Patrick Murphy v. Minister of National Revenue, [1981] CTC 2516, 81 DTC 488

M J Bonner:—The appellant appeals from an assessment of income tax made September 24, 1976, for the 1975 taxation year.

At all relevant times the appellant resided in the Town of Fort Erie, Ontario. He was employed by the Ontario Jockey Club in connection with its pari mutuel operations. The employer held race meets at three tracks of concern in this appeal, namely, Greenwood and Woodbine, both located in the Muni- caplity of Metropolitan Toronto, and the Fort Erie track which was not located in the Municipality of Metropolitan Toronto.

During 1975 the appellant worked for a total of 154 days at Greenwood and Woodbine and for 56 days at the Fort Erie track.

In his return of income for 1975 the appellant claimed a deduction of $1,926 under paragraph 8(1)(h) of the Income Tax Act, the claim being as follows:

On assessment the Minister allowed a deduction of $540 only, that is to say, he disallowed the appellant’s claim for meals. That action was founded, according to the respondent’s counsel, on subsection 8(4) of the Act which provides as follows:

(4) An amount expended in respect of a meal consumed by an officer or employee shall not be included in computing the amount of a deduction under paragraph (1)(f) or (h) unless the meal was consumed during a period while he was required by his duties to be away, for a period of not less than twelve hours, from the municipality where the employer’s establishment to which he ordinarily reported for work was located and away from the metropolitan area, if there is one, where it was located.

Counsel for the respondent approached the case as one in which it was the basis of assessment, or a finding or assumption of fact made on assessment, that the municipality where the employer’s establishment to which the appellant ordinarily reported for work was Metropolitan Toronto, with the result that meals consumed while the appellant was in Toronto working at Greenwood and Woodbine were not consumed during a period while the appellant was required to be away from that municipality.

If that, in fact, was the basis of assessment then it could not be said on the evidence that the appellant discharged the onus of establishing that such basis was factually incorrect.

The appellant was the only witness called at the hearing. His only relevant evidence was that he regarded Fort Erie as his “home track” and that during 1975 he worked on all racing dates at the three named tracks as follows:

There was no evidence whether the pattern thus indicated was ordinary or extraordinary.

The reply to notice of appeal does not plead a finding or assumption of fact was made on assessment to the effect that the employer’s establishment to which the appellant ordinarily reported for work was located in the Municipality of Metropolitan Toronto or, for that matter, anywhere else. Although the place of ordinary reporting for work and the place where an employee is ordinarily required to carry on his duties may be different the reply does plead as a finding or assumption of fact made on assessment that:

.. . during 1975, the Appellant was ordinarily required to carry on the duties of his employment away from Metropolitan Toronto; namely, in Fort Erie and in carrying on his duties in that location, he incurred on account of meal expenses relating to the days employed at that location the amount of $540.

Finally, I observe that the submission in paragraph 8 of the reply is very much less than clear notice to the appellant that he suffered a disallowance based on subsection 8(4) of the Act. Paragraph 8 of the reply reads as follows:

The Respondent states that the Appellant was required by his duties of employment to be away from a period of not less than twelve hours from Metropolitan Toronto, Ontario, the place of business of the Ontario Jockey Club to which he ordinarily reported for work, during the 56 days in which he worked at the Race Track located in Fort Erie, Ontario and, during this time, incurred the amount of $540 on account of meal expenses which amount is deductible in the computation of his income for said year in accordance with the provisions of subsection 8(2) of the Income Tax Act.

Subsection 8(2) does not permit deductions. It prohibits them.

Thus, I cannot find that there was any onus on the appellant to show that the employer’s establishment to which he ordinarily reported for work was located outside Metropolitan Toronto.

I very much doubt that the disallowance rested on subsection 8(4). I say “doubt” because the notice of assessment sent to this Board by the Minister pursuant to subsection 170(2) of the Act contains the following enigmatic assertion:

THE EXPLANATION OF THE CHANGE TO YOUR RETURN HAS BEEN SENT TO YOU BY LETTER (FORM T462) MAILED SEPARATELY.

No copy of that letter or Form T462 was sent to this Board. However, the notification of confirmation states that the assessment was confirmed on the ground that:

.. . away from home expenses in the amount of $1,386 claimed as a deduction from income were not incurred by the taxpayer for travelling in the course of his employment within the meaning of paragraph 8(1 )(h) of the Act.

The assessment, I think, was probably made on the same ground as the confirmation.

The respondent’s counsel, however, conceded at the hearing that “paragraph 8(1 )(h) is satisfied”. It follows, therefore, that there was no basis for the disallowance. The appeal will therefore be allowed and the assessment referred back to the respondent for reconsideration and reassessment on the basis that the appellant was entitled to the deduction of the $1,386 in question.

Appeal allowed