Kempo,
T.C.C.J.:—These
appeals
raised
two
issues
concerning
the
appellant's
1984
and
1985
taxation
years.
One
was
in
respect
of
a
housing
benefit
added
to
the
appellant's
income
for
each
year
pursuant
to
paragraph
15(1)(c)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
and
the
other
concerned
the
appellant's
entitlement
to
claim
a
reduction
for
each
year
respecting
standby
charges
on
two
vehicles
assessed
pursuant
to
subsections
15(5)
and
6(2)
of
the
Act.
Facts
The
appellant
was
50
years
old
at
the
time
of
trial
and
at
all
times
material
was
the
sole
shareholder
and
employee
of
John
Meeuse
Ltd.
(the"company").
At
the
age
of
17
he
began
a
career
in
farming
by
working
on
his
father's
tobacco
and
potato
growing
farm.
In
1963
he
acquired
his
own
farm
at
or
near
lona
Station,
Ontario
(just
outside
of
London)
and
in
1968
he
ran
his
tobacco
and
potato
farm
through
the
company.
By
1978
the
appellant
and
the
company
were
apparently
debt
free.
The
company
had
acquired
a
profitable
tobacco
quota
and
around
1979
it
began
to
sharecrop
most
of
its
farming
operations
and
it
rented
out
its
tobacco
quota.
These
arrangements
proved
to
be
profitable,
calling
upon
minimal
physical
activity
and
attention
of
the
appellant.
For
the
ensuing
three
years,
because
of
his
lack
of
trust
and
confidence
in
the
way
the
tobacco
industry
was
going,
the
appellant
began
actively
looKing
into
other
investment
forms.
At
the
same
time
because
rental
of
the
tobacco
quota
risked
its
cancellation,
a
buyer
for
it
was
being
sought.
The
appellant
described
himself
as
an
unsophisticated
farmer
and
small
businessman.
His
search
for
other
investment
avenues
included
small
businesses
in
the
area.
One
of
the
options
considered
was
the
buying
of
houses
and
fixing
them
up
with
a
view
to
profitable
resale.
To
this
end,
and
with
the
assistance
of
experienced
realtors,
he
viewed
a
number
of
large
estate-type
houses.
An
offer
of
half
a
million
dollars
was
advanced
on
such
a
property
in
Grosse
Pointe,
Michigan
which
was
unacceptably
low
to
the
vendor.
A
local
realtor
in
London
who
was
aware
of
the
appellant's
interest
in
this
kind
of
venture
contacted
him
about
a
house
located
on
#5
Doncaster
Street,
London
(the"London
house").
It
was
around
7,000
square
feet
in
area,
it
had
thirty-five
rooms
and
it
(especially
the
kitchen)
was
badly
in
need
of
redecorating,
repair
and
refurbishing.
The
appellant
said
many
of
the
rooms
were
darkly
papered
and
painted
and
that
much
of
the
work
required
up
to
date
modernization
through
application
of
lighter
and
brighter
colours.
He
was
of
the
opinion
that
it
would
be
marketable
once
it
had
been
freshened
up
in
the
modern
way.
It
was
said
to
be
one
of
the
nicest
pieces
of
real
estate
in
London
at
the
time.
He
was
of
the
opinion
and
belief,
through
the
realtor,
that
once
it
was
fixed
up
and
redecorated
it
could
be
resold
for
$750,000
to
$800,000.
The
London
house
was
acquired
by
the
appellant
in
December
of
1982
for
$318,000.
All
but
$10,000
was
through
a
bank
loan
advanced
to
the
company
which
in
turn
was
loaned
to
him.
Shortly
thereafter
the
company
sold
the
tobacco
quota
for
$500,000,
the
bank
loan
was
retired
and
it
had
the
balance
on
hand
for
further
investment.
In
February
of
1983
the
company
acquired,
for
profitable
resale
according
to
the
appellant,
a
Rolls
Royce
for
$72,818
and
a
Corvette
Stingray
for
$6,627.
The
appellant
readily
admitted
his
penchant
for
vintage,
collector-type
vehicles.
Both
were
readily
available
to
the
appellant
for
his
personal
use
throughout
1984
and
1985.
The
Rolls
Royce
was
sold
at
a
profit
of
$11,000
and
the
company
doubled
its
money
on
the
resale
of
the
Corvette.
There
were
three
housing
structures
on
the
farm
property
at
lona
Station.
