Dr. Lemuel F. Prowsh v. Minister of National Revenue, [1971] CTC 736, 71 DTC 5443

CAMERON, D.J.:—These appeals are from reassessments of income tax dated April 14, 1970 for the years 1967 and 1968, the sole issues being the extent to which the appellant—a physician specializing as an anaesthetist and residing in Charlottetown, Prince Edward Island—is entitled in computing his in- come to deduct (a) expenses of operating an automobile and

(b) allowances in respect of the capital cost thereof.

In his tax returns the appellant claimed deductions for such operating expenses of $1,736 and $1,290 for the years 1967 and 1968 respectively, and similarly claimed capital cost allowances of $544 and $1,395. In the reassessments under appeal the Minister disallowed 75% of the claims for expenses and 50% of the capital cost allowances claimed for each year.

Notice of objection dated May 5, 1970 was filed by the appellant, the reasons thereof being much the same as in the notice of appeal. After reconsideration, the Minister by his notification dated September 24, 1970 confirmed both the said reassessments as having been made in accordance with the provisions of the Income Tax Act, R.S.C. 1952, c. 148 as amended, and in particular on the ground that

automobile expenses to the extent of $1,302 in 1967 and $967.50 in 1968 claimed as deductions from income were personal or living expenses within the meaning of paragraph (h) of subsection (1) of section 12 of the Act; that for the purpose of paragraph (a) of subsection (1) of section 11 of the Act and section 1100 of the Income Tax Regulations the capital cost of the taxpayer’s automobile has been apportioned in accordance with the provisions of paragraph (e) of subsection (6) of section 20 of the Act.

Notice of appeal dated November 23, 1970 was filed by the appellant, the essential parts thereof reading :—

(A) 1. The appellant states that he is the only qualified anaesthetist at the P.E.I. Hospital at Charlottetown in the Province of Prince Edward Island which is a 200 bed hospital and as a result thereof, the appellant is required to be on call 24 hours a day for 7 days a week and must be instantly available at all times. The appellant further states that whether he is at home or away from home on pleasure, the Hospital is required to know where he is at all times and he must be available at all times to render services to the Hospital, and he could not possibly carry out his practice or serve the hospital properly without a car available to him at all times.

2. The automobile which the Appellant owns and for which he is claiming expenses for tax purposes is the automobile used by him at all times in connection with his practice. The appellant has a second automobile registered in his own name which he uses at times only for pleasure.

3. As an indication of the work load carried out by the appellant at the P.E.I. Hospital, the number of cases that he has performed for the year 1967 and 1968 amounted to 1,650 and 1,450 respectively whereas the average work load of an anaesthetist for a year amounts to 800 to 1,000 cases. During 1967 the Appellant received only 1 week’s holidays and was away for an extra week from his practice attending the Canadian Medical Association Convention. During 1968 the appellant received no holidays and was away only for one week from his practice attending the Canadian Medical Association Convention in Regina, Saskatchewan.

4. The appellant maintains an office in his residence; and the Appellant in addition to his professional duties at the P.E.I. Hospital requires an automobile in his capacity as a Coroner and also for his duties at the Charlottetown Hospital.

(B) The statutory provisions under which the Appellant relies and the reasons which he intends to submit are Sections 12(1) (h) and 11(1) (a) and 20(6) (e) of the Income Tax Act on the basis that the automobile expenses claimed as a deduction from income were not personal or living expenses and the Appellant’s automobile was used for business purposes.

The Minister in his reply thereto admitted only that the appellant is an anaesthetist at the P.E.I. Hospital at Charlottetown, and that he owned two automobiles. Then, after setting out the details of the appellant’s claims for expenses and capital cost allowances and the amounts disallowed in the reassessments, he stated that in assessing tax he acted upon certain findings or assumptions of fact which may be summarized as follows :

(a) In 1967 and 1968 the appellant earned income from, inter alia, the business of the practice of medicine. In each of those years the appellant operated an automobile in part for purposes of gaining or producing income from the said business and in part for other purposes.

