Bauke Weizenbach v. Minister of National Revenue, [1981] CTC 2906, 81 DTC 800

Guy Tremblay:—This case was heard on June 2, 1981 in Edmonton, Alberta.

1. The Point at Issue

The issue is whether the appellant, an employee of Sherritt Gordon Mines Limited, is correct in claiming for the 1974 taxation year an amount of $1,007 representing travelling expenses from Fort Saskatchewan, Alberta, to the University of Alberta in Edmonton where he attended courses during the regular office hours.

2. 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 especially from several judicial decisions, including the judgment delivered by the Supreme Court of Canada in Johnston v MNR, [1949] CTC 195; 3 DTC 1182.

2.02 In the same judgment, the Court decided that the assumptions of fact on which the respondent based the assessment are also deemed to be correct. In the present case, in paragraph 8 of the reply to notice of appeal, the respondent described the facts on which he based his assessment:

8. In so assessing the Appellant, the Respondent acted, inter alia, on the following assumptions:

(a) the Notices of Objection with regard to the 1975 and 1976 taxation years are not valid as they were not filed in time and no application for an extension of time within to file such Notice of Objection was received with the time prescribed by the Income Tax Act;

(b) although the Appellant may have attended the University of Alberta, during working hours he was not ordinarily required by his employer to carry on the duties of his employment away from his employer’s place of business at Fort Saskatchewan, Alberta;

(c) the travelling expenses were not incurred by the Appellant in the performance of the duties of his employment.

3. The Facts

3.01 The appellant, since he was 15 years old, has been an employee of Sherritt Gordon Mines Limited, a nickel producer.

3.02 Later he became “a research chemist”. In his 1974 income tax return he described his type of work as “lab technician”. He had no written contract for employment and was not a member of a union. In 1974, he had working under him many assistants who had more degrees than he had.

3.03 The company and the residence of the appellant are located in Fort Saskatchewan, Alberta.

3.04 Once it was suggested to the appellant by the authorities of the company, that he attend courses at university to complete the training he had received at work. Therefore in 1974, he attended courses at the University of Alberta 3 or 4 days per week and performed his duties as a lab technician as well. In fact, he went to work one or two hours a day to check and give instruction to his assistants. Ordinarily he went to work before going to the University, but he also went at other times during the day. During 1974, he earned a salary of $14,609.40.

3.05 At the University of Alberta, during the 1974 taxation year (and also during the years 1975, 1976 and 1977) he attended courses in chemistry, physics, psychology, geology, etc. In 1977, the appellant said he received his “Bachelor of Science General”.

3.06 He travelled from Fort Saskatchewan to the University using his own automobile. The quantum (which is not in dispute) of travelling expenses was $1,007. The appellant claimed this amount as a deduction in the computation of his income.

3.07 The employer did not pay the travelling expenses of the appellant to travel from Fort Saskatchewan to Edmonton and back.

4. Law — Cases of Law — Analysis

4.01 Law

The main provisions of the Income Tax Act involved in the present case are paragraph 8(1 )(h) and subsection 8(2) which 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 (vii), 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;

(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 Cases of Law

The respondent referred to the Board the case of Walter Wylde v MNR, [1979] CTC 3041; 79 DTC 829, which refers to the cases of:

HMQ v Lavers, [1978] CTC 341; 78 DTC 6230;

Krieger v MNR, [1979] CTC 2283; 79 DTC 269;

HMQ v Diemert, [1976] CTC 301; 76 DTC 6187; and,

Guay v MNR, [1970] Tax ABC 1201; 70 DTC 1781.

4.03 Analysis

4.03.1 Because the appellant is an employee, the only provision of the Income Tax Act, which provides a deduction for travelling expenses is paragraph 8(1 )(h) of the Act quoted above. The provision of subsection 8(2) of the Act (also quoted above) indeed limits the deduction in the computation of the taxpayer’s income from an employment to those provided in section 8 of the Act.

In the said section, the only provision which concerns the travelling expenses is paragraph 8(1 )(h) of the Act.

4.03.2 Requirement of paragraph 8(1 )(h) of the Act

The appellant meets the requirements provided in subparagraphs (ii) and (iii) of this section. The crux of the matter, however, was whether the attendance of courses at the University of Alberta was part “of the duties of his employment” during the year 1974. Subparagraph (i) of paragraph 8(1 )(h) of the Act reads as follows:

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

4.03.3 In his testimony, the appellant said that it was suggested by his employer that he attend courses at the University. It was not an obligation, he said in substance, but when an employer makes a suggestion, ordinarily it is always better to accept and follow the suggestion.

Is it sufficient to conclude that the attendance of classes becomes part of the duties of employment?

The Board is inclined to answer affirmatively. At first glance, indeed the attendance of university courses in chemistry, physics, etc, by an employee who is a lab technician, who has been working for 30 years and who is in charge of other employees, is parallel to an employee or the director of a company attending specialized and up-to-date lectures concerning matters in which the company is interested. Ordinarily, the company pays the travelling expenses of the employee or the director because this responsibility for increasing knowledge is so connected to the work or to the responsibility of the employee or director or to the objectives of the company that it becomes part of the duties of the employment.

In the present case, the fact that the appellant had to attend courses three or four days per week, does not change the nature of the operation. On the contrary, it seems to the Board that this reinforces the facts that it was part of the duties of his employment (especially if one considers that this attend ance was during his working hours and that he received the same salary). Once again the facts that the appellant has been working for 30 years for the company, that he was in charge of other employees, that the courses he followed were the specialization of the appellant, are important elements in the present case.

In the Board’s opinion, the appeal must be allowed.

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.