Mervin J Patterson v. Minister of National Revenue, [1981] CTC 2825, 81 DTC 784

Guy Tremblay:—This case was heard on February 12, 1981, in Winnipeg, Manitoba.

1. The Point at Issue

The issue is whether the appellant, principal of John M King School in Winnipeg, Manitoba, is correct in claiming the amount of $255.39 as expenses for 908 miles driven in his car while transporting students to various events and competitions, transporting students to the hospital or on camping trips, etc. The appellant says it is part of his duties. The respondent denies it.

2. The Burden of Proof

2.01 The burden is on the appellant to show that the respondent’s assessment is incorrect. This burden of proof results particularly from several judicial decisions, including the judgment delivered by the Supreme Court of Canada in Johnston v MNR, [1948] CTC 195; 3 DTC 1182. According to this judgment, the assumptions of fact on which the Department of National Revenue based the assessment or reassessment are also deemed to be correct.

2.02 The facts on which the respondent bases the assessment are described in paragraph 6 of the Reply to Notice of Appeal. It reads as follows:

6. In reassessing the appellant, the respondent made the following assumptions, inter alia:

(a) that the Appellant was not ordinarily required to carry on the duties of his

employment as principal of John M King School away from the said school;

(b) that the John M King School was his employer’s place of business.

3. The Facts

3.01 The appellant resides in Winnipeg, Manitoba.

3.02 In 1978, the appellant was employed by Winnipeg School Division No. 1 and was the principal of John M King School in the City of Winnipeg.

3.03 The appellant duly objected to the reassessment which was confirmed in due course by the Minister of National Revenue.

3.04 During the 1978 taxation year, the appellant used his automobile, a 1975 Toyota Corolla, to travel 908 miles in carrying on what he considers various duties of employment as principal of John M King School. Such duties, inter alia, involved attending meetings of the Superintendents of Winnipeg School Division No 1, transporting students to various events and competitions, transporting students to the hospital, transporting students on camping trips, organizing and attending principal’s meetings at Gimli, Manitoba, and attending upon and in respect of other miscellaneous matters.

3.05 The amounts expended by the appellant during the 1978 taxation year for travelling in the course of his employment were as follows:

3.06 The respondent filed as Exhibit R-1 five pages giving the details of the mileage driven during the year 1978.

From this Exhibit, the appellant used his car as follows:

The mileage at the beginning of January 1978 was 13,819 and on December 31, 1978 was 17,748.

From the evidence, it is clear that the mileage from these trips mounted up during the course of work:

Q. Could you give the Board some further idea as to the type of meetings that you would be involved in going to and the nature of any other kinds of trips that composed the 908 miles. If you could take a typical month perhaps and just briefly give a rundown of the meetings or trips during the work day that you were involved with.

A. Each month our Superintendent has one meeting with all Principals. In 1978 it was called the Area Council. The meetings were called for an afternoon, usually from 1:30 which gives us a half-hour to get the children into the school at 1:00 o’clock and then leave for the meeting, until 3:00 or 3:30 or 4:00 at which point we return to the school to make sure there has not been any difficulty.

There are a number of curriculum programs involved that require meetings, which the Superintendent or his designate calls. I see in one month in 1978 I had gone to the T.R.C., which is the Teacher’s Resource Centre, to attend a meeting with the Superintendent and other Principals in regards to the crafts development program in the Division.

The Board of Trustees authorized a program called Kids Accepted Here, and I was required to attend an in service on the program as were all other principals in another school. The nutrition program, a Board of Trustees’ program, there are meetings required of the principals and we administer the programs within the school and in the month of November I was called out on the 17th of November to the School Division Offices at 1:30 in the afternoon on the nutrition program.

Then the Inner City Committee composed of the Superintendent and a number of Principals held a meeting in that month in the annex again of the School Division offices. I was required to attend from 9:30 until 11:00.

I had a number of other small meetings in the central office where I was required to attend, such as a meeting for summer school planning.

Q. Mr. Patterson, could you give the Board an idea of the number of trips on the average per month that would take place: Would it be 5 or would it be 15?

A. It would range between — that particular year it ranged between 5 and 11.

Q. Mr. Patterson, you made reference several times to a particular meeting that you were required to attend. What do you mean when you say you were required to attend? Who required you or how did you know of the meeting or what would have been the consequences if you didn't attend the meeting?

A. The requirement would be the memo or the agenda from the Superintendent’s Department and sent to all elementary Principals, a notice of the meeting. There are several occasions where, I have always in my career phoned if I am unable to attend such a meeting. I know that if you do not give a reason why you do not attend a meeting there are usually questions asked and I would expect if you didn't attend the meeting you would — it would cause you to face your Superintendent or the Board of Trustees.

Q. And what were they?

A. It has been the policy of the Provincial Department of Education and our Board, to sponsor outdoor education experiences for children, particularly children from the inner city who don’t have these opportunities. Each year we have taken approximately 100 children on a three-day, outdoor educational trip to Whiteshell. The children, the supply — of course they are transported by buses, but the buses do not stay and I have always taken my car there in case of illness or in case of an emergency trip to the hospital. There is an RCMP station close by, but it would be unsafe in my opinion to be 100 miles out of the city without a car.

Q. And were there any instances in which you were required to travel within the city in respect of students or children’s activities or meetings with parents? that kind of thing:

A. Yes. I have taken children from the school to the arena to compete in the interschool speed skating competitions and taken the children from the arena at 9:30 or 10:00 at night and delivered them to their homes in the community.

Q. Is it necessary that the Principal do it? What would be the consequences if you did not involve yourself in this activity?

A. Many children would not be allowed to attend. Some parents in our community do have cars, but approximately 600 of our 800 some children were not born in the country and their parents are recent arrivals, they do not own cars and they bring with them an attitude that unless the principal and the teachers are very careful, and I mention the principal, and in attendance then the children are not allowed to compete.