(b) That the direct operating costs attributable to the said business for the years 1967 and 1968 did not exceed the amounts allowed in the reassessments, namely $484 and $322.50, and that any outlays incurred in the operation of the automobile in 1967 in excess of $434 and in the operation of a new automobile in 1968 in excess of $322.50 were personal or living experises, and as such were prohibited from deduction by the provision of Section 12(1) (h) of the Income Tax Act. Similarly in relation to the claims for capital cost allowances he stated that in respect of the 1967 car and the new 1968 car, they were regularly used by the appellant to an extent not greater than 50% for the purpose of gaining or producing income from the business of the practice of medicine, and to an extent not less than 50% for other purposes. The respondent also stated that he relied, inter alia, upon Sections 11(1) (a), 12(1) (a), (12)(l)(h) and 20(6) (e) of the Income Tax Act, R.S.C. 1952, c. 148, and Part XI of the Income Tax Regulations.

In these appeals the onus is on the taxpayer to establish the existence of facts or law showing an error in relation to the taxation imposed (see R. W. 8. Johnston v. M.N.R., [1948] S.C.R. 486; [1948] C.T.C. 195. It is incumbent on the appellant to show that the Minister was wrong in disallowing in each year 15% of the amount claimed by the appellant for operating expenses and 50% of the amount claimed for capital cost allowances.

The only oral evidence at the hearing was that of the appellant. He is a physician practising only as an anaesthetist in Charlottetown where he resides at 29 Greenfield Avenue; he is on the staff of the two hospitals there, namely, the P.E.I. Hospital and the Charlottetown Hospital. In 1967 he owned two automobiles, one of which—a Valiant—was operated by his wife, and the other a 1967 Dodge was operated by the appellant. Late in 1968 that Dodge was replaced by a new Dodge which also was used at all times by the appellant. It is in respect of these two Dodge cars that the deductions are claimed.

The appellant stated that in each year the estimated total mileage for all purposes of his Dodge car was 15,000 miles and this was not disputed. Notwithstanding the various uses to which the car was put it was the contention of counsel for the appellant that all the operating expenses and capital cost allowances claimed should be allowed on the grounds stated in the notice of appeal (supra) that ‘‘whether at home or away from home on pleasure, the hospital is required to know where I am at all times and I must be available at all times. I cannot possibly carry out my practice or serve the hospital properly without a car available to me at all times’’.

The appellant kept no records to show either the number. of miles travelled on each occasion when he used his car or the purposes for which each trip was made.

Before setting out the evidence regarding the purposes for which the car was used, it will be convenient to refer to those sections of the Income Tax Act which seem to me to be relevant to the question of deductibility of the operating costs of the car; they are as follows :

12. (1) In computing income, no deduction shall be made in respect of

(a) an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from property or a business of the taxpayer,

(h) personal or living expenses of the taxpayer except travelling expenses (including the entire amount expended for meals and lodging) incurred by the taxpayer while away from home in the course of carrying on his business,

139. (1) In this Act

(e) “business” includes a profession, calling, trade, manufacture or undertaking of any kind whatsoever and includes an adventure or concern in the nature of trade but does not

include an office or employment;

It is submitted by the appellant that the full operating costs of the car were incurred for the purpose of gaining or producing income from his profession as a practising doctor and were therefore deductible as being within the exception found in Section 12(1) (a).

The Minister, on the other hand, contends that not more than 25% of such costs fall within the exception to the general prohibition of Section 12(1) (a) and that the remaining 75% thereof are personal or living expenses and as such are not deductible by reason of Section 12(1) (h).

I propose to refer now to the evidence of the appellant regarding the use of the car for purposes which, in my view, were wholly unconnected with his business—that of a practising anaesthetist. The appellant is a very active person and was engaged in many activities other than that of his profession. In all of these activities, he used his Dodge car and the mileage for such use is included in his estimate of 15,000 miles annually. As shown by Exhibit 6, he was appointed by the Lieutenant Governor in Council, on March 26, 1959, Chairman of the Hospital Services Commission of Prince Edward Island under the provisions of The Hospital and Diagnostic Services Insurance Act, 8 Eliz. II, c. 17, Section 3(b), at a salary of $6,000 per annum and has retained that appointment to the present time. Apparently he received no travelling expenses in carrying out the duties of that office as Exhibit 6 states ‘‘ with travelling expenses at the rate of 10^ per mile to members of the Commission living outside of Charlottetown’’. The appellant stated that in his capacity as chairman he was Administrator of the Commission for the entire province and attended at his office located at all times in Charlottetown almost daily (but possibly not on Saturday or Sunday) either following the operations at the hospital or in the evening.

