Bowman
J.T.C.C.:
—
This
is
an
appeal
from
an
assessment
for
the
appellant’s
1991
taxation
year.
The
issue
is
the
deductibility
in
computing
his
income
for
1991
of
the
sum
of
$30,497,
being
the
amount
claimed
by
him
as
expenses
beyond
a
research
grant
received
by
him.
Dr.
Scheinberg
is
a
well-known
and
distinguished
tenured
professor
of
history
at
Concordia
University.
In
1991
he
received
a
grant
of
$4,000
from
the
university
to
do
research
on
a
project,
“Civil
Aviation
and
the
North
Atlantic
Triangle”
and
to
this
end
he
and
his
family
travelled
to
Europe
where
he
did
research,
not
necessarily
on
the
North
Atlantic
Triangle,
but
on
the
rise
of
the
extreme
right,
which
I
would
take
to
include
neo-nazis,
skinheads
and
other
extreme
right
racist
elements
of
that
ilk.
Dr.
Scheinberg
has
in
recent
years
acquired
a
commendable
reputation
as
an
authority
in
this
area
and
is
frequently
quoted
or
interviewed.
The
$4,000
was
received
in
accordance
with
article
26
of
the
Collective
Agreement
between
Concordia
University
and
Concordia
University
Faculty
Association.
That
clause
reads
as
follows:
ARTICLE
26
SABBATICAL
LEAVE
26.01
The
purpose
of
sabbatical
leave
is
to
serve
the
objectives
of
the
university
by
affording
faculty
members
and
librarians
a
regular
opportunity
to
maintain
and
enhance
their
academic
and
professional
competence
free
from
normal
on-campus
teaching/professional
and
service
obligations.
Sabbatical
leave
is
intended
to
promote
intensive
scholarly
and
professional
activity
through
sustained
periods
of
concentrated
research
and
study.
The
parties
to
this
agreement
acknowledge
a
joint
responsibility
to
ensure
the
effective
use
of
sabbatical
leaves
so
as
to
strengthen
the
university
in
the
achievement
of
its
objectives.
26.02
Tenured
members
shall
be
eligible,
upon
application,
for
consideration
for
sabbatical
leave
as
follows:
a)
after
six
(6)
years
of
continuous
full-
time
service,
one
year’s
leave
at
85
per
cent
of
regular
salary
plus
a
$4,000
travel/conference
allowance.
One
(1)
year
sabbatical
leaves
normally
commence
on
June
1.
For
the
purposes
of
eligibility
for
subsequent
sabbatical
leaves,
service
shall
be
counted
from
the
end
of
the
period
of
leave
except
as
provided
for
in
26.06.
OR
b)
after
six
(6)
years
of
continuous
full-
time
service,
six
(6)
months
leave
at
100
per
cent
of
regular
salary
plus
a
$2000
travel/conference
allowance.
Such
six
(6)
month
sabbatical
leaves
normally
commence
June
1
or
January
1.
For
the
purposes
of
eligibility
for
subsequent
sabbatical
leaves,
service
shall
be
counted
from
the
end
of
the
period
of
leave
except
as
provided
for
in
26.06.
OR
c)
after
three
(3)
years
of
continuous
full-
time
service,
six
(6)
months
leave
at
85
per
cent
of
regular
salary
plus
a
$2000
travel/conference
allowance.
Such
sabbatical
leaves
normally
commence
on
June
1
or
January
1.
For
the
purposes
of
eligibility
for
subsequent
sabbatical
leaves,
service
shall
be
counted
from
the
end
of
the
period
of
leave
except
as
provided
for
in
26.06.
26.03
In
exceptional
circumstances
necessitated
by
an
extensive
research
plan,
a
member
may
request
a
two
(2)
year
leave.
Should
such
a
leave
be
granted,
the
member
shall
receive
50
per
cent
of
base
salary
for
each
year
away.
26.04
A
member
who
is
denied
a
sabbatical
leave
for
financial
reasons,
or
because
satisfactory
arrangements
cannot
be
made
to
carry
on
the
work
of
the
applicant,
shall
not
be
denied
on
the
next
application
for
similar
reasons.
26.05a)
Written
application
for
sabbatical
leave
must
be
received
no
later
than
September
15
by
the
appropriate
Vice-Rector.
b)
Applications
shall
be
supported
by
a
description
of
the
work
planned
by
the
member
during
the
proposed
leave,
indicating
the
activities
to
be
undertaken,
and
any
fellowship
or
travel
grant
applied
for
or
received.
c)
The
Vice-Rector
shall
consult
with
the
applicant’s
Dean/Director
and
shall
submit
recommendations
to
the
Personnel
Committee
of
the
Board
of
Governors.
d)
The
Vice-Rector
shall
notify
the
member
by
December
31
of
the
year
of
the
application
whether
or
not
the
application
has
been
granted.
e)
If
a
sabbatical
leave
is
denied
for
other
than
the
reasons
stated
in
the
clause
26.04,
the
member,
upon
written
request
to
the
Vice-Rector,
shall
be
provided
with
a
detailed
written
statement
which
establishes
valid
grounds
for
the
denial.