The
appellant
testified
he
and
his
new
family
(he
married
in
1983)
lived
almost
exclusively
in
one
of
these
houses
for
the
two
years
under
appeal
simply
because
the
London
house
was
not
inhabitable
due
to
its
initial
poor
condition
and
its
ongoing
renovations,
which
commenced
in
the
fall
of
1983.
The
appellant
soon
realized
how
quickly
such
projects
could
devour
unexpected
amounts
of
capital.
By
early
1984,
not
having
sufficient
personal
funds
to
pay
for
both
the
renovations
and
the
interest
on
the
company
loan
made
for
its
purchase,
the
appellant
transferred
the
London
house
to
the
company
for
$330,000.
He
admitted
he
had
not
fiscally
reported
the
transaction
for
that
year
and
rationalized,
by
way
of
explanation,
that
since
he
had
spent
in
excess
of
$15,000
on
the
house
by
then
there
would
have
been
no
gain
in
any
event.
It
was
at
this
time
that
the
company,
having
sold
its
tobacco
quota
but
still
gathering
some
income
from
its
sharecropping
arrangements,
began
experiencing
its
own
cash
flow
problems.
It
planted
a
large
potato
crop
which
necessitated
the
appellant's
time
and
attendance,
and
a
profit
ensued.
The
following
year,
1985,
was
not
so
fortunate.
Due
to
unforeseen
market
circumstances
the
farm
lost
money.
For
both
1984
and
1985
the
appellant
said
he
and
his
family
actually
lived
on
the
farm,
going
to
the
London
house
and
staying
there
only
during
the
times
they
were
doing
the
smaller
redecorating
jobs.
The
larger
renovation
projects
had
been
contracted
out.
The
appellant
said
that
because
the
place
was
almost
always
in
a
construction
mess
it
was
not
in
a
state
allowing
for
furniture
to
be
moved
in.
He
did
have
a
telephone
installed
so
that
he
could
be
reached.
He
also
acknowledged
that
he
had
used
the
London
house
address
and
telephone
number
on
his
1984
and
1985
tax
returns
and
that
he
had
not
told
the
respondent's
officials
prior
to
the
hearing
that
he
had
never
used
or
occupied
the
house
as
a
residence
during
those
years.
On
the
recommendation
of
his
advisors
he
paid
$18,000
to
the
company
annually
for
his
use;
that
amount
ostensibly
being
its
fair
market
value.
As
the
company
continued
to
experience
cash
flow
problems
after
1985,
the
appellant's
wife
put
in
around
$15,000
to
finish
the
renovations,
including
full
modernization
of
the
kitchen.
The
company
sold
the
house
to
her
in
March
of
1987.
She
then
sold
it
to
a
third
party
after
making
it
more
presentable
for
sale
by
placing
furniture
within.
Attempts
by
the
respondent's
officials
in
March
of
1987
to
enter
and
view
the
interior
for
valuation
purposes
were
stonewalled.
The
housing
benefit
The
position
of
the
respondent's
counsel
was
that
the
appellant
had
the
sole
and
exclusive
use,
or
the
opportunity
for
such
use,
of
the
London
house
for
personal
purposes
at
any
and
all
times
throughout
1984
and
1985
and
thereby
had
enjoyed
a
benefit
qua
shareholder
pursuant
to
paragraph
15(1)(c)
of
the
Act.
The
value
of
the
benefit
as
assessed
by
the
respondent
was
correct
in
that
the
company
had
acquired
the
property
in
1984
for
the
exclusive,
if
not
the
principal,
purpose
of
providing
a
residence
to
its
shareholder
and
therefore
the
benefit
was
properly
assessed
on
a
company
equity
basis
(plus
the
utilities
paid
by
it)
following
the
formula
in
Youngman
v.
The
Queen,
[1986]
2
C.T.C.
475,
86
D.T.C.
6584
(F.C.T.D.)
as
approved
in
substance
by
the
Federal
Court
of
Appeal
at
[1990]
2
C.T.C.
10,
90
D.T.C.
6322.
The
position
of
the
appellant's
counsel
was
that
the
property
had
been
acquired
by
the
Company
for
profitable
resale,
that
any
personal
benefit
(which
was
conceded)
was
merely
incidental
and
more
of
assistance
to
the
Company,
and
that
the
amount
of
$18,000
as
determined
by
the
appellant
ought
to
be
viewed
as
reasonable
and
be
allowed.
As
authority,
the
case
of
Houle
v.
The
Queen,
[1983]
C.T.C.
406,
83
D.T.C.