The Hospital and Diagnostic Services Insurance Act provides

in Section 3 for the construction of a body corporate under the name ‘‘Hospital Services Commission of Prince Edward Island”; for the appointment of members of the Commission, and for the appointment of one of the members as its chairman by the Lieutenant Governor in Council. It further provides :

8. (g) The Chairman, the Vice-Chairman, if any, and the other member or members, as the case may be, of the Commission shall receive such remuneration for their services as the Lieutenant- Governor-in-Council determines.

(i) The Commission and the Commissioners shall perform such duties and functions, and shall have, and may exercise, such powers as are prescribed by this Act and the regulations or are imposed or conferred upon them by the Lieutenant-Governor-in- Council.

In 1957, the appellant, by order in council, was appointed Chief Coroner for his province and still holds that appointment. The appointment was made under The Coroners Act being c. 10 of the Acts of the General Assembly of 1957, Section 1 thereof being as follows :

1. (1) The Lieutenant-Governor-in-Council may appoint a Chief Coroner who shall, ex officio, be a Coroner for every County in the Province.

(2) The Chief Coroner shall act in an advisory capacity to Coroners and perform such other duties with respect to the office of Coroner throughout the Province as the Lieutenant-Governor-in- Council may direct.

(3) In lieu of fees the Chief Coroner shall be paid out of the Consolidated Revenue Fund such salary as may be fixed by the Lieutenant-Governor-in-Council.

(4) Any person appointed as Chief Coroner may also be appointed and hold office as a County Coroner.

By Section 3 thereof, every coroner so appointed was required, before entering upon the duties of his office, to subscribe and take oaths in forms 1 and 2, namely, an oath of allegiance and an oath of office. Then Section 4 provides:

4. Coroners’ fees and allowances for holding investigations and inquests shall be those set out in Form 3, provided that where the Attorney-General is of opinion that the prescribed fees are insufficient having regard to the special circumstances of any investigation or inquest he may approve a larger fee to any Coroner.

Exhibit 7 contains copies of the appellant’s quarterly accounts for services as coroner for the years 1967 and 1968 as returned to the Attorney General, totalling respectively for these years $1,589 and $1,766. In some cases mileage at 10¢ per mile was charged and paid, apparently for attendances outside Charlottetown. The appellant estimated that in the performance of his duties as coroner he travelled annually between 1,000 and 2,000 miles, but no records were kept. Exhibit 7 indicates that he billed the Attorney General for 335 miles in 1967 and for 530 miles in 1968.

In my opinion, the positions of the appellant as Chief Coroner (or Coroner) and as chairman of the Hospital Services Com- mission were not parts of the appellant’s business as a practising physician. Both would seem to be within the definition of ‘"office” as defined in Section 139(1) (ab) of the Income Tax Act which reads:

139. (1) In this Act,

(ab) “office” means the position of an individual entitling him to a fixed or ascertained stipend or remuneration and includes a judicial office, the office of a Minister of the Crown, the office of a member of the Senate or House of Commons of Canada, a member of a legislative assembly, senator or member of a legislative or executive council and any other office, the incumbent of which is elected by popular vote or is elected or appointed in a representative capacity and also includes the position of a corporation director; and “officer” means a person holding such an office;

In Alexander v. M.N.R., [1969] C.T.C. 715, Jackett, P., as he then was, after referring to the definition of ‘‘office’’, stated at page 716:

In my mind, that definition only applies where a person has been appointed, elected or otherwise assigned to some pre-existing “position” that carries a fixed or ascertainable stipend or remuneration.