26.06a)
The
Employer
may
defer
a
requested
sabbatical
leave
for
up
to
one
(1)
year
in
the
event
the
member’s
services
are
required
for
the
period
of
time
planned
for
the
leave.
Such
deferral
shall
be
counted
as
service
towards
an
application
for
a
subsequent
leave.
b)
A
granted
sabbatical
leave
may
be
deferred
by
mutual
agreement
for
up
to
three
(3)
years.
The
deferral
shall
be
counted
as
service
towards
an
application
for
a
subsequent
leave.
A
member’s
request
for
such
a
deferral
shall
not
be
unreasonably
denied.
26.07
A
member
may
apply
to
use
part
of
the
sabbatical
leave
salary
as
a
research
grant.
The
Employer
assumes
no
responsibility
for
the
taxation
status
of
such
a
grant
and
shall
report
such
grants
in
accordance
with
the
income
tax
laws
and
regulations.
Paragraph
56(1
)(o)
requires
that
there
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
the
following:
(o)
The
amount,
if
any,
by
which
any
grant
received
by
the
taxpayer
in
the
year
to
enable
him
to
carry
on
research
or
any
similar
work
exceeds
the
aggregate
of
expenses
incurred
by
him
in
the
year
for
the
purpose
of
carrying
on
the
work,
other
than
(i)
personal
or
living
expenses
of
the
taxpayer
except
travelling
expenses
(including
the
entire
amount
expended
for
meals
and
lodging)
incurred
by
him
while
away
from
home
in
the
course
of
carrying
on
the
work,
(ii)
expenses
in
respect
of
which
he
has
been
reimbursed,
or
(iii)
expenses
that
are
otherwise
deductible
in
computing
his
income
for
the
year.
The
university
issued
Dr.
Scheinberg
a
T4
slip
with
respect
to
his
salary
and
a
T4A
slip
for
the
leave
research
grant
of
$4,000.
Dr.
Scheinberg
contends
that,
although
his
salary
and
the
$4,000
grant
together
with
$21.97
(a
royalty
received
from
Garland
Publishing)
should
be
included
in
computing
his
income,
the
following
expenses
should
be
deducted:
TRANSPORTATION:
$1,501.50
TELEPHONE:
$1,776.00
PROMOTION:
2340
X
80
per
cent:
$1,872.00
CONVENTION:
$3,000.00
DUES
AND
MEMBERSHIPS:
$650.00
TRAVEL:
$5,000.00
BANK
CHARGES:
$120.00
PROFESSIONAL
FEES:
$600.00
RESEARCH
AND
PRINTING:
$20,000.00
$34,519.50
The
Minister
of
National
Revenue
in
assessing
disallowed
the
expenses
claimed
to
the
extent
of
$30,497,
the
difference
between
the
research
grant
plus
the
royalty
and
the
expenses
of
$34,519.50
claimed
on
the
basis
that
the
research
expenses
allowable
may
not
exceed
the
total
research
grants
taxable
in
the
year
within
the
meaning
of
paragraph
56(1
)o)
of
the
Act.
A
couple
of
observations
might
be
appropriate
at
this
point.
Paragraph
56(1
)(o)
is
not
a
provision
that
allows
a
deduction.
It
requires
the
inclusion
in
income
of
the
amount
of
a
research
grant
to
the
extent
that
it
exceeds
the
expenses
relating
to
the
research.
Where
the
expenses
exceed
the
grant
it
does
not
authorize
the
deduction
of
the
excess.
If
those
expenses
are
to
be
deducted
the
authority,
if
it
exists
at
all,
must
be
found
elsewhere.
Second,
Dr.
Scheinberg
contended
that
the
$4,000
was
not
a
research
grant
but
rather
a
“leave
of
absence
grant”.
I
do
not
see
the
distinction,
or,
if
one
exists,
its
significance.
The
$4,000
was
paid
to
him
by
the
university
under
a
provision
of
the
collective
agreement
that
authorizes
grants
in
connection
with
sabbatical
leave
that
is
intended
to
promote
intensive
scholarly
and
professional
activity
through
sustained
periods
of
concentrated
research
and
study.
I
think
that
the
$4,000
that
he
received
was
a
research
grant
that
falls
precisely
within
paragraph
56(1
)(o)
R.
v.
Amyot
sub
nom.
Amyot
v.
R.,
[1976]
C.T.C.
352,
(sub
nom.
The
Queen
v.
Amyot),
76
D.T.C.
6217
(F.C.T.D.),
Hoyt
v.
Minister
of
National
Revenue,
[1977]
C.T.C.
2401,
77
D.T.C.
270
(T.R.B.);
R.
v.
Taylor
(sub
nom.
Taylor
v.
Minister
of
National
Revenue)
[1979]
C.T.C.
2356,
79
D.T.C.
331
(T.R.B.).