Q. Is there any policy of the employer, the School Division as to your participation, shall I say within the community or in the students’ affairs outside the school or is this just simply a voluntary action on your part?

A. The School Division has since 1975 been actively interested in the community school philosophy and a large proportion of school Principals have been sent by the Division to Flint, Michigan, to take part in a two-week or one-week workshop on the community school education as practiced there. There is a policy of the Board in regard to the community school and community involvement. Yes, there is a policy on community involvement.

Q. Is the policy issued in a published form or is it relayed to you through meetings or by the Superintendent orally? What form does the policy take?

A. The form of the policy at present is a motion in the Board’s minutes. But there is a community school policy in the School Division and reported in the Board minutes.” (S.N. pages 11 to 16).

4. Law — Cases at Law — Analysis

4.01 Law

The main provisions of the Income Tax Act involved in the present case are 8(1 )(h), (j) and (2). They read as follows:

8(1) In computing a taxpayer’s income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:

(h) where the taxpayer, in the year,

(i) was ordinarily required to carry on the duties of his employment away from his employer’s place of business or in different places,

(ii) under the contract of employment was required to pay the travelling expenses incurred by him in the performance of the duties of his office or employment, and

(iii) was not in receipt of an allowance for travelling expenses that was, by virtue of subparagraph 6(1)(b)(v), (vi) or (viii), not included in computing his income and did not claim any deduction for the year under paragraph (e),

(f) or (g),

amounts expended by him in the year for travelling in the course of his employment;

(j) where a deduction may be made under paragraph (f) or (h) in computing

the taxpayer’s income from an office or employment for a taxation year,

(i) any interest paid by him in the year on borrowed money used for the purpose of acquiring an automobile used in the performance of the duties of his office or employment, and

(ii) such part, if any of the capital cost to him of an automobile used in the performance of the duties of his office or employment as is allowed by regulation;

(2) Except as permitted by this section, no deductions shall be made in computing

a taxpayer’s income for a taxation year from an office or employment.”

4.02. Case at law

The counsel for the parties referred the Board to the following cases at law:

1. Gerald C Shangraw v MNR, [1976] CTC 2415; 76 DTC 1309;

2. Tajdeen A Valani v MNR, [1980] CTC 2218; 80 DTC 1206

3. J Wayne Bryant v MNR, [1980] CTC 2529; 80 DTC 1428;

4. Herman Luks (No 2) v MNR, [1958] CTC 345; 58 DTC 1194;

5. John T Klue v MNR, [1976] CTC 2401; 76 DTC 1303;

6. Richard A Ronchka v MNR, [1979] CTC 3071; 79 DTC 854;

7. Donald J Bubnick v MNR, [1981] CTC 2015; 81 DTC 25

8. Thomas Healy v HMQ, [1979] CTC 44; 79 DTC 5060;

9. Bolton P Bromwich v MNR, 23 Tax ABC 61; 59 DTC 568;

10. Ernest Neufeld v MNR, [1981] CTC 2010; 81 DTC 18;

11. Frederick Ian Brownlee v MNR, [1978] CTC 2780; 78 DTC 1571.

4.03 Analysis

4.03.1 It was admitted by counsel of both parties that the requirements stipulated in subparagraphs 8(1)(h)(ii) and (iii) of the Income Tax Act are met. The point in dispute is subparagraph 8(1 )(h)(i) especially on whether the appellant was “ordinarily required”.

4.03.2 It is admitted by the respondent (para 5 of the Reply to Notice of Appeal) and it is in accordance with the evidence (para 3.06) that the appel- lant was required to pay the travelling expenses incurred by him in the performance of the duties of his employment as principal of John M King school. The written agreement was indeed completed by verbal clauses. The figure of $255.39 is not even in dispute. Again the only point is the meaning and the application of “ordinarily required’’.

4.03.3 In reading the cases at law and paragraph 8(1 )(h) of the new Income Tax Act, the Board stated that there is an evolution in the interpretation of the words "ordinarily” and “ordinarily required”. Formerly (B P Bromwich v MNR, 23 Tax ABC 61; 59 DTC 568; Ben Stromberg v MNP, 9 Tax ABC 393; 54 DTC 28; Jacob Dover v MNP, 22 Tax ABC 467; 59 DTC 515, etc) they were interpreted as being essentially related to time.

In the most recent cases at law, however, the Court gives to the expression:

(a) the meaning of “normally” required as opposed to “rarely” or “exceptionally”, Richard A Bonchka v MNB, [1979] CTC 3071; 79 DTC 854 at 857;

(b) “in my opinion, interpreting those words as being related to the actual duties and responsibilities of the appellant’s employment rather than to the time factor is also a legal and valid interpretation.” Gerald C Shangraw v MNB, [1976] CTC 2415; 76 DTC 1309 at 1311;

(c) When it is .. . important part of his duties”, John T Klue v MNR, [1976] CTC 2401; 76 DTC 1303 at 1305; and

(d) “The objection of section 8(1 )(h) is to enable employees who are required by their employment to work from time to time away from the place at which they usually work, to deduct their out-of-pocket expenses in so doing.”, Thomas Healy v HMQ, [1979] CTC 44; 79 DTC 5060 at 5064.

In the Board’s opinion, in the present case, the evidence shows that the trips made by the appellant were not only carried out in the performance of his duties but were “ordinarily required”. This expression means the same as “normally required”. His trips were the “actual duties and responsibilities” of the appellant. Moreover, they were required more than “from time to time”.

5. Conclusion

The appeal is allowed and the matter is referred back to the respondent for reassessment in accordance with the above Reasons for Judgment.

Appeal allowed.