Guy Bureau v. Minister of National Revenue, [1976] CTC 2451, 76 DTC 1332

Guy Tremblay:—This case was heard at Montreal, Quebec on September 20, 1976.

1. Summary

The Board must decide if the appellant should be taxed in 1972 for personal use of the automobile made available to: him by his employer, the whole in accordance with paragraph 6(1)(e) of the Income Tax Act (SC 1970-71-72, c 63, as amended).

2. Burden of Proof

The appellant has the burden of showing that the respondent’s assessment is unjustified. This burden of proof is based not on one particular section of the Act, but on a number of judicial decisions, one of which is the judgment delivered by the Supreme Court of Canada in Johnston v MNR, [1948] CTC 195; 3 DTC 1182.

3. The Facts

3.1. During 1972 the appellant worked for Roger Lauzon, a distributor of Molson products in the Sherbrooke region.

3.2. When the employer purchased the automobile, he offered it to the appellant for personal use in the evenings and on the weekend, in return for a monthly payment of $30.

3.3. The appellant refused this offer on the grounds that he had his own automobile and the company automobile was used solely for company business and not for his personal use. The employer did not press the offer.

3.4. The appellant’s work consisted in visiting the 550 customers of his employer so as to maintain good relations and increase contacts of every kind to help sell Molson products.

3.5. The daily work is described in the reports drawn up each day by the appellant. The Board has examined some of these reports, and has also noted the considerable amount of work done by the appellant every weekend to foster sporting, social and other contacts.

3.6. According to the appellant, on leaving his residence he usually went directly to visit customers. Approximately three or four times a week he went directly from his residence to the office. With his employer’s permission, he occasionally used the automobile to attend family funerals.

3.7. When the company automobile was at the garage for repairs, the appellant used his own automobile for the employer’s purposes.

3.8. The appellant used his own automobile to go on vacation and left the employer’s automobile at the office.

3.9. The respondent added $437.40 to the appellant’s income for the taxation year 1972. The respondent confirmed his decision following an objection by the taxpayer, who appealed to the Board on January 28, 1975.

4. Point at Issue

Has the appellant established that paragraph 6(1)(e) of the Act was not applicable to his case?

5. Comments

Paragraph 6(1)(e) reads as follows:

6. (1) There shall be included In computing the income of a taxpayer for a taxation year as income from an office or employment such of the following amounts as are applicable:

(e) where his employer made an automobile available to him in in the year for his personal use (whether for his exclusive personal use or otherwise), the amount, any, by which an amount that would be a a reasonable standby charge for the automobile for the aggregate number of days in the year during which it was made so available (whether or not it was used by the taxpayer) exceeds the aggregate of

(i) the amount paid by him in the year to his employer for the use of the automobile, and

(-ii) any amount included in computing his income for the year by virtue of paragraph (a) in respect of the use by him of the automobile in the year; . . .

One of the principal conditions determining the applicability of the section is that the employer should have made an automobile available to the taxpayer for his personal use. The Board has considerable doubts as to the application of this paragraph in the case at bar. The appellant did in fact refuse the employer’s offer of the automobile for his personal use in return for a payment of $30 a month. The appellant owns his own automobile. The evidence provided by the appellant’s testimony and the daily work reports for 1972, filed as Exhibit A-1, has shown that the appellant worked as much in the evening as during the day, and almost as much on the weekend as during the other five days of the week.

The fact is that during 1972 the appellant used the automobile solely for his employer. The evidence even indicates that the appellant used his personal automobile for the employer’s purposes. As the Board has considerable doubts as to the application of this paragraph in the case at bar, it gives the benefit of the doubt to the taxpayer. It bases its judgment on the fact that the Act must be interpreted restrictively. As section 6 is a taxing provision, it must be interpreted strictly in the sense that the benefit of any doubt must be given to the taxpayer.

The Board accordingly concludes that the employer’s automobile was not in fact available to the employee for his personal use within the meaning of paragraph 6(1 )(e) of the Act.

The respondent pointed to the fact that the appellant used the automobile to go from his home to his employer’s office. In Henry v MNR, [1972] CTC 33: 72 DTC 6005, which was cited by the respondent, the Supreme Court of Canada considered that such use was for persona! and not business purposes in the case of an anaesthetist who went from his home to the hospital. The anaesthetist’s automobile expenses were disallowed as a deduction in computing his net income.

In the case at bar, the principle established by the Supreme Court in the aforementioned case is also applicable, and the Board considers that the automobile was used for personal purposes on the few occasions (two or three times a week according to the evidence) when the appellant used this vehicle for the purpose of going from his residence to his employer’s office. The vehicle was also put to personal use to go to family funerals, even though permission had been granted by the employer.

The Board considers, however, that these cases of personal use were so infrequent, in view of the many hours the taxpayer worked each week, that they should not be taken into account by virtue of the principle De minimis non curat praetor. It lt was also undoubtedly on the basis of this principle that the respondent wrote Interpretation Bulletin IT-63R, and paragraph 4 thereof in particular. It could perhaps be argued that under the actual terms of paragraph 6(1 )(e) the automobile has only to be “available” and it is not necessary that it be “used”, for personal purposes. As: explained above, the Board considers that paragraph 6(1)(e) is not applicable and that the employer did not make his automobile available to the appellant for the latter’s personal use during 1972. While the appellant did in fact sometimes use the automobile for personal purposes, the Board considers that this happened so infrequently that such occasions should not be taken into account.

6. Conclusion

The Board allows the appeal of the appellant, vacates the present assessment, and refers the matter back to the respondent for reassessment accordingly.

Appeal allowed.