John Hobson v. Minister of National Revenue, [1983] CTC 2024, 83 DTC 31

Guy Tremblay:—This case was heard on July 14, 1982, at the City of St John’s Newfoundland.

1. The Point at Issue

The point at issue is whether the appellant, a teacher employed by the Green Bay Integrated School Board in Newfoundland, is correct in claiming travelling expenses in the amount of $5,192 in the computation of his income for the 1980 taxation year. During that year he lived and worked in Australia under a teacher exchange program.

2. The Burden of Proof

2.01 The burden is on the appellant to show that the respondent’s assessment is incorrect. This burden of proof results particularly from several judicial decisions, including the judgment delivered by the Supreme Court of Canada in Johnston v MNR, [1948] CTC 195; 3 DTC 1182.

2.02 In the same judgment, the Court decided that the assumed facts on which the respondent based the assessment or reassessment are also deemed to be correct. In the present case, the assumed facts are described in the reply to notice of appeal as follows:

3. In so reassessing the Appellant’s income tax liablity the Respondent relied, inter alia, on the following assumptions of fact:

(a) At all material times the Appellant was employed by the Green Bay Integrated School Board in Newfoundland;

(b) Prior to 1980 the Appellant lived at 32 Crescent Avenue, Roberts Arm, Newfoundland and worked in the Green Bay Integrated School District in Newfoundland;

(c) Throughout 1980 the Appellant lived and worked in Australia under a teacher exchange program; and

(d) After 1980 the Appellant lived at 32 Crescent Avenue, Roberts Arm, Newfoundland, and worked in the Green Bay Integrated School District in Newfoundland.

3. The Facts

3.01 The evidence showed that the respondent’s assumptions of fact quoted above (paragraph 2.02) are correct.

3.02 At all material times, the appellant was paid by the Department of Education of the Government of Newfoundland. For the 1980 taxation year his T4 slip was issued by the Department of Education of the Government of Newfoundland.

3.03 During the 1980 taxation year the appellant taught in Melbourne, Australia. During that year he received his directions from the Department of Education of the State of Victoria, Australia.

In that same year an Australian teacher came to teach in Green Bay, Newfoundland.

3.04 The appellant spent $5,192 in moving expenses to move to Australia and subsequently return to Newfoundland. Despite the fact that the appellant went to Australia to represent, in a certain way, the Province of Newfoundland, he never received any amount to reimburse him for his travelling expenses.

3.05 The respondent filed, as Exhibit R-1, a letter dated “1981/02/09” which reads as follows:

TO WHOM IT MAY CONCERN:

This is to certify that John Hobson, from January 1980 to December 1980, was on assignment to St Alban’s Special School in Victoria, Australia, while still in the employ of this School district.

Mr Hobson was not reimbursed for any travel to or from Australia.

Signed,

D M Parry

Superintendent of Education

3.06 After receiving the reassessment issued on December 21, 1981, the appellant filed a notice of objection. The respondent, on April 8, 1982, notified the appellant that the assessment was confirmed on the ground that:

. .. after moving to a new residence, the taxpayer did not cease to be employed at the location in Canada at which he was ordinarily employed before so moving and accordingly expenditures in the amount of $5,192 are not deductible from income within the provisions of subsection 62(1) of the Act.

4. Law — Analysis

4.01 Law

The main provisions of the Income Tax Act involved in the present case are subsection 62(1) and paragraphs 63.1(b) and 250(1 )(d). They read as follows:

62. (1) Where a taxpayer

(a) has, at any time,

(i) ceased to carry on business or to be employed at the location or locations, as the case may be, in Canada at which he ordinarily so carried on business or was so employed, or

(ii) ceased to be a student in full-time attendance at an educational institution in Canada that is a university, college or other educational institution providing courses at a post-secondary school level,

and commenced to carry on a business or to be employed at another location in Canada (hereinafter referred to as his “new work location”), or

(b) has, at any time, commenced to be a student in full-time attendance at an educational institution (hereinafter referred to as his “new work location”) that is a university, college or other educational institution providing courses at a post-secondary school level,

and by reason thereof has moved from the residence in Canada at which, before the move, he ordinarily resided on ordinary working days (hereinafter referred to as his “old residence”) to a residence in Canada at which, after the move, he ordinarily so resided (hereinafter referred to as his “new residence”), so that the distance between his old residence and his new work location is not less than 25 miles greater than the distance between his new residence and his new work location, in computing his income for the taxation year in which he moved from his old residence to his new residence or for the immediately following taxation year, there may be deducted amounts paid by him as or on account of moving expenses incurred in the course of moving from his old residence to his new residence, to the extent that

(c) they were not paid on his behalf by his employer,

(d) they were not deductible by virtue of this section in computing the taxpayer’s income for the preceding taxation year,

(e) they would not, but for this section, be deductible in computing the taxpayer’s income,

(f) the aggregate of such amounts does not exceed

(i) in any case described in paragraph (a), the taxpayer’s income for the year from his employment at his new work location or from carrying on the new business at his new work location, as the case may be, or

(ii) in any case described in paragraph (b), the aggregate of amounts required to be included in computing his income for the year by virtue of paragraphs 56(1 )(n) and (o), and

(g) any reimbursement received by him for such expenses has been included in computing his income for the year.

63.1 Where a taxpayer is deemed by section 250 to be resident in Canada throughout a taxation year or during a part of a taxation year, in applying sections 60, 62 and 63, in respect of him during the period when he is so deemed to be resident in Canada, the following rules apply:

(b) subsection 62(1 ) shall be read without reference to the words “in Canada”;

250. (1) For the purposes of this Act, a person shall, subject to subsection (2), be deemed to have been resident in Canada throughout a taxation year if

(d) he performed services, at any time in the year, in a country other than Canada under a prescribed international development assistance program of the Government of Canada and he was resident in Canada at any time in the 3 months’ period preceding the day on which such services commenced,

4.02 Analysis

4.02.1 The facts are clear and section 62 of the Act is clear also. In order to be eligible, under section 62 quoted above, a taxpayer must cease to be employed at a location in Canada (subparagraph 62(1 )(a)(i) ) and must commence to be employed at another location in Canada (subparagraph 62(1 )(a)(ii)). The new work location of the appellant was not in Canada, but in Australia. Therefore, the travelling expenses are not deductible.

4.02.2 Counsel for the appellant based his argument on the rationale given by the respondent in his notification of confirmation. Counsel contended that the respondent is bound by this assumption which is the basis of the appeal. In the reply to notice of appeal, however, the assumptions of fact are different.

The Board is bound by the evidence which is to the effect that the new work location in 1980 was in Australia. It is useful to point out that the ordinary residence of the appellant during the said year was in Canada in the sense of subsection 2(1) of the Income Tax Act which reads as follows:

2. (1) An income tax shall be paid as hereinafter required upon the taxable income for each taxation year of every person resident in Canada at any time in the year.

4.02.3 Pursuant to the provisions of paragraphs 63.1(b) and 250(1 )(d) quoted above, it is not impossible that the appellant has a basis to deduct his travelling expenses. Indeed, if the teacher exchange program, under which the appellant went to Australia, could be considered as a “prescribed international development assistance program of the Government of Canada”, as stipulated in paragraph 250(1 )(d), the appeal would be allowed. No evidence to this effect was given by the appellant and no admission made by the respondent. As the appellant had the burden of proof, and as the Board is bound by the evidence, it must consider that this condition is not fulfilled. The assessment must be maintained.

5. Conclusion

The appeal is dismissed in accordance with the above reasons for judgment.

Appeal dismissed.