The
expenses
claimed
were
not
substantiated
with
receipts
or
vouchers.
Dr.
Scheinberg’s
representative
stated
that
he
was
not
aware
that
it
was
necessary
because
the
Department
of
National
Revenue
did
not
require
substantiation.
The
short
answer
to
this
is
that
the
Department
did
not
consider
the
expenses
deductible
in
any
event,
substantiated
or
not.
I
note,
for
example,
that
some
of
the
expenses
claimed
were
estimates.
Travel
was
estimated
at
$5,000
and
research
and
printing
at
$20,000.
A
large
portion
of
this
latter
figure
of
$20,000
was
a
salary
paid
by
Dr.
Scheinberg
to
his
wife
as
a
research
assistant.
She
included
it
in
her
income
and
paid
tax
on
it.
It
was
paid
to
her
presumably
on
the
optimistic
but
erroneous
assumption
that
he
could
deduct
it.
The
failure
to
produce
receipts
would
not
necessarily
have
been
fatal
if
I
had
concluded
that
in
principle
such
expenses
were
deductible.
I
could
have
referred
the
matter
back
to
the
Minister
of
National
Revenue
to
determine
which
expenses
had
been
proved.
Since
I
have,
however,
concluded
that
they
are
not
deductible
the
question
does
not
arise,
but
we
are
left
with
the
unfortunate
result
that
both
Dr.
and
Mrs.
Scheinberg
are
paying
tax
on
the
same
amount.
I
can
do
nothing
about
this
although
I
daresay
the
Minister
might
wish
to
consider
whether
any
administrative
relief
were
available.
The
main
thrust
of
Mr.
Dollinger’s
argument
on
behalf
of
Dr.
Scheinberg’s
position
that
the
expenses
are
deductible
is
that
they
represent
business
expenses
deductible
in
computing
income
under
section
9.
Dr.
Scheinberg
has
produced
a
book,
The
Extreme
Right:
International
Peace
and
Security
at
Risk.
In
fact,
it
is
a
draft
report
produced
in
November
1994.
It
consists
of
ten
essays
written
by
five
authors.
Two
of
the
essays
were
written
by
Dr.
Scheinberg.
Those
essays
are
Canada:
Right-Wing
Extremism
in
the
Peaceable
Kingdom
and
Right-Wing
Extremism
in
the
United
States.
It
was
prepared
for
the
Institute
for
International
Affairs
of
B’nai
Brith
Canada.
Financial
assistance
was
provided
by
the
B’nai
Brith
Foundation
and
the
Department
of
Foreign
Affairs
and
International
Trade.
Mr.
Dollinger
contends
that
when
and
if
the
book
is
published
and
starts
producing
royalties
they
will
be
income
from
a
business
and
the
expenses
should
be
deducted
when
incurred
(i.e.
1991).
He
contends
further
that
Dr.
Scheinberg
is
a
professional.
I
agree
that
he
is
a
professional
—
that
is
an
accurate
description
of
the
professorial
calling.
It
is
not
however
determinative
of
the
nature
of
his
income
and
it
does
not
mean
that
expenses
incurred,
at
a
time
when
he
is
on
a
sabbatical
leave
in
Europe
and
85
per
cent
of
his
salary
plus
a
research
grant
is
being
paid
by
the
university
of
which
he
is
an
employee,
are
business
expenses.
In
1991
he
evidently
incurred
some
expenses
in
Europe
beyond
the
amount
of
the
grant
given
him
and
it
is
an
obvious
conclusion
that
the
research
that
he
did
there
related
to
an
area
of
scholarship
in
which
the
university
expected
him
to
do
research.
To
the
extent
that
the
expenses
were
not
personal
or
living
expenses,
they
related
not
to
any
business
that
he
carried
on
but
to
his
employment
with
the
university.
Doing
research
and
publishing
are
necessary
concomitants
of
being
a
university
professor
and
the
cost
of
research
and
publishing
-
at
least
during
a
year
when
the
professor
is
employed,
whether
on
sabbatical
leave
or
teaching
at
the
university
and
doing
research
on
his
or
her
field
—
relates
to
the
employment
as
a
professor’.
Section
8,
which
regulates
very
precisely
the
deduction
of
employment
costs
appears
not
to
cover
such
expenditures.
If
any
books
which
Dr.
Scheinberg
publishes
start
to
yield
royalties
for
him
which
he
must
take
into
income
any
expenses
incurred
in
prior
years
that
relate
to
the
production
of
the
royalties
should
be
deductible
in
the
years
in
which
royalties
are
receivable.
This
appears
to
be
in
accordance
with
the
decision
in
Canderel
Ltd.
v.
R.
(sub
nom.
Canderel
Ltd.
v.
Canada),
[1995]
2
C.T.C.
22,
(sub
nom.
The
Queen
v.
Canderel
Ltd.),
95
D.T.C.
5101
(F.C.A.).
The
appeal
is
therefore
dismissed.
Appeal
dismissed.
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