5430
(F.C.T.D.)
would
be
more
akin
to
the
facts
at
bar
wherein
the
Court
held
that
the
taxpayers'
ascertainment
of
the
value
was
reasonable
and
should
be
upheld.
Counsel
for
each
party
agreed
that
if,
as
a
question
of
fact,
the
company
did
not
have
a
business
purpose
in
acquiring
the
subject
house,
the
appeals
on
this
point
ought
to
fail.
Concomitant
with
this
position,
given
the
absence
of
any
valuation
evidence
tendered
as
to
fair
market
rental
value,
counsel
apparently
accepted
the
reality
that
if
the
Court
finds
there
was
a
business
purpose
of
the
company,
then
the
appeals
should
succeed
without
more.
In
my
opinion
the
appeals
on
this
issue
are
to
succeed
as
the
appellant
has
marshalled
sufficient
and
convincing
testimony
supportive
of
his
position.
The
submissions
of
counsel
for
the
respondent
were
primarily
directed
to
questioning
the
veracity
of
the
appellant's
testimony.
While
there
may
well
have
been
some
self-serving
reconstructions
on
his
part,
such
did
not
amount
to
a
probative
want
of
credibility
in
my
view.
His
interpretation
of
and
answers
to
questions
on
cross-examination
were
often
literal,
lending
a
certain
glibness
to
his
answers.
I
believe,
on
observing
his
manner
and
demeanour,
he
was
nonetheless
trying
to
be
as
responsive
and
honest
as
possible.
In
my
opinion
it
has
been
established
on
a
balance
of
probabilities
that
the
Company
had
acquired
the
London
house
for
business
reasons
which
was
for
fix-up
and
resale
at
a
profit,
and
that
the
appellant's
personal
use
was
limited
and
merely
incidental.
There
has
been
no
evidence
advanced
as
to
why
the
$18,000
paid
annually
for
this
purpose
would
be
unreasonable
or
insufficient.
Accordingly
this
issue
is
to
be
resolved
in
favour
of
the
appellant.
The
standby
charges
Counsel
for
both
parties
agree
that
the
information
provided
on
Form
TD-5
(filed
as
Exhibits
A-1
and
A-2
for
the
1984
and
1985
taxation
years
respectively)
was
accurate
and
that
the
appellant,
by
their
completion
on
the
day
before
the
hearing,
breached
its
instructions
which
read
as
follows:
Application
for
Reduction
of
the
Automobile
Standby
Charge,
and/or
Notification
of
Operating
Cost
Benefit
Option
In
accordance
with
subsections
6(2)
and
15(5)
of
the
Income
Tax
Act,
the
standby
charge
for
an
automobile
provided:
(i)
to
an
employee
or
person
related
to
that
employee
by
the
employer
or
person
related
to
the
employer,
or
(ii)
to
a
shareholder
or
related
person
by
a
corporation
may
be
reduced
if
the
automobile
is
driven
on
average
fewer
than
1,000
personal
kilometres
per
30
day
period
(12,000
kilometres
for
a
full
year).
In
order
to
enjoy
the
reduced
benefit,
the
employee
must
complete
and
file
this
form
with
the
employer.
In
the
absence
of
this
form,
the
maximum
standby
charge
must
be
calculated.
This
form
is
for
the
use
of
both
the
employee
and
the
employer
to
assist
in
establishing
a
reduced
automobile
standby
charge
for
the
purposes
of:
A.
Establishing
deductions
at
source
for
the
taxation
year,
and
B.
Calculating
the
table
benefit
to
be
reported
on
form
T4
Supplementary
for
the
taxation
year.
If
applicable,
complete
Part
A
and
file
one
copy
of
this
form
with
your
employer
at
the
beginning
of
the
taxation
year
or
upon
commencement
of
employment,
as
the
case
may
be.
Part
B
is
to
be
completed
at
the
end
of
the
taxation
year.
If
it
has
not
been
completed
and
returned
to
the
employer
by
January
31st
in
the
immediately
following
year,
the
maximum
standby
charge
will
be
calculated
by
the
employer.
Part
C
is
to
be
completed
before
the
end
of
the
year,
if
under
subsection
6(2.2),
the
employee
chooses
to
authorize
the
employer
to
use
/2
(50%)
of
the
"standby
charge"
as
the
basis
to
establish
the
operating
cost
benefit.
Employers
must
retain
all
TD5
declarations
filed
for
inspection
by
officers
of
Revenue
Canada,
Taxation.
