Robert D P Blake v. Minister of National Revenue, [1977] CTC 2516, 77 DTC 364

Delmer E Taylor:—This appeal is in respect of the 1973 and 1974 taxation years, and the points raised by the appellant were:

—for 1973, the disallowance by the Minister of National Revenue of the employment expense deduction of $150; and the allowance of only $100 rather than the $300 claimed by the taxpayer on account of an education deduction:

—for 1974, the disallowance by the Minister of National Revenue of the employment expense deduction of $150; the allowance of only $100 rather than the $250 claimed by the taxpayer on account of an education deduction; and the disallowance of an amount of $50 claimed as a conference attendance expense.

The respondent relied, inter alia, upon paragraph 8(1)(a), subsection 8(3), paragraph 18(1)(h), subsection 81(3) and paragraph 110(9)(b) of the Income Tax Act, SC 1970-71-72, chapter 63.

Facts

The income tax returns filed by the appellant for the years in question provide the following information:

1973

Type of work or occupation in 1973: Teacher - Farmer - Student

Name of present employer: Niagara South Board of Education

1974

Type of work or occupation in 1974: Student, Farmer, Teacher, Politician.

Name of present employer: Niagara South Board of Education, Town Council, Area Municipality of Dunnville

The appellant was during portions of the years 1973 and 1974 on sabbatical leave from the Niagara South Board of Education while he was in attendance at university.

Contentions

The letter to the Tax Review Board from Mr Blake does not provide much detail regarding his appeal but, with the agreement of the taxpayer, it was read into the record of the hearing and is herein reproduced:

165 Gardiner Avenue, East, Dunnville, Ontario,

November 3, 1976.

Registrar of the Tax Review Board,

Kent Professional Building,

381 Kent Street,

Ottawa, Canada. K1A 0M1

Dear ? ,

This letter is my official notification to the Tax Review Board that I wish to appeal the Notices of Assessment for the taxation years ending December 31, 1973 and 1974; as I received by ‘‘Notification by the Minister”, dated at Toronto, the first day of September 1976.

Specifically, I intend to show that I do qualify for the deductions I have claimed in the 1973 and 1974 taxation years according to the intentions and meanings of the appropriate sections of the Income Tax Act. I believe my case should be judged as a unique exception to the more general and broader interpretations of some taxation public servants, at the District and Regional levels of the Department of National Revenue.

Generally, I would like to end, once and for all, a “feeling” I have—based on some pretty solid theories—that because I “won” a taxation case in the spring of 1973, there are person(s) from the District Office ‘‘out to prove something”. This is just a “feeling”, but that feeling has caused me many hours of anxiety, frustration, and lost time in trying to reasonably deal with “people who have no faces—only official forms and opinions”.

I await further word from your office as to the next step I must take in my search for a “just” solution to our mutual problems.

Yours truly,

(Sgd) Bob Blake

ROBERT D P BLAKE,

A “BELIEVING” CITIZEN OF CANADA

Copy sent to:

W J Skinner, Director,

Dist Taxation Office,

Hamilton, Ontario.

The position of the respondent was as follows:

—the appellant was, during the 1973 and 1974 taxation years, in receipt of a municipal officer’s expense allowance that was not included in computing his income for those years;

—while on sabbatical leave the appellant was in receipt of income from an office or employment or alternatively, an allowance, benefit, grant or reimbursement for expenses in respect of his program of studies;

—the amount which the appellant sought to deduct in 1974 on account of convention expenses was a personal or living expense of the appellant.

Evidence

The appellant filed with the Board no documentary evidence in support of his claim regarding any of the points at issue, but did review in some detail his view that the several roles he allegedly filled should be recognized for their own separate contribution to both his individual economic and professional position in society, and also the cumulative effect on his income tax liability to the government from this demonstration of effort and dedication. This perspective was summarized by him as follows:

As I have stated, I wear four hats. Those four hats produce income for me. The Internal Revenue Department, because of their tax structure, gain more tax dollars out of me because I wear four hats as opposed to wearing one hat. If I were just a teacher I would be able to claim the $150 deduction. If I were just a farmer I would be able to claim up to two conventions, whether I belonged to the organization or not that had something to do with my business, and I believe the interpretation is that that is my judgment. If I were a full-time student I would have the normal education deduction of $50 per month. Because I happen to have initiative and an excess energy I have a very strong feeling that somebody is suggesting that I settle back in one role to be less conscientious, less energetic, be a little more apathetic.

Counsel for the respondent introduced through the appellant the following documents:

Exhibit R-1—Copy of a letter from the appellant to the Director of

Education dated October 24, 1972, requesting sabbatical leave for the school year 1973-1974.

Exhibit R-2—Copy of a reply regarding above, dated October 27,

1972, acknowledging receipt of letter, and stating: “When policy on the matter is established for the 1973-74 school year, your application will be referred for processing.”

Exhibit R-3—Copy of a motion dated May 15, 1973 by the Board of

Education granting permission for the sabbatical leave.

Exhibit R-4—Copy of agreement between Niagara South Board of

Education and District 7, Ontario Secondary School Teachers’ Federation, for the year 1973-74.