I have no doubt whatever that in the present case the appellant’s position either as coroner or as chairman of the Hospital Services Commission was an ‘"office” within the test there laid down. In each case the appellant was appointed to a pre-existing ""position” that carries a fixed or ascertainable stipend or remuneration. It follows that the appellant, in relation to the operating expenses of his car, cannot claim the benefit of the exception in Section 12(1)(a); neither can he claim such expenses as travelling expenses incurred by him while away from home in the course of carrying on his business under Section 12(1) (h). While he is therefore an officer, Inasmuch as he is a person holding such an office as is defined in Section 139(1) (ab), no attempt was made to establish that he was entitled to the deduction of travelling expenses allowed as deductions to certain officers or employees under the provisions of Section 11(1) (a).

The appellant for his own convenience occupied a summer home at Keppoch Beach (situate about 5 miles from his residence in Charlottetown) where he and his family resided for some five months each summer. It was there that he went for the sole purpose of gardening (which he says was his only hobby) and also for rest and recreation. Neither business nor duties of any sort were performed there. Its only use, in so far as his profession is concerned, was that he had there a telephone by means of which the hospitals in Charlottetown could reach him if his services were required for emergency operations. The unspecified but quite substantial car mileage in going from Charlottetown to and returning from Keppoch Beach for five months each year is included in the total estimated annual mileage of 15,000 miles.

The appellant also owned a farm situate 25 miles from Charlottetown and there he frequently went to carry out or supervise farming operations, which, of course, had nothing to do with his professional duties as a doctor or his duties as Chief Coroner or as chairman of the Hospital Services Commission. Again his car was used and the unspecified number of miles travelled is included in his estimates of an annual mileage of 15,000.

I am satisfied that the automobile expenses incurred in going to and from Keppoch Beach (subject to a comment later to be made) and in going to and from the farm were personal and living expenses and as such were not expenses laid out for purposes of gaining or producing income from a business of the taxpayer. Consequently they cannot be deducted under Section 12(1)(a). I have no doubt also that the appellant frequently used his car for his own personal pleasure and that the number of miles so travelled was included in his estimate of 15,000 miles annually. I say this because of his statement in paragraph 1 of the notice of appeal regarding the necessity of having his car available whether he was at home or away from home on pleasure.

Before dealing with the specific issue before me I should refer to one other matter. It was shown in the evidence that an agreement was entered into on June 30, 1966, between the appellant (therein called the ‘‘doctor’’) and Anesthesia Facilities Ltd., a body duly incorporated under The Companies Act of the Province of Prince Edward Island with headquarters at Charlottetown and therein referred to as ‘‘the Facilities Company”. It was filed as Exhibit 14 and shows that appellant was president thereof and his wife its secretary. I have no doubt it was incorporated by or on behalf of the appellant. It remained in effect until December 31, 1967, when it was modified to some extent by including as a party thereto the anaesthetist at the Charlottetown Hospital (Dr. McDonald) and his wife, and it is still in effect as so modified. In his tax return the appellant claimed a deduction of $15,000 for 1967 and $9,800 for 1968 for “administrative fees’’ and he stated at the hearing that such amounts were paid to Anesthesia Facilities Ltd. under the contract Exhibit 14, and as modified in 1968 when Dr. McDonald became a party thereto, and the latter’s wife became a shareholder, as was Mrs. Prowse. The appellant did not produce any books or records of Anesthesia Facilities Ltd. but did state that in 1967 he was president and his wife was secretary; that his wife as secretary was paid a salary of $5,500 and ‘‘a share of the profits’’. In 1968 Mrs. Prowse received a lesser amount and Mrs. McDonald was also paid an unspecified amount.

In the re-assessments these deductions for ‘‘administrative fees’’ were not disallowed and hence any question as to their deductibility is not here in issue. What do concern me, however, are certain clauses therein which very strongly suggest that out of its administrative fees of $15,000 and $9,800, it was the duty of the company to pay all the costs incurred by the appellant in carrying out his medical practice including costs of operating his car as well as the provision of an office and facilities.

