Jean-Yves Lepage v. Minister of National Revenue, [1982] CTC 2538

D E Taylor [TRANSLATION]:—This appeal, heard on February 3, 1982 In Quebec City, was brought following an assessment in which the Minister of National Revenue disallowed the deduction claimed by the appellant of a “remoteness premium” for 1979. This decision, rendered on April 28, 1982, results from this appeal. The appellant’s contention, as set forth in his Notice of Appeal, is as follows:

STATEMENT OF FACTS

1. I am married and the father of two children. My ordinary place of residence is Riviere Bleu, Temiscouata County.

2. Throughout 1979 I maintained a self-contained domestic establishment in my ordinary place of residence for my spouse and my children.

3. I was employed as a member of the supervisory personnel of La Compagnie Loram-Komo Opinaca during 1979.

4. I was thus employed at the La Grande Opinaca Complex at James Bay, and the work performed there was of a temporary nature.

5. With respect to these duties I received an allowance of $14,040 from my employer.

6. In an assessment issued on July 17, 1980 and bearing No 52460528 this amount was included in my income, thus reducing the overpayment claimed when I filed my tax return for 1979.

7. Following the filing of a notice of objection, the Minister of National Revenue on Janaury 19, 1981 confirmed the notice of assessment issued for 1979. This confirmation was based on a letter issued by my employer on March 6, 1980, which described the allowance received as a remoteness premium (Exhibit 1).

GROUNDS OF APPEAL TO THE BOARD

1. My employment with La Compagnie Loram-Komo Opinaca at the La Grande Opinaca Complex was of a temporary nature.

2. Since the La Grande Opinaca Complex is remote from any established community, I could not be expected to maintain a self-contained domestic establishment for the members of my family there.

3. For the purposes of this employment I had to be away from my ordinary place of residence for not less than thirty-six hours.

4. Since I was a member of the supervisory personnel of my employer I was entitled to family accommodation under the terms of the contract between the James Bay Power Corporation and La Compagnie Loram-Komo Opinaca, but I incurred the cost of my board, unlike the other members of the supervisory personnel, who had single rooms. See the attached extract from the contract (Exhibit 2).

5. This contractual agreement was confirmed by my employer in a letter dated March 20, 1981 (Exhibit 3), which gives an explanation of the contents of the letter of March 6, 1980.

6. Consequently, this allowance received from my employer was an allowance for living expenses at a remote location and should not be included in computing my income under subparagraph 6(6)(a)(ii) of the Income Tax Act.

The following are the facts presumed by the respondent:

— The appellant was employed by La Compagnie Loram-Komo Opinaca as an assistant project manager on the Petite Opinaca project at James Bay;

— The appellant received from his employer as a remoteness premium an allowance of $270 per week, for a total of $14,040 In the 1979 taxation year;

— the appellant was fed and lodged at the expense of his employer;

— the appellant’s employer had made available to the appellant accommodation at the very place of his employment.

Mr Lepage explained that he was an engineer and that he had accepted the employment in the belief that the amount in issue would not be taxable, because he incurred the cost of his board. He was surprised to find that the amount was included on a 1979 T4 Supplementary as “salary”. The appellant confirmed that he purchased his meals in the restaurant and not in the cafeteria provided by the James Bay Power Corporation. He estimated that the cost thereof was between $25 and $30 per day. He worked for two or three years in this area of James Bay.

The following exhibits were filed in evidence by the appellant:

Exhibit 1

LA COMPAGNIE LORAM-KOMO OPINACA

ADRESSE POSTALE		CHANTIER
CASE POSTALE 100	(ENTREPRISE EN COPARTICIPATION)	CHANTIER E.O.L.
ST-SAUVEUR. QUEBEC, PQ.		CAMPIMENT PETITE-OPINACA
GIK 6V9		COMPLEXE LA GRANDE
(418) 688-9253		OPINACA, P.Q.
TELEX: 051-3331		JOY 2Y0
	1500 OUEST, BOUL. WILFRID HAMEL	(819) 672-2135
	QUEBEC, P.Q. G1N 3Y0	AVEC L'AIDE DE L’OPERATRICE
	Quebec City
	March 6, 1980

TO WHOM IT MAY CONCERN:

Re: Mr Jean-Yves Lepage

SIN 213-623-713

This is to confirm that Mr Jean-Yves Lepage of Rivière Bleu, Temiscouata County, Quebec worked for our company during 1979 as an Assistant Project Manager at our Petite-Opinaca project at James Bay.

