Robert Talbot v. Minister of National Revenue, [1992] 2 CTC 2264, 92 DTC 1994

Lamarre Proulx, T.C.C.J.:—This is an appeal from the assessment by the respondent, the Minister of National Revenue (the" Minister”), for the 1987 and 1988 taxation years.

The issue is whether the appellant's income from a teaching position at Université Laval was employment income or business income. The appellant claimed that it was business income, the respondent employment income.

With respect to the year 1987, the respondent also raised a preliminary argument requesting that the appeal be dismissed because the appellant had not instituted his appeal within the time prescribed by section 169 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") or followed the procedure prescribed in that section and in section 165 of the Act. The respondent explained his position in his reply to the notice of appeal, as follows:

The Tax Court of Canada does not have jurisdiction to hear the appeal concerning the 1987 taxation year because more than one year and 90 days elapsed between the date of the Notice of Assessment, April 1988, and the date of the Notice of Objection, October 14, 1989. Consequently, the respondent is not required to consider the objection which was filed by the appellant for the year 1987, and the Court cannot rule on that year by reason of section 169 of the Income Tax Act.

[Translation.]

Concerning this preliminary argument raised by the respondent, the appellant submitted pieces of correspondence between him and the officers of the Department of Revenue which show that discussions continued between him and those officers without the latter taking into account expiring deadlines. The first letter was dated May 3, 1988, and the last was dated March 1, 1989.

Can the actions of an officer of the respondent prevent the limitation periods of sections 165 and 169 of the Act from applying?

As mentioned, the taxpayer sent the first letter to the respondent's officers on May 3, 1988. On November 4, 1988, he received the following letter from an officer of the respondent, when the time limited for filing the notice of objection had already expired on July 20, 1988.

Quebec, November 4, 1988

Subject: Your letter of May 3. 1988

Dear Sir:

Further to your request and in order to be able possibly to establish your right to the deduction which you claim, we must determine whether the income against which it is claimed is indeed from self-employment.

To this end, you must provide us with a copy of your contract of employment at Universite Laval concerning the courses in social advertising which you gave, or, failing that, written confirmation from your employer describing the conditions of employment.

Furthermore, should it be established that you are entitled to a deduction, you Will have to provide us with additional information, since the statement of revenue and expense submitted is incomplete. Detailed statements will be necessary for the items" miscellaneous expenses", "automobile expenses", as well as "meal and travel expenses".

You are granted a period of 30 days to respond to this request, failing which the deduction will be disallowed.

You need only to contact the undersigned if you require additional time.

Yours sincerely,

Inquiries and Office Exam

[Translation.]

Further to the information obtained from the taxpayer and gathered from the employer, an officer of the respondent sent the following letter to the taxpayer:

March 1, 1989

SUBJECT: DEDUCTION AGAINST SELF-EMPLOYMENT INCOME

1987 INCOME TAX RETURN

Account number 215-786-112

We have examined your request for adjustment to the return indicated above. We have not processed the adjustment request for the following reasons:

The information gathered from the employer indicates that you were not required to incur any of the expenses listed in your return in order to perform your teaching duties.

The agent for the appellant wondered whether the acts of the respondent's officers rendered sections 165 and 169 of the Act inapplicable. From a reading of the relevant provisions of the Act and after a review of the case law, I conclude that the periods of time provided by the sections of the Act are mandatory. The actions or agreements of either party cannot alter the applications of these sections. Nor can one party waive compliance with them.

In Guay v. M.N.R., [1979] C.T.C. 2981, 79 D.T.C. 588, Chairman Cardin stated the following at page 2981 (D.T.C. 590):

. . . although anomalies or problems may have occurred to explain why the taxpayer was unable to or did not file his notice of objection at the proper time—I do not consider that the Board can ignore the applicable section of the Act, and even though the respondent withdrew his motion to dismiss the appeal, and there may have been agreements between the respondent and the taxpayer to proceed, these facts could never confer on the Board jurisdiction which is not given by the Act.

In Hughes v. M.N.R., [1987] 2 C.T.C. 2360, 87 D.T.C. 635, Judge Brulé of this Court also confirmed the principle stated in Guay cited above, at page 2362 (D.T.C. 636):

The respondent cannot, through consent or the application of the doctrine of estoppel, invest the Court with a jurisdiction it does not possess. Case law on this point in regard to Notices of Appeal is unambiguous and may be properly applied to late-fined Notices of Objection. See among others, Anderson v. M.N.R., [1980] C.T.C. 2290, 80 D.T.C. 1269, MacDonell v. M.N.R., [1984] C.T.C. 2279, 84 D.T.C. 1258, Wollenberg v. M.N.R., [1984] C.T.C. 2043, 84 D.T.C. 1055 and Taubler v. M.N.R., [1987] 2 C.T.C. 2058, 87 D.T.C. 393.

I would cite the words of Bonner, T.C.J. in the case of Lapointe-Fisher Nursing Home, Ltd. v. M.N.R., [1986] 1 C.T.C. 2462, 86 D.T.C. 1357, at page 2464 (D.T.C. 1360):

A right of appeal to this Court is conferred by section 169 of the Income Tax Act only “where a taxpayer has served notice of objection to an assessment under section 165 .. . ." Thus, if the appellant's premise is right, its appeal must be dismissed by reason of its failure to satisfy the condition precedentcontained in section 169.