The agreement reads in part as follows:

1. The Facilities Company shall, at its own expense, provide the Doctor with the use of its office for the conduct of his medical practice of all its present equipment and supplies, and of its organization, administrative office, accounting, its library and other services and facilities, and in addition such other equipment, supplies, organization, administrative office accounting, library and other services and facilities as may from time to time be required by the Doctor for the purposes of the conduct of the said practice but all of the same shall nevertheless be and remain the property of the Facilities Company.

2. The Facilities Company shall, at its own expense, collect and recover all moneys, charges, fees and remuneration which may from time to time during the currency of this agreement be owing to the Facilities Company by virtue of an agreement between the parties hereto and dated this date wherein provision is made for the assignment of all such accounts by the Doctor to the Facilities Company and the Facilities Company shall provide all services and staff that may be necessary for that purpose and shall at its own expense pay all costs and expenses which may be incurred by the Doctor in the proper conduct of its medical practice.

3. The Doctor shall pay to the Facilities Company for the premises, equipment, supplies, services, facilities and staff provided by the Facilities Company to the Doctor pursuant to this agreement an amount which shall be payable at such time or times as the parties hereto may from time to time mutually agree upon.

4. At the commencement of each calendar year, the amount payable to the Facilities Company by the Doctor in respect of the services and facilities to be provided during such year shall be estimated by the parties hereto as closely as practical and one- twelfth of the amount of such estimate shall be paid by the Doctor to the Facilities Company on the first day of each month during such year. Such estimate shall be revised from time to time as it appears necessary and monthly payments shall be adjusted accordingly.

I note that the concluding words of paragraph 2 ‘‘of its medical practice’’ are obviously meant to be ‘‘his medical practice”.

The agreement seems to provide that all charges and fees of the appellant were to be assigned to that company to be collected by it and that from the proceeds thereof it would pay all the services mentioned in paragraph 1, including an office and would ‘ pay all costs and expenses which may be incurred by the Doctor in the proper conduct of its (his) medical practice’’. The appellant stated that his accounts were not in fact assigned to the company but were prepared in the company office, namely a room leased by it from him and situated in his home; all patients when billed were asked to make their cheques payable to the company.

It would seem highly probable that the administrative fees of $15,000 and $9,800 allowed as deductions in 1967 and 1968 included the total costs of operating the appellant’s car as well as the capital cost allowances claimed—as provided by the contract. If that is so then the appellant may already have been allowed in full such deductions as are here in issue.

Certain adjustments have to be made in the amounts claimed for the year 1968 for car operating expenses. The claim was for $1,290. To that amount should now be added the sum of $280 for insurance premium (Exhibit 13) omitted in error, counsel for the minister now consenting to the claim being so amended. From that total two deductions were agreed on at the hearing;

(a) $11.21 for repairs in August 1968, shown to have been done on the car operated by the appellant’s wife; and (b) $42, an expense incurred by the appellant in purchasing and installing on his Dodge car in November 1968, a towing hitch to be used for the purpose of hauling fertilizer to his farm at a distance of 25 miles from his home—the mileage of each trip being included in his estimate of 15,000 miles. As so amended that claim of the appellant for 1968 is $1,516.79, one-quarter thereof being $379.20.

The issues to be determined and the principles to be applied thereto are the same for each year. It will suffice therefore if I consider the matter at this stage for the year 1967. It is clear that in his reassessment the minister came to the conclusion that the direct operational costs of the automobile attributable to the use thereof in the appellant’s business or profession (that of an anaesthetist) did not exceed $484, being one-quarter of the total claimed, basing his assumption or conclusion on the ground that the automobile travelled in that year 15,000 miles, of which not more than one-quarter was in the exercise of the appellant’s profession.