In addition to his weekly salary, Mr Lepage received a remoteness premium of $270 per week, and in 1979 he received $14,040 in remoteness premiums.

La Compagnie Loram-Komo

Per: (signed)

Abel Keilani, P Eng

Project Manager

Exhibit 2

TRUE COPY

10B 240-01-001

LA GRANDE RIVER DEVELOPMENT

EASTMAIN—OPINACA—LA GRANDE DIVERSION

Construction of dikes OA-8 and OA-9 and barrage OA-10 and related projects

VOLUME 1

VOLUME II

5.0 Services available at Petite Opinaca and within its area

5.1 Board and lodging

Energy will furnish for Contractor personnel board and lodging subject to the conditions stated hereafter. Contractor is not allowed to set up its own board and lodging services.

5.1.1 Board

Each working day two hot meals are served in the cafeteria, one at breakfast time and one at supper time. On Sundays and holidays, three hot meals are served in the cafeteria. With each meal served in the cafeteria, the employee can take out a snack for the mid-shift meal.

5.1.2 Lodging

Contractor’s male personnel is lodged at Petite Opinaca camp in double rooms located in sleeping quarters.

For male supervisory personnel Energy makes available single rooms to Contractor.

Upon Energy’s approval, Contractor’s female personnel can be allowed at Petite Opinaca. The female personnel is lodged in double rooms located in dormitories reserved for women at Eastmain.

5.1.3 Sleeping quarters generalities

Each sleeping unit has its own sanitary, heating and lighting facilities and is equipped with a washer and a dryer for the use of the occupants. Maintenance of sleeping quarters, rooms and surroundings is provided by Energy.

5.1.4 Payment

Contractor shall pay to Energy two (2) dollars per day, for each day or part thereof that an employee receives board and/or lodging.

5.1.5 Family accommodation

5.1.5.1 Equipped lot:

Energy will place at contractor’s disposal for a member of its supervisory personnel and for Contract duration four (4) lot(s) located at Eastmain Village in the vicinity of Eastmain or at Radisson, according to education needs (of children of supervisory personnel).

These lots are arranged and equipped with full municipal services. Contractor may install on it a modular home unit. Each unit shall be in new condition and with a surface of 1400 sq ft maximum. Every unit installed at Eastmain shall be approved by la Société d’énergie de la Baie James and conform to the special standards following:

— heating shall be done by means of fuel furnaces and forced ventilation ducts,

— all exterior coating shall be of steel and painted with a baked enamel finishing,

— the fire prevention shall be carried out by heat or smoke detectors giving a local alarm and by portable chemical extinguishers,

— piping, plumbing and electric wiring shall conform to the Regulations of the Province of Quebec and Contractor shall submit to Energy, upon request, the drawings approved by the authorities having jurisdiction,

— a 12 ft by 8 ft shelter may be built at the unit entry,

— any additional construction shall be approved by Energy.

Contractor shall transport at its own expense the mobile home unit to its settingup area.

Energy installs the mobile home on the lot. The installation includes blocking, protection against frost from ground level to main floor, connections to water, sewers, electricity and fuel distribution network.

Installation cost for one unit, is 5,800 dollars at Contractor’s expense, the rental charge for one lot is $100 monthly including cost of municipal services as water supply, sewerage, electricity for lighting, snow removal from roads, garbage collection, street maintenance and other community services.

At the end of the work, Contractor shall disconnect services to mobile home and transport it outside of the territory, at its costs, except as otherwise instructed by Energy.

5.1.5.2 Familial mobile houses:

Energy supplies Contractor according to the following limits:

4 mobile houses to be chosen between Eastmain and/or Radisson villages.

the rent of these houses is $180 Monthly each unit; this amount includes heating, lighting and supply of municipal services.

