John T Klue v. Minister of National Revenue, [1976] CTC 2401, 76 DTC 1303

The Chairman:—This is the appeal of John T Klue from an income tax assessment in respect of the 1974 taxation year.

The issue in this appeal is whether a deduction of $992.74, claimed by the appellant for travelling expenses in his 1974 tax return, was properly disallowed by the Minister.

The appellant, a Detective Sergeant with the Metropolitan Toronto Police Force during the pertinent tax year, was engaged in criminal investigation in that city. His working hours were on a two-week rotational basis between the day shift and the night shift, with appropriate time off between shifts.

The appellant was required to attend hearings of criminal cases in the Provincial Court, a Magistrate’s Court or the County Court for the purpose of giving evidence in cases in which he had been involved and filing pertinent exhibits. When he was on duty, he used his employer’s cars for the necessary transportation to and from the courts. However, the appellant was also required to attend court for the same purposes when he was off duty, at which times he had to use his own car, for which it is alleged that he was not reimbursed for travelling expenses by the employer.

The appellant testified that in 1974 he was required to attend court on 84 different occasions during hours when he was not on duty, and that the travelling expenses incurred in so doing were computed as follows:

The appellant also claimed in his 1974 tax return a a deduction of $46 representing expenses incurred for lunches for 23 days @ $2 per lunch. However, during the hearing of the appeal, this claim for $46 was withdrawn by the appellant. The issue therefore is whether automobile expenses totalling $946.74, incurred by the appellant in travelling to and from the courts at times when he was normally off duty, are deductible.

Counsel for the respondent, in his Reply to the appellant’s Notice of Appeal, admits that the appellant was required to appear at the Provincial Court House and at the County Court House as part of his duties, but contends that the appellant, under the contract of employment, was not required to pay travelling expenses incurred by him in the performance of his duties and that he was in fact given a presribed allowance to cover this. The respondent concludes that the appellant’s 1974 income is from an office or employment and that therefore the deduction claimed for expenses is not permitted by paragraph 8(1)(h) or subsection 8(4) of the Income Tax Act, SC 1970-71-72, c 63, as amended, and is also prohibited by subsection 8(2) of the said Act.

From the evidence adduced, I am satisfied that what we are dealing with here are expenses incurred by the appellant in travelling from his home at 22 Hamilton Hall Drive, Markham, Ontario to either the Provincial Court at 60 Queen Street West or the County Court at 361 University Avenue, in Toronto (both of which were from 25 to 28 miles from his residence) as part of his normal duties as a police officer at times when he was off duty. There is no evidence whatever thai, as suggested by the respondent, the expenses claimed were incurred in travelling from the appellant’s home to his employer’s place of business, namely the Police Station at 150 Harrison Street in Toronto to which the appellant was assigned and which was also some 28 miles from his residence, nor are we dealing with expenses for travelling to court when the appellant was on duty, at which time Harrison Street Precinct’s police car was used for that purpose.

Counsel for the appellant produced, as Exhibit A-1, a photocopy of part of the contract of employment in force in 1974 together with a section of The Police Act, RSO 1970, c 351, and amendments thereto.

Section 55 of The Police Act for the Province of Ontario (Exhibit A-1), in describing the duties and powers of members of the police force, states that those officers are “charged with the duty of . . .. laying informations before the proper tribunal, and prosecuting and aiding in the prosecuting of offenders, . . .”.

Article 5:05 of the contract of employment defines “Call Back’ as the call back of a member after he has reported off duty and before his next following tour of duty, and states that it includes attendances at courts located within the Municipality of Metropolitan Toronto during his off duty hours.

Article 5:07 requires members of the force to forfeit to the Treasurer of the Municipality of Metropolitan Toronto all witness fees, exclusive of transportation allowance, received by them for attending at any court within the limits of Metropolitan Toronto.

Article 5:05, however, permits members of the force to receive overtime pay at the rate of time and one-half for call backs or to take appropriate time off in lieu of pay.

Article 19:01 states that a mileage allowance of 10 cents a mile will be paid to a member who is requested to use his own car in the performance of police duty. However, according to the appellant’s testimony, which was not contradicted, this provision applies to the use of a member’s unmarked car when on police duty in undercover criminal investigations, but does not apply to use of a member’s personal car for attendance at court, for which no travelling allowance is paid.

