Blair T Harrison v. Minister of National Revenue, [1981] CTC 2150, 81 DTC 91

D E Taylor:—This is an appeal heard in Toronto, Ontario on December 9, 1980, against an income tax assessment for the year 1977 in which the Minister of National Revenue disallowed the amount of $4,077.50 claimed by the appellant as “moving expenses”. The notice of appeal read as follows:

In October, 1977 I sold my house at 765 Woodcrest Blvd, London, to Sifton Properties Limited.

I Purchased a house at the same time from Sifton Properties at 72 Crestlynn Cr, Simcoe.

I moved from London to Simcoe in October, 1977.

There were a number of the usual expenses connected with the sale of 765 Woodcrest and also with the purchase of 72 Crestlynn Cr.

Since I moved more than 25 miles closer to my work, some of these are, I believe, deductible expenses. The particular expenses to which I refer are: real estate commission ($2,777.50), legal fees ($800), and mortgage discharge fee ($500).

It is my contention that these were expenses incurred by me in connection with the sale of 765 Woodcrest Blvd. since they were subtracted from the market value.

It is my contention that the spirit of the legislation is to allow the taxpayer to deduct the normal expenses of moving from his taxable income. The manner in which the taxpayer “pays” should not nullify his claim. The fact that these were each an ‘allowance to be incurred’ from Sitton’s point of view does not make them less of an expense to me, the taxpayer.

The respondent asserted:

— The appellant by an agreement of purchase and sale sold his residence known for municipal purposes at 765 Woodcrest Blvd in the City of London, in the Province of Ontario, to Sifton Properties Ltd for a consideration of the amount of $46,072.50.

— The appellant did not incur any commission expense, legal fees or mortgage discharge fee expense on the sale to Sifton but to the extent that any such expenses were incurred, such expenses were incurred and paid by the said Sifton Properties Ltd.

— The expenditures claimed were not amounts paid by the appellant within the meaning of subsection 62(1) of the Income Tax Act.

The appellant submitted a letter from Sifton describing the transaction (Exhibit A-1):

April 16, 1979

Mr Blair T Harrison

72 Crestlynn Crescent

Simcoe, Ontario

N3Y 4X3

Dear Blair:

Further to your discussions with Mr Ken Morris, he has asked me to confirm our discussions of 1977 with respect to the trade-in of your home at 765 Woodcrest Boulevard, London, Ontario on the purchase of your present residence.

When we negotiated the value of your unit, at 765 Woodcrest, which would be allowed on the purchase of your new home, the following allowances were deducted from the estimated market value of $50,500:

Allowance for real estate commissions to be potentially incurred
on resale of 765 Woodcrest (5.5% of $50,500 based on MLS rate)	$2,777.50
Legal fees to be incurred by virtue of our purchase from you and
Subsequent sale by us	800.00
Allowance for mortgage paydown or discharge fee to be
incurred should subsequent purchaser require same	500.00
Allowance for redecorating, cleaning, etc.	350.00
	$4,427.50

This amount of $4,427.50 subtracted from the estimated market value of $50,500 produced a net price of $46,072.50 which is the amount listed on the Statement of Adjustments under the heading ‘Purchase Price’.

As you were advised, the amounts listed above were deductions made for expected future expenses and we are unable to verify that these items were incurred by us in the amounts specified although they were taken into consideration to determine the trade-in value of your home.

I trust this information will satisfy your requirements.

Yours truly,

SIFTON PROPERTIES LIMITED

Glen R Sifton

Manager, Land Division

GRS: ak

cc Mr Ken Morris

Counsel for the Minister noted that while Exhibit A-1 might serve to support the amounts claimed on a mathematical basis, it was not admissible evidence with regard to the point at issue. Counsel also made reference to certain other case law:

Hunter v The King, [1904] AC 161 (HL(E));

Marvin R V Storrow v Her Majesty The Queen, [1978] CTC 792; 78 DTC 6551,

Royal Trust Corporation of Canada v MNR, (not yet published).

The issue comes down to an interpretation by the Board of two specific terms which must be met in the Act:

Sec. 62. Moving Expenses.

(1) Where a taxpayer

. . . there may be deducted amounts paid by him as or on account of moving expenses incurred . . . .

and

Sec. 62(3)(e)

(3) “Moving expenses” defined. In subsection (1), “moving expenses” includes any expense incurred as or on account of

(e) his selling costs in respect of the sale of his old residence

In this matter, the appellant presented no agreement of sale supporting the $50,500 value which was critical to his appeal. The letter from Sifton does not fulfill that requirement. The appellant’s case, therefore, comes down to a proposition that “if he had made out the papers’’ in a manner reflecting the $50,500 and then refunded to Sifton the amounts in question, such refunded amounts (presumably totalling $4,077.50) would have been deductible. That, in itself, is a dubious proposition as noted by counsel for the Minister in citing the recent Royal Trust Corporation case. However, the fact is that in the present case no payment, even as alleged in Royal Trust can be perceived, and the appeal must therefore fail. Even emphasizing the phrase “as or on account of. .(Paragraph 62(3)(e) does not aid Mr. Harrison because his term also refers back to the word “paid” — it does not provide a substitute or an alternate to payment.)

The appeal is dismissed.

Appeal dismissed.