Andrew Dupej v. Minister of National Revenue, [1982] CTC 2281

Roland St-Onge:—The appeal of Mr Andrew Dupej came before me on December 17, 1981, in the City of Toronto, Province of Ontario, and it has to do with a variety of deductions that the appellant sought to deduct in his 1976, 1977 and 1978 taxation years.

The facts of this appeal are well spelled out at paragraphs 2 to 9 inclusive of the reply to the notice of appeal, which read as follows:

2. The appellant, in his return of income for the 1976 taxation year, deducted from income $3,829.28 in respect of carrying charges on investment income, and did not report income totalling $2,201.12.

3. The Respondent, in reassessing the Appellant for the 1976 taxation year, disallowed $3,290.55 of the amount deducted by the Appellant in respect of carrying charges on investment income, and added to the Appellant’s income $2,201.12.

4. The Appellant, in his return of income for the 1977 taxation year, deducted from income $3,337.50 in respect of carrying charges on investment income, and twice deducted from income the amount of $302.40 in respect of Canada Pension Plan contributions and $171.60 in respect of Unemployment Insurance premiums paid during that year, yielding a duplicate deduction of $474.

5. The Respondent, in reassessing the Appellant for the 1977 taxation year, disallowed all of the amount, viz, $3,337.50, deducted from income by the Appellant in respect of carrying charges on investment income, and disallowed the duplicate deduction of $474 in respect of Canada Pension Plan contributions and Unemployment Insurance premiums.

6. The Appellant, in his return of income for the 1978 taxation year, deducted $7,972.73 as business expenses from self-employed income.

7. The Respondent, in assessing the Appellant for the 1978 taxation year, disallowed the $7,972.73 deduction claimed by the Appellant as business expenses against self-employment income.

8. In so assessing the Appellant for the 1976 and 1977 taxation years, the Respondent makes the following assumptions and findings of fact:

(a) that in each year, an amount of $1,500, constituting part of the deduction claimed by the Appellant in each year in respect of carrying charges on investment income, was a repayable shareholder advance by the Appellant to Torax Properties Limited, and was therefore an outlay of capital;

(b) that the Appellant is a shareholder in Torax Properties Limited;

(c) that in 1976, an amount of $1,790.55, and in 1977, an amount of $1,837.50, both amounts constituting the remainder of the deduction claimed in 1976 and 1977 in respect of carrying charges on investment income, were amounts paid in respect of interest on a personal residence mortgage, and were therefore personal or living expenses;

(d) that in the taxation year 1976, the Appellant received $1,941.97 from Teachers’ Superannuation Commission and $259.15 from Mutual Life of Canada, both amounts being received on account of pension benefits.

9. In so assessing the Appellant for the 1978 taxation year, the Respondent makes the following assumptions and findings of fact:

(a) that the Appellant was employed during the year and was not ordinarily required to carry on the duties of his employment away from the employer’s place of business or in different places.

Upon cross-examination, the appellant has admitted most of the paragraphs 2 to 9 inclusive of the respondent’s reply to the notice of appeal.

In 1976, the appellant did not report $2,201.12. The respondent added this amount as income because there were two separate amounts: One of $1,941.97 and another one of $259.15 received as pension benefits. The Minister added that as income, because these amounts must be included as pension benefits and it is considered to be income by virtue of paragraph 56(1) (a) of the Income Tax Act, SC 1970-71-72, c 63, as amended. So, with respect to this amount of $2,201.12, the appeal is dismissed.

With respect to the taxation year 1977, the appellant admitted that he had deducted twice the amount of his contribution to the Canada Pension Plan in the amount of $302.40 and the premiums for Unemployment Insurance in the amount of $171.60. Consequently, with respect to the amount, the total of $474, the appeal is dismissed.

Again, with respect to the taxation years 1976 and 1977, the Minister has deducted respectively the amount of $3,829.28 and $3,337.50. The Minister disallowed these amounts for two reasons:

1. In 1976 and 1977, $1,500 for each year was an advance made by the appellant to his company, so by virtue of paragraph 18(1 )(b) of the Act, this is considered as being a capital outlay and is not deductible.

2. With respect to the balance of the total amount for each year, to know in 1976 — $1,790.55; in 1977 — $1,837.50, these amounts represent interest paid on a personal residence mortgage and, consequently, these expenses are personal and living expenses and cannot be deducted by virtue of paragraph 18(1 )(h) of the Act.

Consequently, in this respect, the appeal is dismissed.

As to the 1978 taxation year, the appellant deducted $7,972.73 as business expenses from self-employed income. The evidence has revealed that the appellant was not an independent contractor because:

1. he was paid by the hour;

2. there was no need for an office at home;

3. the travelling was done from his home to his site of work;

4. the work was effectuated at the manufacturer’s office and with its equipment.

For these reasons, the appellant cannot be considered as an independent contractor and cannot claim business expenses in that respect.

Also, the evidence has revealed that the appellant was not ordinarily required to carry on the duties of his employment away from the employer’s place of business or in different places. Consequently, the travelling expenses cannot be deducted by virtue of paragraph 18(1 )(h) of the Act.

For all these reasons, the appeal is dismissed.

Appeal dismissed.