to his 2011 and 2012 taxation
years.
[39]
After taking into account all of the adjustments
above, the appellant’s employment and condominium expenses and net rental loss
for 2011 and 2012 taxation years are as follows:
|
|
2011
$
|
2012
$
|
|
Employment
expenses
Professional fees
|
450.00
|
450.00
|
|
Advertising and
promotion
|
3,234.81
|
2,434.81
|
|
Motor vehicle
|
946.23
|
933.91
|
|
Meals and
entertainment
Lodging
|
1,507.78
1,095.06
|
1,507.78
541.06
|
|
Supplies
Other expenses
Work space-in-home
|
467.71
Nil
Nil
7,701.59
|
467.71
Nil
Nil
6,335.27
|
|
|
2011
$
|
2012
$
|
|
Condominium expenses
|
|
|
|
Maintenance and
repairs
|
240.00
|
168.00
|
|
Property taxes
|
1,590.00
|
1,607.81
|
|
Utilities
|
1,544.00
|
1,254.00
|
|
Travel
Other expenses
|
Nil
3,045.00
6,419.00
|
Nil
3,044.00
6,073.81
|
|
Condominium net rental loss
Gross rent
Condominium expenses
|
2011
$
5,933.39
6,419.00
|
2012
$
4,789.60
(6,073.811)
|
|
Net rental loss
|
(485.61)
|
(1,284.20)
|
|
Appellant’s half
share
|
(242.80)
|
(642.10)
|
|
|
|
|
[40]
For these reasons, the appeal is allowed and the
matter is referred back to the Minister for reconsideration and reassessments
in accordance with these reasons.
Signed at Ottawa, Canada,
this 29th day of November 2017.
“Réal Favreau”
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