Is I have stated earlier, the appellant specialized in anaesthesia assisting in operations mainly in the P.E.I. Hospital and to a much Jesser extent at the Charlottetown Hospital. While he is on the medical staff of both hospitals and all the equipment and facilities used by him in the performance of his duties as an anaesthetist are supplied by them, he receives no payment or salary from either hospital, all his accounts being billed to the patients. It was not suggested that there was any contract with either hospital. In 1967 he assisted at 1 5,58 operations of which 1,362 were at the P.E.I. Hospital and the balance at the Charlottetown Hospital. He stated that he goes from his home to the P.E.I. Hospital (a distance of one-third of a mile) reporting there at 7.15 a.m. on each day when operations are scheduled. His operations are usually scheduled for 5 days a week and are commenced at about 7.30 a.m. ; on some days he has 12 or more such operations usually finishing at or prior to 2 p.m. Before he leaves the hospital he usually picks up the schedule of operations listed for the following day. In addition he usually sees his patients in the recovery room ; goes to the hospital in the evening to see patients who are to be operated on the following day to find out their condition and determine the type of anaesthetic to be used. In addition he may find it necessary to visit some patients for 2 or 3 days after their operations to check on their condition. He states that he is the only anaesthetist at the P.E.I. Hospital and is therefore ‘‘on call” for emergency cases at all times both day and night. When he is not at home he arranges to keep contact with the hospital by advising his wife or thé hospitals where he may be reached. On an average day he would be in attendance at the hospital on two occasions (and on some days perhaps as many as ten occasions). If he had a “break” when there by reason of operations being cancelled he would go to the office of the P.E.I. Hospital Services Commission but not more than once per day.

On the evidence as a whole I think it would be fair to assume that ‘the appellant on an average working day used his car in the exercise of his profession in driving from his home in Charlottetown to the P.E.I. Hospital and returning to his home not more than twice per day ; and in going to and returning home from the'Charlottetown Hospital not over once every other day.

Reference may usefully be made to the decision of Thurlow, J. in Cumming v. M.N.R., [1968] Ex. C.R. 425; [1967] C.T.C. 462, where the claims made were somewhat similar to those in the instant case. The Ex. C.R. headnote reads:

Appellant, a doctor, carried on practice exclusively as an anaesthetist, rendering all of his services to patients at the Ottawa Civic Hospital. As there was no place in the hospital where the administrative functions of his practice, billing etc., could be carried on he performed most of his work at his home about half a mile away, using an automobile to travel between his home and the hospital.

Held, since appellant could not live at the hospital nor carry out all of his activities there he had to have a place away from the hospital for the successful carrying on of his practice, and therefore the expense of maintaining and operating the automobile in travelling between the two places for the purpose of his practice was a deductible expense and not a “personal and living expense” within the meaning of s. 12(1) (h) of the Income Tax Act. Newsom v. Robertson (1952), 33 T.C. 452, distinguished.

At page 439 [475] Thurlow, J. stated:

In my view, since the appellant could not possibly live in or over the hospital so as to incur no expense whatever in getting to and from it when required and since he could not even carry out at the hospital all the activities of his practice necessary to gain or produce his income therefrom, it was necessary for the successful carrying on of the practice itself that he have a location of some sort somewhere off the hospital premises. This necessity of itself carried the implication that travel by him between the two points would be required. Where, as here, the location off the hospital premises was as close thereto as it might reasonably be expected to be from the point of view of his being available promptly when called as well as from the point of view of economizing on the expense of travelling between the two points it is, I think, unrealistic and a straining of the ordinary meaning of the words used in the statute to refer to any portion of the expense of travelling between these points in connection with his practice as “personal or living expenses” and this I think is so whether the taxpayer lives at or next door to his location off the hospital premises or not. There may no doubt be cases where a further element of personal preference for a more distant location has an appreciable effect on the amount of the expense involved in travelling between the two points but I do not think such an element is present here. In the appellant’s situation there is, in my view, no distinction to be made either between journeys from his home to the hospital and returning therefrom in the course of his scheduled daily and evening routines and similar journeys made in response to emergency calls or between journeys of either of these types and those made either in response to a call when he was working on his records at home or from the hospital to his home for the purpose of working on his records and then returning to the hospital to attend another patient. In my view whenever he went to the hospital to serve his patients he was doing so for the purpose of gaining income from his practice and the expenses both of going and of returning when the service had been completed were incurred for the same purpose. All such expenses, in my view, fall within the exception of Section 12(1) (a) and are properly deductible and none of them in my opinion can properly be classed as personal or living expenses within the prohibition of Section 12(1) (h).

