Leonard a Krieger v. Minister of National Revenue, [1979] CTC 2283, 79 DTC 269

Guy Tremblay:—This case was heard at Saskatoon, Saskatchewan, on October 10, 1978.

1. Point at Issue

The point is whether the appellant is correct in appealing the respondent’s assessment by which travelling expenses, in the amount of $388.88 are disallowed, on the basis that the appellant, an official receiver in bankruptcy, is not ordinarily required to carry on the duties of his employment away from his employer’s place of business within the meaning of subparagraph 8(1)(h)(i) of the new Act.

2. Burden of Proof

The appellant has the burden of showing that the respondent’s assessment is not justified. This burden of proof is based not on a particular sec- tion of the Income Tax Act but on several judicial decisions, among them a decision of the Supreme Court of Canada rendered in R W S Johnston v MNR, [1948] CTC 195; 3 DTC 1182.

3. The Facts

3.01 The appellant is an official receiver in bankruptcy, section of the Consumer and Corporate Affairs office in Saskatoon.

3.02 He is required to chair the first meeting of creditors of all bankruptcies registered in Division #2 of the Province of Saskatchewan. The meetings are held in various centres in northern Saskatchewan for the creditor’s convenience.

3.03 He also has to travel as Estate Administrator for the Federal Insolvency Trustee Agency.

3.04 Consequently, two or three days a month (between 24 to 30 days a year) he has to leave Saskatoon. He was away during the daytime but came back home at night.

3.05 Because of these trips, he was obliged to have business travel insurance. His employer reimbursed mileage (0.19 /2$ per mile) and meals. During the 1975 taxation year, the employer reimbursed an amount of $735.42 to the appellant.

3.06 In filing his income tax return for the 1975 taxation year, the appellant claimed $388.88 as deduction computed as follows:

The amount of $640.80 for gasoline was calculated as follows on the basis of 15 miles per gallon and 0.72¢ per gallon:

13,352 = 890 x 0.72 = $640.80

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3.07 Upon reassessment dated November 1, 1976, the respondent disallowed the amount of $388.88.

3.08 A notice of objection was filed on November 23, 1976.

3.09 The respondent answered on March 24, 1977, to confirm the reassessment.

3.10 The appellant lodged an appeal before the Tax Review Board on April 18, 1977.

4. Law—Jurisprudence—Comments

4.1 Law

The main sections involved in the present case are paragraph 8(1)(h) and subsection 8(2) of the new Act. These sections read as follows:

(h) Travelling expenses—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 ore employment.

4.2 Jurisprudence

Counsel for respondent cited the following cases:

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

2. Her Majesty the Queen v Thomas Healy, [1978] CTC 355; 78 DTC 6239;

3. Marcel Provost v Her Majesty the Queen, [1976] CTC 445; 76 DTC 6254;

4. Jean-Paul Léger v MNR, [1976] CTC 2115; 76 DTC 1092;

5. Jos C Tremblay v MNR, [1969] Tax ABC 1211; 70 DTC 1006;

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

4.3 Comments

The Income Tax Act must be strictly interpreted. Consequently, in order to be able to deduct travelling expenses, the appellant must meet all the conditions specified in paragraph 8(1)(h).

The evidence shows that the appellant was required to carry on the duties of his employment away from his employer’s place of business about 24 to 30 days per year. It is not what the legislator means by “was ordinarily required to carry on the duties ..as provided in subparagraph 8(1)(h)(i).

Moreover, contrary to subparagraph 8(1)(h)(i), the appellant was not obliged to pay travelling expenses. In fact, he received allowances as explained in paragraph 3.05 of the Facts.

The appellant therefore does not meet the conditions of paragraph 8(1)(h). After reading subsection 8(2), it is observed that no other subsection of section 8 of the new Act authorizes the deduction of the appellant’s travelling expenses.

Under the circumstances, the expenses claimed by the appellant are not deductible.

5. Conclusion

The appeal is dismissed in accordance with the above reasons for judgment.

Appeal dismissed.