The
information
disclosed
therein
by
the
appellant
and
his
employer
was
that
for
1984
and
1985
both
vehicles
had
been
driven
100
per
cent
as
to
personal
use
(Part
B),
that
the
total
annual
kilometres
driven
(for
all
purposes)
for
each
year
was
500
as
to
the
Corvette
and
488
as
to
the
Rolls
Royce
(Part
A),
and
that
the
average
kilometres
driven
personally
per
30-day
period
for
both
vehicles
was
82
(Part
A).
The
essence
of
the
respondent
counsel's
submission
was
that
the
appellant's
failure
to
complete
and
file
form
TD-5
on
the
timely
basis
as
set
out
in
the
form
effectively
disentitled
him
to
any
reduction
of
the
standby
charge.
The
authority
for
this,
it
was
asserted,
is
in
paragraph
6(2)(d)
of
the
Act
which
provides
.
.
.it
shall
be
assumed,
unless
the
taxpayer
establishes
otherwise
in
prescribed
form,
[Emphasis
added.]
that
(in
effect)
the
aggregate
number
of
kilometres
driven
for
non-business
reasons
exceeded
1,000
per
month.
As
the
whole
subsection
is
a
morass
of
intricate
drafting
complexities,
I
have
taken
the
liberty
of
distilling
its
essence
for
the
purposes
of
this
appeal.
Section
248(1)
defines
"prescribed"
as,
inter
alia,
"in
the
case
of
a
form
or
information
to
be
given
on
a
form,
prescribed
by
Order
of
the
Minister”.
Ostensibly,
then,
subsection
6(2)
operates
to
"assume"
liability
on
a
taxpayer
for
full
standby
charges
(which
is
a
multiplier
applied
to
the
vehicle's
cost
irrespective
of
actual
business
use)
except
where
a
reduction
is
claimed
in
prescribed
form
which
is
form
TD-5.
The
Act
does
not
mandate
any
filing
times,
nor
does
it
require
the
form
to
be
included
in
a
tax
return
or
even
to
be
filed
by
anyone
with
Revenue
Canada.
Counsel
for
the
respondent
submitted
that
if
the
respondent
has
the
power
to
prescribe
the
form,
all
requirements
involving
timing,
filing
and
information
to
be
provided
that
appear
thereon
have
the
force
of
law.
It
amounts,
he
submits,
to
incorporation
into
the
Act
by
reference.
The
decision
in
Lavigueur
et
al.
v.
M.N.R..
[1991]
1
C.T.C.
2567,
91
D.T.C.
448
(T.C.C.)
was
relied
upon
for
the
proposition
that
no
relief
is
available
in
the
absence
of
the
form
TD-5
being
provided.
Appellant's
counsel
urged
the
Court
to
distinguish
Lavigueur
on
its
facts,
and
to
find
ambiguity
within
paragraph
6(2)(dj
emanating
from
the
absence
of
any
requirement
therein
mandating
a
timely
filing
of
the
form
such
that
any
doubt
ought
to
resolved
in
the
appellant's
favour.
Analysis
In
Lavigueur
et
al.
the
taxpayer,
not
having
kept
records
and
not
being
able
to
definitively
establish
the
personal
miles
against
business,
was
in
no
position
to
produce
the
prescribed
information
on
Form
TD-5
in
any
way
and
at
any
time.
The
ratio
of
the
Lavigueur
decision
is
found
in
the
following
paragraphs
at
page
450:
In
the
case
at
bar,
the
evidence
shows
that
the
appellant
did
not
comply
with
the
obligation
imposed
on
him
by
the
Act
in
respect
of
the
1984
and
1985
taxation
years,
if
he
did
not
wish
to
be
taxed
on
the
amount
resulting
from
the
computation
provided
in
subsection
6(2)
of
the
Act,
or
if
he
wished
to
be
taxed
on
a
lesser
amount.
While
I
can
understand
that,
given
the
particular
circumstances
of
his
case,
the
appellant
might
have
been
able
to
state
that
he
did
not
use
the
automobile
leased
by
the
employer,
the
company
Bijouterie
Lavigueur
(1976)
Inc.
for
his
own
personal
purposes,
he
did
not
do
so
in
the
clear
and
explicit
manner
provided
by
the
Act.
