Hoch – Tax Court of Canada finds that “or” is generally disjunctive

The principal rabbi at a Toronto schul beneficially owned (together with his wife) 3/8ths a Toronto home, and the schul beneficially owned the other 5/8ths. The schul T4’d him for a s. 6(1)(a) benefit for his free use of the 5/8ths of the home, and he claimed an off-setting deduction under s. 8(1)(c)(iii). Respecting the 3/8ths of the home, he claimed a deduction under s. 8(1)(c)(iv) from his employment income equal to the fair rental value of that portion of the home.

CRAs disallowed the s. 8(1)(c)(iv) deduction on the basis that a deduction could not be claimed under both ss. 8(1)(c)(iii) and (iv). It likely was bothered by how the taxpayer’s approach effectively undercut the rule in ss. 8(1)(c) (iv) which limits the fair rental value deduction to 1/3 of the taxpayer’s compensation.

MacPhee J agreed with CRA that the “or” separating ss. 8(1)(c)(iii) and (iv) was disjunctive. He indicated that “or … in the ordinary sense is prima facie disjunctive” but “can also be conjunctive in limited circumstances,” – and such limited circumstances were not made out here. Instead:

It is unlikely that Parliament intended for a person to avoid the limitations imposed by subparagraph 8(1)(c)(iv) by simply claiming amounts under both subparagraphs (iii) and (iv).

Neal Armstrong. Summary of Hoch v. The Queen, 2019 TCC 99 under s. 8(1)(c)(iv).