Hamlyn T.C.J.:
1 This is an appeal with respect to the 1993 taxation year.
2 In computing income for the 1993 taxation year, the Appellant deducted the amount of $45,462.00 as moving expenses.
3 In reassessing the Appellant for the 1993 taxation year, the Minister of National Revenue (the “Minister”) disallowed the deduction of moving expenses in the amount of $9,536.00 to the Appellant.
4 In reassessing the Appellant, the Minister made the following assumptions of fact accepted by the Appellant at trial:
(a) prior to 10 March 1993, the Appellant resided in Montreal (“the Montreal Residence”) and also had a home in Lachute (the “Lachute Home”);
(b) in March 1993, the Appellant moved from Quebec to Vancouver;
(c) the total of all cost in relation to the move from the Montreal Residence and the Lachute Home amounted to $57,276.17;
(d) of the total described in paragraph (c) above $42,926.90 was allowable;
(e) the University of British Columbia (“UBC”) provided an accountable allowance of $7,000.00 towards the cost of the move;
- (f) the allowance of $7,000.00 is allocable to the expenditures for the invoices were submitted to UBC to substantiate moving costs and these invoices were:
i. from Arsenault Transport Ltd. for a total of $2,031.54
ii. from Atlas Van Lines for a total of $5,701.44.
The Appellant submitted the following in his Notice of Appeal:Dr. Michael Klein and his wife Bonnie lived in Quebec until he moved to British Columbia in 1992. Dr. Klein owned a home in Montreal second home in Lachute, Quebec. Dr. Klein moved to British Columbia and sold both properties in Quebec. Both these properties were used by Dr. Klein and Mrs. Klein on a regular basis throughout the year. Dr. Klein acquired the Lachute home in 1989 due to the fact that his wife had a stroke in 1987 which has left her with a permanent disability. Bonnie Klein is confined to her wheelchair and the Lachute home was a single level home versus the three levels of their Montreal home. The settled routine was that Dr. Klein lived in the Montreal home, which was close to his work, and spent the rest of his time with his wife in Lachute.
Revenue Canada has allowed the costs of the move to British Columbia relating to the home in Montreal but has disallowed the costs related to the second home. Revenue Canada has taken the position that only the costs of one property can be deducted pursuant to the moving expense sections of the Income Tax Act, particularly Section 62. The amount of expenditures in dispute are:
| Real estate commission on the Lachute home | $8,958.54 |
| Lachute notary costs | 198.61 |
| $9,157.15 |
5 The reasons for the appeal were submitted as follows:Issue one:
The leading cases referred to on this issue are Thomson v. Minister of National Revenue, 2 D.T.C. 812and Rennie v. Minister of National Revenue, 90 D.T.C. 1050. These cases conclude that a person can be ordinarily resident only in one place. However, that one place is not specifically defined.
In Thomson v. Minister of National Revenue, Mr. Justice Estey said at page 813:
A reference to the dictionary and judicial comments upon the meaning of these terms indicates that one is “ordinarily resident” in the place where in the settled routine of his life he regularly, normally or customarily lives.
Mr. Justice Rand said at page 815:
The expression “ordinarily resident” carries a restricted signification, and although the first impression seems to be that of preponderance in time, the decisions on the English Act reject that view. It is held to mean residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application.
In Rennie v. Minister of National Revenue, Christie T.C.J. concludes as follows:
While there is judicial authority for the proposition that for some purposes a person may have more than one residence (although only one domicile), ... I know of no authority that holds that a person can be ordinarily resident in two places at the same time. Nor is there anything in the wording of section 62 that suggests that possibility for the purpose of deducting moving expenses. Indeed what is essentially envisaged by the section is a taxpayer commencing to be employed and by reason thereof moving a prescribed minimum distance with the consequent termination of his then place of ordinary residence and the creation of a new and different place of ordinary residence.
Neither these cases nor the Income Tax Act limit the moving costs to either principal residence, a city block, a city or any particular area. The cases appear to refer to a move from jurisdiction where the taxpayer is ordinarily resident to another jurisdiction where the taxpayer takes up new residence. This would be in the spirit of the Income Tax Act. Therefore, the costs incurred by Dr. Klein for moving from Quebec to British Columbia should be deductible.
Issue two:
2. The second issue deals with the $7,000 reimbursed from UBC for moving expenses. Moving expenses should include all expenses associated with moving, nor just expenses that are deductible under Section 62. There is no direct connection between the UBC reimbursement and the Section 62 deduction, in that UBC did not indicate that the $7,000 was to be applied only to Section 62 expenses. IT470R, which sets out Revenue Canada's position, states in paragraph 35 that the “reimbursement of moving expenses is not considered as conferring a taxable benefit on the employee”. The taxpayer has the choice of applying the reimbursement to non-deductible (Section 62) expenses first and then to reduce the claim for Section 62 expenses.