Counsel for the respondent determined through cross-examination of the appellant that during the 1973-74 school year he had been paid $9,000 while on sabbatical leave, representing about 75% of his regular salary; that the respondent had allowed the $50 per month “education deduction” (also referred to as a “tuition allowance’’) for the two non-school months (July and August) of 1973 and 1974; and that the $50 claimed for convention expenses for 1974 had been for registration at a department heads convention related in large measure to educational interests.

Argument

There was an opinion expressed by the appellant that the particular agreement (Exhibit R-4) did not specifically cover his case but he did not proffer any similar document which would have done so. His view of the sabbatical leave was that it had been granted ‘‘as an award or prize based on some kind of merit established by a selection committee”, and that therefore the $9,000 received was not salary, which could put in jeopardy his entitlement to the $50 per month tuition allowance provided in the Act. Further, as a farmer and/or teacher, and/or politician, he was supporting himself as a student and reporting his farm income, and he felt he should be granted the allowance under paragraph 110(1)(h) if the deduction were denied under paragraph 110(1)(g) of the Act. During the 13 or 14 months involved, he had taken a total of ten credit courses, and under the rules of the university, he had been a full-time student. On the $150 expense allowance, his point was:

Regarding the limitations, I feel that I have got a unique argument indeed as only one of my proposals, and that is that the municipal allowance, tax- free, was one-third. The Act clearly states that I am allowed up to one-half and if you add one-third of $3,700, plus $150, you will not come up with half of $3,700. It will be less.

Dealing with the $50 convention expense, he put forward that he had attended as a farmer, not as a teacher, since in his view there was a relevance.

Counsel for the respondent argued that the restriction imposed under subsection 8(3) of the Act disqualified the appellant from the $150 expense allowance provided under subsection 8(1); that the appellant had received a salary from the Niagara South Board of Education during the periods in questions, which would fall under the exempting provisions of subparagraph (i) of paragraph 110(9)(b) of the Act, denying him thereby any tuition allowance; and that since the appellant in the submission of the Minister was an employee (a teacher), he could not claim any amount for attendance at a conference basically concerned with education.

Findings

First, the Board turns to the question raised by the appellant regarding the admissibility of Exhibit R-4, and states that the totality of his answers leaves no doubt that to any degree this particular document might not be applicable to him, it does not affect the terms as they deal with the matter of sabbatical leave. Further, it was the responsibility of the appellant to provide to the Board any document which he would have considered more appropriate.

Mr Blake’s contention that he should be treated under certain circumstances as four separate taxpayers—teacher, politician, farmer and student—but allowed to combine and intertwine tax advantages from one to the other where beneficial to him does not impress the Board. To follow such reasoning to its illogical conclusion would mean that not only the allowances he suggested would need consideration but also it could be argued that those allowances related to personal and dependants’ exemptions should be duplicated, triplicated or, in this case, quadruplicated. One individual does not become four different taxpayers by virtue of the fact that his income arose from four different sources.

On the points at issue, at the hearing the appellant did recognize the obvious weakness in this appeal with regard to the $50 convention expense in 1974, and the Board has no evidence to support its allow- ance. With respect to the $150 expense allowance, it appears to the Board that the appellant’s ineligibility for such a deduction is clear, as cited by counsel for the respondent.

Turning to the matter of the “educational allowance” of $50 per month, it would appear to the Board that the respondent, basing his contention on subparagraph 110(9)(b)(i) of the Act, is stating that since the appellant was in receipt of salary, his sabbatical year at university was not a “qualifying educational program”. As indicated earlier, the Board rejects the claim of the appellant that he, as a farmer, could support himself as a student and qualify under paragraph 110(1)(h). In passing, it might be noted that in each of the two years in question, the appellant’s farming operations showed a substantial loss and he gave no explanation respecting the manner in which this would permit him to support himself as a student. His entitlement, if any, must come under paragraph 110(1 )(g) and the respondent is not denying that the appellant was in full-time attendance at university, nor that the university was a designated educational institution. Subparagraph 110(9)(b)(i), in my view, deals with any form of recompense for expenses in connection with the program, but it is far from certain that this should be extended to also cover an amount treated by an employer as salary or wages. Counsel for the respondent has based his argument on the contention that the appellant received a salary, and indeed all the evidence supports that position. That salary was approximately 75% of the salary earned by the appellant the previous year, or that which he would have earned during the current year (this is the only point which is uncertain, and it is irrelevant) and the amount paid was apparently $9,000. The appellant did not supply detailed calculations for his entitlement to an amount of $300 (6 x $50) for 1973, nor $250 (5 x $50) for 1974, but the total of $550 is well within the time frame taken to complete his course (some 13 or 14 months). The Board finds no support under subparagraph 110(9)(b)(i) for denying to the appellant the tuition allowance deduction from his salary, provided for under paragraph 110(1 )(g) of the Act.

Decision

The appeal is allowed in part to permit the claim for an educational allowance of $300 for 1973 and of $250 for 1974 and the matter is referred back to the respondent for reconsideration and reassessment accordingly. In all other respects the appeal is dismissed.

Appeal allowed in part.