Exhibit 3

LA COMPAGNIE LORAM-KOMO OPINACA

ADRESSE POSTALE		CHANTIER
CASE POSTALE 100	(ENTREPRISE EN COPARTICIPATION)	CHANTIER E.O.L.
ST-SAUVEUR. QUEBEC, PQ.		CAMPIMENT PETITE OPINACA
G1K 6V9		COMPLEXE LA GRANDE
(418) 688-9253		OPINACA, P.Q.
TELEX: 051-3331		JOY 2Y0
	1500 OUEST, BOUL. WILFRID HAMEL	(819) 672-2135
	QUEBEC, P.Q. G1N 3Y0	AVEC L’AIDE DE L'OPERATRICE
	March 20, 1981
Mr. Jean-Yves Lepage

Rivière Bleue, Temiscouata

Quebec

GOL 2B0

Dear Sir:

Further to our recent meeting, I should like to explain the nature of the weekly remoteness premium of $270 paid to you during the 1979 calendar year for a total of $14,040.

This remoteness premium, which was paid in addition to your salary since the beginning of the project in 1977, took the place of a remote location allowance to enable you to subsidize your living expenses in your accommodation at Mélèzes, the place of residence for the supervisory personnel of the construction companies working at the Eastmain-Opinaca-La Grande complex.

These terms and conditions relating to place of residence and living expenses were, moreover, provided for in the contracts between La Compagnie Loram- Komo (Opinaca) and the James Bay Power Corporation.

Please find enclosed for your information an offprint of the contractual documents.

	Yours sincerely,
	(signed)
	Abdel Keilani, P Eng
Encl	Project Director

Mr Abdel Keilani, an engineer, one of the appellant’s superiors and the author of the letters cited above, testified that he could not determine with certainty the portion of the remoteness premium required by the appellant for his meals, but that food and meals at James Bay were, in any Case, very expensive. A mobile home was provided free of charge to Mr Lepage during the period in issue.

Both counsel provided the Board with summaries of the relevant legislation, case law and definitions, and submitted the following references:

Counsel for the respondent maintained that the place of employment could not qualify as a “special work site” because the duties performed by the appellant were not of a temporary nature, that the term “board” should apply to his food and to his accommodation, whereas the appellant paid only for his food, and that the sum in question could not be considered an “allowance”. I am not persuaded that any of the said reasons is tenable in the circumstances of this case. I am also of the opinion that the appellant paid part or perhaps all of the cost of his meals during this period. The only issue to be determined, therefore, concerns the allowance received by the appellant, namely, whether this “allowance” was received by him for the cost of board and whether it was reasonable.

As far as I can tell, the appellant’s problem depends on the facts and not on the case law. His employer included the amount in question ($14,040) in box “K” (taxable allowances and benefits) of the T-4 for the 1979 taxation year. The result is that this sum forms part of the total earnings (Box “C”) appearing on the same form. I can only assume that the employer was aware of the circumstances surrounding the amount in issue, especially since the company and the appellant were in agreement with respect to the terms and conditions of employment and the Minister of National Revenue was not involved. Whether or not the appellant and the company had the same understanding of the agreement in question is not an issue to be considered by this Board. The Board must decide the issue only on the basis of the evidence adduced, the most persuasive part of which was the exhibits reproduced above and the testimony of Mr Keilani. Although the employer attempted to explain the situation, he did not consider it worthwhile to correct the T-4 form, that is, to deduct the amount in question from the appellant’s income. The amount cannot be eliminated simply by calling it a “remoteness premium”. That is how Mr Keilani refers to it in his letter of March 6, 1980, and the appellant also referred to it in the same way in his tax return for 1979. The change in terminology in Mr Keilani’s letter of March 20, 1981 is unjustified, because the appellant had a mobile home at his disposal free of charge. Consequently, the appellant must show, independently of the company’s statements, that the T-4 form was incorrect, that the amount received by him was for his board (food) and that it was “reasonable". It is difficult for the appellant to prove that the sum received for “board” only (non-taxable), when the company refused in fact to show this payment as such on the T-4 form. In any case, no evidence was presented to the Board to show that the amount was “reasonable" — it would be more reasonable to assume that the appellant could have obtained his meals in the cafeteria at an approximate cost of $2 per day (see exhibits cited above). If, as the appellant claimed, the amount in question should be regarded and paid as a “non-taxable benefit”, his problem arises from the competence of his employer and not from the provisions of the Income Tax Act.

Decision

The appeal is dismissed.

Appeal dismissed.