Judge
Dussault
analyzed
paragraph
6(2)(d)
of
the
Act,
thusly:
The
arithmetic
formula
provided
in
this
subsection
for
the
years
in
question
is
based
on
the
hypothesis
that
the
employee
uses
the
automobile
made
available
to
him,
on
average,
for
1,000
kilometres
per
month
or,
if
you
will,
12,000
kilometres
per
year,
(otherwise
than
in
the
performance
of
the
duties
of
the
taxpayer's
office
or
employment)".
This
hypothesis
becomes
the
assumption
in
paragraph
6(2)(d)
of
the
Act,
which
reads:
.
.
.
and
for
the
purposes
of
this
subsection
it
shall
be
assumed,
unless
the
taxpayer
establishes
otherwise
in
prescribed
form,
that
the
aggregate
number
of
kilometres
referred
to
in
subparagraph
(c)(i)
is
not
less
than
the
product
obtained
under
subparagraph
(c)(ii).
Clearly,
this
means
that
it
is
presumed
that
the
taxpayer
uses
the
automobile
on
average
for
1,000
kilometres
per
month
or
12,000
kilometres
per
year
for
personal
purposes,
or,
as
it
states,
(otherwise
than
in
the
performance
of
the
duties
of
the
taxpayer's
office
or
employment)",
unless
he
"establishes
otherwise
in
prescribed
form".
The
prescribed
form
is
form
TD5.
He
was
of
the
opinion
that:
In
order
to
control
the
benefit
arising
from
the
use
for
personal
purposes
of
an
automobile
owned,
or
leased
by
an
employer,
Parliament
believed
it
advisable
to
establish
a
presumption
that
personal
use
amounts
to
1,000
kilometres
per
month
or
12,000
kilometres
per
year,
as
soon
as
an
employer
makes
an
automobile
available
to
an
employee.
This
presumption
may
be
rebutted
by
the
employee,
and
the
Act
imposes
an
obligation
on
him
to
do
so
in
a
specific
manner,
“in
the
prescribed
form”,
when
there
is
less
use
for
personal
purposes.
In
that
case,
the
application
of
the
arithmetic
formula
in
subsection
6(2)
operates
to
reduce
the
amount
to
be
included
in
the
employee's
income
proportionately.
/f
an
employee
does
not
comply
with
the
obligation
thus
imposed
by
the
Act
how
can
he
later
argue
that
the
Department
of
National
Revenue
was
wrong
to
include
in
his
income
the
amount
set
out
in
subsection
6(2)
of
the
Act
which
results
from
the
application
of
the
presumption
established
therein?
[Emphasis
added.]
I
find
no
ambiguity
within
paragraph
6(2)(d)
under
review.
It
provides
in
clear
and
unambiguous
language
that
an
assumptive
position
is
to
be
taken
unless
the
taxpayer
establishes
otherwise
in
prescribed
form.
The
language
is
expressed
in
mandatory
terminology,
and
it
has
been
interpreted
as
such
by
Judge
Dussault
in
Lavigueur.
It
is
true
that
the
facts
here
differ
from
those
in
Lavigueur
in
that
the
total
kilometres
driven
for
all
purposes
never
exceeded
1,000
annually
let
alone
monthly,
and
that
the
form
had
been
filed,
albeit
late.
To
follow
through
with
the
appellant's
position
would,
however,
invite
a
finding
either
that
a
filing
of
the
form
would
be
redundant
and
therefore
unnecessary
or
alternatively
that,
given
its
omission
in
the
statute,
the
filing
time
requirement
could
be
interpreted
as
meaning
at
any
time
before
the
trial.
I
do
not
accede
to
either
conclusion.
While
the
redundancy
aspect
may
be
technically
valid
on
the
facts
of
this
case,
it
nonetheless
does
not
entitle
the
Court
to
read
out
words
in
an
enactment
purporting
to
be
an
expression
of
Parliament's
intent.
Finally,
and
while
the
appellant-counsel's
overall
analysis
may
be
meritorious,
it
has
already
been
substantively
answered
by
Judge
Dussault’s
analysis
and
opinion
as
previously
noted,
and
I
see
no
reason
why
the
result
for
this
appellant
should
be
any
different.
Accordingly
this
issue
in
these
appeals
fails.
Conclusion
The
appeals
are
allowed,
with
costs,
and
the
matters
are
referred
back
to
the
respondent
for
reconsideration
and
reassessment
on
the
basis
that
the
additional
housing
benefit
amount
added
to
the
appellant's
income
for
his
1984
and
1985
taxation
years,
pursuant
to
subsection
15(1)
of
the
Income
Tax
Act,
be
deleted.
Appeals
allowed.