There remains, however, the question of how much of the amounts claimed by the appellant as deductions was properly referable to the appellant’s use of the automobile in question in his practice and how much was referable to his use of the automobile for other purposes.

In that case Thurlow, J. apportioned the adjusted claims for operating expenses of the automobile on the basis of the relative mileage when used in going to and from the office in the appellant’s home to the hospital, and when used for other purposes. For the year 1962 the total mileage was approximately 8,000 miles and it was found that only one-quarter thereof was referable to travelling to and from his home to the hospital where his services were performed. Accordingly he was allowed only one- quarter of the adjusted claim for operating expenses. The same apportionment was followed by the Minister in the instant case.

The appellant has satisfied me that he did not and could not do the major administrative part of his business at either of the hospitals as there was no office set aside for his personal use there. In the P.E.I. hospital there was a small office forming part of the operating suite and available to other doctors as well, where he kept a few books necessary to the practice of anaesthesia. A nurse on the operating room staff completed there the record cards (such as the sample Exhibit 2) for each operation. They showed the name and address of the patient, date of operation, name of the operating surgeon and particulars of the operation including the type of anaesthetic used, and the time involved. The only detail added was the fee of the appellant as fixed by him and added to the card either by himself or his wife. He stated that he required and did have his office in his own home at Greenfield Avenue; that it was separate from the room he leased to Anesthesia Facilities Ltd. and that his medical records were kept there. There were signs near the entrance door bearing the appellant’s professional name and also the name of Anesthesia Facilities Ltd. He stated also that he spent about 12 hours per week there in administrative work in connection with his practice, discussing with his wife the fees to be charged, reduced or remitted due to particular circumstances of the patients; but that he performed no medical services there except for a very few times each year when a patient might come to the house in advance of an operation to discuss the type of anaesthesia that might be used. I think it highly probable however, that practically all the time spent in the office at home by either himself or his wife in connection with his practice was in their capacities as president and secretary of Anesthesia Facilities Ltd. and perhaps in its office there.

In the Cumming case (supra) Thurlow, J. decided that if there was any one place that could be called the taxpayer’s base it was his home. In the instant case, on the evidence before me, I am prepared to make the same finding particularly on the ground that he had no office elsewhere and that certain parts of his ‘‘business’’ were carried on at his home.

The only outlays connected with the operation of his automobile for the purpose of gaining or producing income from his business were the expenses of going from his home to either the P.E.I. Hospital or the Charlottetown Hospital or both, and returning to his home on Greenfield Avenue. In the reassessments it was assumed that the total of such mileage did not exceed one- quarter of a total annual mileage of 15,000—namely 3,750 miles or over 10 miles for every day of the year. The mileage from the home to the P.E.I. Hospital and return is two-thirds of one mile and assuming that the appellant made this trip three times each day (including the five months spent at Keppoch Beach)— and the evidence is that he did less—then the total mileage per day would be 2 miles. The mileage from the home to the Charlottetown Hospital is one-half mile more than the one-third mile to the P.E.I. Hospital—a distance of five-sixths of one mile each way ; and assuming that the appellant made this trip twice every day (and again the evidence indicates that he did not) and then returned to his home, the total daily mileage for that trip would be 314 miles. In all the total of the day’s travel would be 514 miles and for a full year the total of such mileage would be 1,948 miles, or about one-half of the mileage actually allocated by the Minister to the appellant in the reassessments as having been made for the purpose of gaining or producing income from his business or profession.

These figures indicate that the allowances by the Minister for the operation of the automobile in each of the years were overly generous. The appellant has failed to satisfy me that these reassessments in that regard were erroneous. The appeals in regard thereto for each of the years will be dismissed.