In MacKay Construction Ltd. v. Canada, [1989] 1 C.T.C. 285, 89 D.T.C. 5097 (Federal Court decision) Reed, J. reaffirmed the same principles, but dismissed the Minister's motion for other reasons.

I must therefore conclude that the appeal with regard to the appellant for the year 1987 is not valid and must be dismissed for reason of nullity.

Let us now turn to the appeal with regard to the year 1988.

The facts on which the respondent relied in assessing the appellant for the year 1988 are as follows:

(a) During the 1988 taxation year, the appellant was employed by Université Laval, in Quebec;

(b) During that taxation year, the appellant allegedly took on, inter alia, lecturing duties at the University;

(c) The respondent considers that the appellant received employment income from those lecturing duties;

(d) In this connection, Université Laval issued to the appellant a T-4 slip stating his compensation paid for 1988, which slip indicated total employment income, before deductions, of $54,431.67;

(e) Of that amount, the appellant claims that the sum of $3,478 represents professional fees that arose from the lecturing duties;

(f) Against this income of $3,478 arising from the lecturing duties, the appellant has claimed the following amounts as expenses:

INCOME	$3,478
EXPENSES
Postage	526
Telecommunications	1,145
Films, slides, typing, etc.	567
Office expenses	1,389
Automobile expenses (25%—1988)	125
Promotional expenses	3,000
Entertainment expenses (80%—1988)	240
Travel expenses	2,000
TOTAL EXPENSES	$8,992
PROFIT (LOSS) FROM THE YEAR	($5,514)

(g) The appellant has not shown the respondent, either by filing a T2200 form signed by the employer or by other means, that he was required under his contract of employment to pay his expenses with respect to his lecturing duties;

(h) The expenses which the appellant claims to have incurred arise, inter alia, from expenses for foreign travel.

[Translation.]

At the hearing, the agent for the appellant informed the Court that the amounts claimed as deductions for the year 1988 were $2,656 and were in respect of income from the lecturing duties.

During the year 1988, Mr. Talbot was employed by Université Laval as a university educational consultant. He also obtained lecturing duties, and it is the income arising from those lecturing duties which is in issue.

The course was to be given outside the appellant’s hours of employment as an educational consultant. The course was a regular course at the University. The appellant admitted to be governed with respect to this course by the collective agreement signed between Université Laval and the Syndicat des chargées et chargés de cours de l’Université Laval (SCCCUL-CSN) 1988-1990. It was an agreement which, as may be seen from a reading of it, addresses the rights and obligations of the employer and lecturers as employees of the University.

The contract entitled “Hiring Contract” [translation] signed between the appellant and Université Laval also concerns a contract of employment. In the total compensation clause, there is indicated:

This amount will be paid only on the condition that the work is completed in full. It includes a vacation allowance as well as other social benefits.

[Translation.]

I wish to refer to the remarks of Marceau, J. in Lionel Rosen (Lionel Rosen v. The Queen, [1976] C.T.C. 462, 76 D.T.C. 6274, at page 466 (D.T.C. 6276) (Federal Court-Trial Division)):

The work done by the plaintiff for the three schools at which he taught was done as an integral part of the curricula of the schools; the courses were regular courses and, if I may say so, the business in which he was actively participating was the business of the schools not his own. His situation as part time teacher was essentially different from that of a guest speaker or lecturer but it was not for that matter essentially different from that of a full time professor.

It is my opinion that the Minister was right in considering that the plaintiffs relationship with the three educational institutions in 1972 was that of an employee engaged for thepurpose of delivering lectures on a part time basis, and not that of an independent contractor.

Relying on the decision in Lionel Rosen cited above, and in Joseph Marotta v. The Queen, [1986] 2 F.C. 221, [1986] 1 C.T.C. 393, 86 D.T.C. 6192 (F.C.T.D.), I conclude that the legal situation described by the appellant is similar to that described in those two decisions, and I conclude that the appellants income from the lecturing duties is employment income, not business income.

Counsel for the respondent then argues that subsection 8(10) of the Act requires a taxpayer to file a certificate of employer certifying that the employee had to provide and pay for certain supplies if the employee wishes to request a deduction for them. This subsection reads as follows:

8 (10) Certificate of employer. An amount otherwise deductible for a taxation year under paragraph (1)(f) or (h) or subparagraph (1)(i)(ii) or (iii) by a taxpayer shall not be deducted unless the taxpayer files with his return of income for the year a prescribed form signed by his employer certifying that the conditions set out in such provision were met in the year in respect of the taxpayer.

The respondent requested the prescribed form, form T2200, from the appellant in a letter dated May 3, 1989. The form was not completed and sent because, according to the agent of the appellant, that would have been an admission that employment income was involved. It nevertheless could have been sent subject to challenge by the taxpayer as to the nature of the income arising from the duties. One may also think that the taxpayer was uncertain that the form would be signed by his employer. Whatever the case may be, it was not filed. Since it is an essential condition for the deductions provided in paragraph 8(1)(h) of the Act, I therefore conclude that the taxpayer is not entitled to the deductions claimed.

I am therefore not required to decide in the circumstances whether the contract of employment required the appellant to incur the expenses claimed and whether they were in fact incurred for the purposes of the contract.

The appeals are dismissed.

Appeals dismissed.