C J Webb v. Minister of National Revenue, [1983] CTC 2305, 83 DTC 245

The Chairman [ORALLY]:—The appeal of Mr C J Webb is from an income tax assessment in respect of the 1978 taxation year and the issue is the amount of moving expenses that should be allowed to him. In July of 1978 the appellant, who was then with the Department of National Defence, was moved from Ottawa to Bagotville, Quebec. He was, according to the evidence, given some four months’ notice of the move that was to be made.

For his 1978 taxation year the appellant claimed moving expenses in the total amount of $5,831.19. For moving expenses the Department of National Defence, as the employer of the appellant, paid to the appellant an amount of $3,804.75 which left an amount of $2,026.44. As I understand the evidence, there is no dispute as to the figures and as to the amount. The issue is whether or not it was deductible.

In his 1978 taxation year the appellant claimed the amount of $2,026.44 as deductible from his income for that year. The Minister disallowed that deduction.

In his remarks and in argument, and in his pleadings the appellant feels that the law cannot and does not cover all possible contingencies covering all situations and, of course, the Income Tax Act does not do that nor does any other statute and a considerable amount of discretion is given to the different courts in order to be able to adjust the wording of the Act to specific circumstances. So, the courts and this Board do have some discretion in the interpretation of the different sections of the Act. However, there are limits to the discretion that can be used by the courts in their interpretation of the Act. There is not only the rules of the interpretation of statutes that are binding on the courts, there is also a limit, one that is based on common sense and on the reasonableness of the deductions — in this particular case, reasonableness not only as to the amount but as to the nature of the items that are claimed as being deductible.

I think that it is well worth stressing here that the courts have, over the years, established that limit, and that the decisions of the Federal Court as to what is meant by moving expenses is binding on this board. What they have in their wisdom decided was moving expenses and what was not is binding and this Board cannot overrule the Federal Court.

I think that it might be useful to refer briefly to some of the decisions of the Federal Court. The one I am referring to now is Storrow v The Queen, [1978] CTC 792; 78 DTC 6551, and I think this hits the case we have before us squarely when Mr Justice Collier states at 795 and 6552 respectively:

Only outlays incurred to effect the physical transfer of the taxpayer, his household and their belongings to the new residence are deductible.

Then, Mr Justice Addy in Jack R Gold v The Queen, [1977] CTC 616; 77 DTC 5430, states:

From this subsection it seems abundantly clear that the words “moving expenses” mean the expenses incurred in physically moving and in actually changing residence and certain other very specific expenses relating directly to the actual move and reinstallation and do not mean an amount to compensate for incidental disturbances or damages not related to the actual move and reinstallation in the new residence.

Finally, in O J Rath v MNR, [1979] CTC 183; 79 DTC 5140, Mr Justice Mahoney at 186 and 5142 respectively states:

The outlays necessarily incurred to replace those goods were not outlays incurred to effect their physical transfer nor were they specifically allowed by subsection 62(3).

Now, as suggested by the appellant, there can be no doubt that he had been forced to move, if you will, from Ottawa to Bagotville; that these expenses would not otherwise have been incurred and they are related to the moving of the appellant from Ottawa to Bagotville. They are therefore consequential on that moving. They however do not come within the meaning of the subsection; they are not part of the expenses that have been defined by the Federal Court as to what is to be included and interpreted as coming within the meaning of moving expenses.

The wisdom of the Federal Court, in my opinion, can easily be seen in that there has to be somewhere a limit as to what can be considered as actual moving expenses. In this particular instance in the appellant’s work sheet I think we have gone beyond what the Federal Court considers to have been deductible; the replacement cost of food. The appellant states that they had a quarter side of beef and lobster and other things, but he also had four months in which he could have expended that food, had he so wanted. It is not just the question of what he did, someone somewhere has to set a limit as to what is meant by moving expenses and, of course, the Federal Court concluded that the type of expenses referred to in the appellant’s work sheet as category one, is not to be included in travelling expenses and is in fact personal living expenses.

The question of the cost of acquiring a new permit to drive a car which may well have been consequential on the move, has nothing to do with the actual physical transfer of the appellant from Ottawa to Bagotville.

As far as the second category is concerned, there were travel costs in the amount of $89.32 which, as I understood the evidence, was not necessarily paid by the appellant, but was estimated on the basis of what amount per kilometre was allowed to public servants. The employer apparently allowed only a lesser amount and paid the employee the allowance for mileage at the going rate.

For temporary lodgings in Ottawa there is an item of $105. On cross- examination it was found that an amount had been paid by the appellant but not in money; rather it was paid in the form of a gift and the value of the gift is not mentioned.

As far as receipts are concerned of course, anyone who comes before the Board or any court has to substantiate the claims that he is making and it should be recalled that the Board or the court does not have before it any of the receipts until they are presented by the taxpayer and in this case, the Board has none but that is not really the reason why I am going to have to dismiss this appeal.

The reason basically is that the nature, not necessarily the amounts, of the claims as moving expenses does not come within what has been determined, and as far as I can see by the number of cases clearly determined by the Federal Court, as being moving expenses; ie the expenses for the physical transfer of the taxpayer from one place to another. The Income Tax Act does in fact give some idea as to what may be included and what may not, but it would be well beyond the powers of this Board, in light of the decisions of the Federal Court, for the Board to allow the additional deductions claimed by the appellant in this appeal as being part of the moving expenses from Ottawa to Bagotville.

The appeal is therefore dismissed.

Appeal dismissed.