There remains the question of the disallowance of 50% of the claim in each year for capital cost allowances. It is not disputed that the Dodge car for the purpose of capital cost allowance fell in Class 10; or that the claims for such allowances for 1967 and 1968 respectively of $554 and $1,395 would have been correct if the appellant were entitled to the full amount without the apportionment provided for in Section 20(6)(e) of the Act which reads :

20. (6) For the purpose of this section and regulations made under paragraph (a) of subsection (1) of section 11, the following rules apply:

(e) where property has, since it was acquired by a taxpayer, been regularly used in part for the purpose of gaining or producing income therefrom or for the purpose of gaining or producing income from a business and in part for some other purpose, the taxpayer shall be deemed to have acquired, for the purpose of gaining or producing income, the proportion of the property that the use regularly made of the property for gaining or producing income is of the whole use regularly made of the property at a capital cost to him equal to the same proportion of the capital cost to him of the whole property; and, if the property has, in such a case, been disposed of, the proceeds of disposition of the proportion of the property deemed to have been acquired for gaining or producing income shall be deemed to be the same proportion of the proceeds of disposition of the whole property;

In the Cumming case (supra) Thurlow, J. in considering the provisions of that subsection said at page 441 [477] :

On the basis of mileage alone, the use made by the taxpayer of the Chevrolet for the purposes of his practice appears to me to have been no more than 25 per cent of the total use and if this were the only thing to be considered as being “use” of an automobile the basis for calculation of the appellant’s capital cost allowance would, it seems, necessarily be limited by Section 20(6) (e) to 25 per cent of the total capital cost of the automobile. The appellant on the other hand, and his accountant, considered that 90 per cent of the use of the car was use for the purposes of the practice and this I think was derived by considering its use from the point of view of the time involved in keeping it available for operation in the practice. Thus on a day when the appellant drove the car to the hospital, left it standing there while he was at the hospital, drove it again to return home and perhaps made several more trips with it to the hospital and back in the course of the day and at no time had any occasion to drive it for any purpose not associated with the practice, the car might well be considered as having been used throughout that day solely for the purposes of the practice. It was urged as well, and it is I think notorious, that an automobile depreciates both from operating it and by becoming obsolete and that-the loss in capital value over a year through the latter might well be greater than through the former. I have no difficulty in accepting the evidence that the car was used (in the time sense) a great deal more for the purposes of the practice than it was used for other purposes but I think that an estimate , of the proportion of the use to be attributed to the practice must have some regard both to the extent of wear and tear through driving it for the purposes of the practice as compared with the driving done for other purposes and to the extent of the time in which it was in use for the purposes of the practice as compared with the time it was in use for other purposes. On this basis I would fix the proportion of the use made of the car for the purposes of the practice at 50 per cent and the capital cost for the purposes of Section 11(1) (a) and the regulations at 50 per cent of its capital cost. The appellant is entitled to deductions in each year for capital cost allowance calculated on that basis.

In that case Thurlow, J. accepted the evidence ‘ that the car was used (in the time sense) a good deal more for the purposes of the practice than it was used for other purposes’’. In view of the fact that the appellant herein was ‘‘on call” for a great deal of the time, the same inference may perhaps be drawn here.

With respect, I adopt the view of Thurlow, J. that an automobile depreciates both from operating it and becoming obsolete, and that ‘‘an estimate of the proportion of the use to be attributed to the practice must have some regard both to the extent of wear and tear through driving it for the purposes of the practice as compared with the driving done for other purposes and to the extent of the time in which it was in use for the purposes of the practice as compared with the time it was in use for other purposes”.

As stated earlier, it is abundantly clear that the Dodge car in both years was used by the appellant for many purposes other than that of his practice, the latter accounting for only a small percentage of the total mileage. I am quite satisfied that the apportionment for capital cost allowances made by the respondent for both years was in accordance with the provisions of Section 20(6)(e) of the Act and that the appellant was not entitled to anything more.

For these reasons the appeals fail on all counts and will be dismissed.

In view of the fact that the total operating costs of the automobile for 1968 have been found to be $1,516.79 instead of $1,290 (the errors and omissions having been due entirely to faults in the appellant’s return) it is necessary to amend the reassessment for that year by allowing. as a deduction 25% of $1,516.79 instead of 25% of $1,290. For that purpose only the reassessment for that year is referred back to the minister for a further reassessment in accordance with these reasons.

The respondent is entitled to his costs to be paid after taxation.