There can be no doubt that the appellant in this appeal is an employee, and the question is whether he qualifies, under the requirements set out in the exception to the general tax rule of paragraph 8(1)(h) of the new Income Tax Act, to deduct from his income the travelling expenses claimed by him in 1974. Paragraph 8(1 )(h) of the said Act reads 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 (9),

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

In my opinion, the appellant qualifies for this deduction under subparagraph 8(1)(h)(i) of the Income Tax Act, SC 1970-71-72, c 63, as amended, because attendance at court was an essential and important part of his duties as a police officer as set out in The Police Act, and, as such, it should be considered as part of the duties the appellant was ordinarily required to carry on. The appellant could be subpoenaed to appear at court, in which case, he was summoned to appear by being given notice of a hearing well in advance thereof or sometimes he had only a few minutes’ notice of it. The appellant was therefore required, when off duty, to leave an address and telephone number where he could be reached in such an eventuality. Moreover, the appellant’s appearances were made at the Court House on Queen Street or University Avenue in Toronto and not at his employer’s place of business, which was at 150 Harrison Street. In my opinion, the appellant was in fact ordinarily required to appear in court as part of his duties as a police officer and to carry on these duties of his employment away from his employer’s place of business.

The appellant also meets the requirements of subparagraph 8(1 )(h)(ii) of the Act because, under the terms of his contract, he was required to pay the travelling expenses incurred by him in attending courts in Metropolitan Toronto at times when he was not on duty, which attendance, nonetheless, constituted the performance of a necessary part of the duties of his office or employment.

The conditions of subparagraph 8(1)(h)(iii) of the Income Tax Act are also met in that the uncontradicted evidence was that the appellant was not in receipt of any allowance for travelling from his residence to his obligatory attendance at courts in Metropolitan Toronto.

Counsel for the respondent seemed to contend that there was no difference in principle, and very little difference in mileage, between the appellant’s travel from his home to the courts and from his home to his employer’s place of business, and that the expenses were personal in that they were incurred in going to and from the place where the appellant was to carry out the duties of his employment. It appears to me that, even though the distance between the appellant’s home and the courts is almost identical with the distance from the appellant’s home to the police station at 150 Harrison Street to which he is assigned, that does not make the Court House buildings identical with his employer’s place of business. The appellant testified that, when he was to attend court on his off duty periods, he was usually required to go to the station first to pick up the necessary records, files and exhibits before proceeding to the courts to give evidence.

In my opinion, the evidence is clear that the appellant, even when he was off duty, was ordinarily required to carry on certain duties of his employment away from his employer’s place of business. Whether the contract of employment or The Police Act of Ontario provide travelling allowances for attending courts outside Metropolitan Toronto is immaterial to the issue in this appeal. No evidence was adduced to contradict the appellant’s testimony that he did not receive any travelling allowance or to prove that he was not required to pay his travelling expenses in attending any of the courts in Metropolitan Toronto when not on his ordinary tour of duty.

In the circumstances, l cannot conclude otherwise than that, for the purpose of the issue presently before the Board, the appellant meets all the conditions set out in paragraph 8(1 )(h) of the Income Tax Act, SC 1970-71-72, c 63, as amended.

Although counsel for the respondent did not refer to it in his Reply to the Notice of Appeal, he cited in argument paragraph 6(1)(b) of the said Act, which deals with personal or living expenses that must be included in computing a taxpayer’s income. Subparagraph 6(1)(b)(vii) of the said Act deals with the taxing of allowances for travelling expenses received by an employee from his employer if if computed by reference to time actually spent by the employee in travelling away from the municipality where the employer’s establishment is located and at which the employee ordinarily works.

I cannot see how the said subparagraph 6(1)(b)(vii) of the Act can possibly apply to the facts of this appeal, because no allowances for travelling expenses were paid to, or received by, the appellant. The appellant, in my opinion, conforms to all the conditions of paragraph 8(1)(h) of the Income Tax Act as amended by SC 1970-71-72, c 63, section 1, and therefore the automobile expenses claimed should be allowed.

For these reasons, the appeal is allowed in part and the matter referred back to the respondent for reconsideration and reassessment in order that he may take into account that this Board holds that automobile expenses in the amount of $946.74, claimed by the appellant to have been expended for off duty court attendance in 1974, are deductible pursuant to paragraph 8(1 )(h) of the Income Tax Act applicable to that taxation year. In all other respects, the appeal is dismissed.

Appeal allowed.