Analysis
Issue One
6 The applicable statutory provision is subsection 62(1) of the Income Tax Act (the “Act”). Subsection 62(1) permits a taxpayer who moves from the residence in Canada at which, before the move, the taxpayer ordinarily resided to the residence in Canada at which, after the move, the taxpayer ordinarily resided, to deduct his “moving expenses” thereby incurred if the move is made in connection with the commencement at a business or employment of a particular location in Canada.
7 The Act does not define “ordinarily resided”. The words “ordinarily resident” have been judicially defined by Estey J. in Thomson[FN1: <p><em>Thomson v. Minister of National Revenue</em>(1946), 2 D.T.C. 812at page 813 (S.C.C.).</p>] to mean:
the place where in the settled routine of his life he regularly, normally or customarily lives.
8 The success or failure of the Appellant's argument turns on his initial premise concerning the principle to be drawn from the case law that he has cited, the Thomson, supra, and Rennie[FN2: <p><em>Rennie v. Minister of National Revenue</em>(1989), 90 D.T.C. 1050 (T.C.C.)</p>] , decisions. His submission is that these cases permit a taxpayer to be ordinarily resident in only one place, but that the word place is not defined. He would include Quebec in the definition of place. Quebec is the one place where he was ordinarily resident (albeit in two separate residences) before his move and therefore the costs of selling both homes are deductible. For the purposes of subsection 62(1), then, a taxpayer may be ordinarily resident in only one place, but may have more than one residence within this place.
9 A close reading of the case law does not support the Appellant's proposition. While the word “place” may not be expressly defined, its meaning is necessarily limited by the case law. The Appellant quotes Christie A.C.J.T.C. as saying in Rennie, supra, at page 1052:
I know of no authority that holds that a person can be ordinarily resident in two places at the same time.
The comments are to be considered, however, in the context of Christie A.C.J.T.C's other comments in the same case, preceding at page 1052:I do not believe that the concept of a person being capable of having more than one residence can be applied in the interpretation of the provisions of section 62 already cited in the manner propounded by the appellant. Those provisions relate to each other and constitute a framework that permits persons within it to deduct moving expenses. It is not the word “residence” that governs, but rather the phrase “ordinarily resided”.
10 A full consideration of Christie A.C.J.T.C.'s observations in Rennie, supra, does not permit the word “place” to have the broad definition that the Appellant seeks.
11 Further, McGillis J. in Mallett[FN3: <p><em>Mallett v. R.</em>(1992), 92 D.T.C. 6537 (Fed. T.D.).</p>] comments on the term “ordinary residence” at page 6539:
In the decision Thomson v. Minister of National Revenue, [1946] S.C.R. 209 (S.C.C.), the concept of ordinary residence was discussed. It appears from a reading of the several judgments in this case that, although a person may have more than one residence, the term “ordinary residence” has a more restricted meaning at law. As stated by Rand, J. at page 224 of the judgment, ordinary residence means” ... residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence.” The concept inherent in this statement is echoed, albeit in different words, in the other concurring judgments in the case. Recent jurisprudence has concluded, based on the analysis in Thomson v. Minister of National Revenue, supra, that a person cannot have two ordinary residences at the same time [See Rennie v. Minister of National Revenue (1990), 90 D.T.C. 1050 (T.C.C.)].
Conclusion
12 The jurisprudence establishes that a person cannot have two ordinary residences. I conclude from the evidence, the Lachute residence pending the move to Vancouver was a special temporary residence to meet the needs of the Appellant's wife. The Appellant spent approximately fifty percent of his time at that residence. The ordinarily residence of the Appellant was Montreal (Westmount). Accordingly, the moving expense deductions are not available for expenses related to the Lachute property.
Analysis
Issue Two
13 The Appellant further submits he should be able to reallocate his non-deductible moving expenditures so that those non-deductible moving expenses could be applied to the accountable $7,000 allowance of the University of British Columbia (the “UBC”) thus giving further allowable moving expenses to be deducted pursuant to subsection 62(1).
Conclusion
14 The Court must deal with the facts as they are not as the Appellant in retrospect wishes they were. The Appellant submitted to UBC invoices in relation to the accountable allowance to substantiate the moving costs. Those invoices were accepted by UBC and the allowance was paid by UBC; the Appellant reported the transaction on his tax return and that part of the transaction was assessed accordingly by the Minister. In terms of the appeal and the assessment that is the end of the matter.
Decision
15 The appeal, only on the admission at trial, is allowed. The matter is referred back to the Minister for reconsideration and reassessment on the basis that the expense incurred of $250 to the Treasurer of Westmount and the expense of $350 incurred to labre & associés were further allowable deductible moving expenses.
16 The Appellant is entitled to no further relief.
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