Paul Laurent v. Minister of National Revenue, [1978] CTC 2412, [1978] DTC 1311

The Chairman [TRANSLATION]:—This is an appeal by Mr Paul Laur- rent against a tax assessment for the 1974 taxation year, by which the respondent disallowed a deduction in the amount of $5,453.01 which the taxpayer, when calculating his income, had deducted as expenses for the purpose of earning income.

Issue

The Board must decide whether the expenses claimed were incurred by the taxpayer as an independent contractor for the purpose of earning income, or whether the taxpayer was an employee and the expenses were personal.

Facts

During 1974 the taxpayer was an employee of Hydro-Quebec and taught part-time at the University of Montreal, the College du Vieux- Montréal and Saint Paul University in Ottawa.

The following information is attached as an appendix to the notice of appeal:

Appendix to an appeal to the Tax Review Board

Mr Paul Laurent

1974

Employment income
HYDRO-QUEBEC	$17,779.68
University of Montreal		1,658.97
College du Vieux-Montréal		882.00
Saint Paul University, Ottawa		600.00
Allowance received (6(1)(b)(i))		250.00
	21,170.65
Professional income
Quebec Order of Nurses (technical consultation
and research)	$	250.00
University of Montreal (professional fees for
consultation and research)		400.00	650.00
			21,820.65

Deductible expenses relating to employment income
Section 8(1)(a)	150.00
Travel expenses	2,885.99
Rental expenses	650.72
Supplies	450.00
Meal expenses	854.30
	4,991.01
Deductible expenses relating to professional income
Entertainment and advertising expenses	612.00	5,603.01
Adjusted net income		$16,217.64

The amount of the expenses which the respondent disallowed and the taxpayer disputes is $5,603.01 ($5,603.01 less the $150 deduction allowed under paragraph 8(1 )(a) of the Income Tax Act, SC 1970-71-72, c 63, as amended).

Submissions

The taxpayer submitted that when performing his teaching duties he was acting as an independent contractor and that, in order to earn income, he had to incur travel and meal expenses when going to the various institutions to carry out his duties as a teacher. The taxpayer also alleged that he incurred rental and entertainment expenses incidental to his profession of teacher, and he concluded that all the expenses Claimed are deductible.

The respondent, on the other hand, submitted that the taxpayer is not operating any business as a professional; that he did not incur the expenses claimed while performing his duties at the institutions described above; that he was not required to perform his duties at any place other than his employers’ places of business; and that the appellant was not required under his contracts of employment to rent an office or supply books or other documents while performing his duties. He therefore concluded that the taxpayer was the employee of the various educational institutions, and that none of the expenses claimed (except the amount of $150 which has already been mentioned) are allowed by the Income Tax Act.

The appendix which the taxpayer included with his notice of appeal refers to expenses related to employment income. No distinction was made between expenses which are supposed to have been incurred by the taxpayer as a teacher and those which could have been incurred while the taxpayer performed his duties as an employee of Hydro-Quebec. Furthermore, although the burden of proof rested with the taxpayer, none of the amounts of expenses which the taxpayer claimed he had incurred were proved to the Board’s satisfaction. In my opinion, the Board would be justified in dismissing the appeal for lack of proof that the amounts claimed were in fact paid:

However, since the taxpayer was representing himself at the appeal hearing and he may not have been familiar with the Act and precedents on this subject, it may perhaps be useful to comment on the scope of section 8 of the Income Tax Act, on which the taxpayer based his Claim.

It should first be emphasized that, since section 8 of the said Act constitutes an exception to general tax law, it must be interpreted restrictively, and subsection 8(2) confirms this restriction. Paragraph. 8(1 )(a) allows $150 to be deducted as expenses pertaining to employment, and this was granted to the taxpayer. Subparagraphs 8(1)(h)

(i) , (ii), (iii) and 8(1 )(j)(i) and (ii) to which the taxpayer referred, apply specifically to income from an office or employment and do not concern business, professional or other income. By basing his claim on section 8 in his notice of appeal, the taxpayer admitted that he is an employee and not a professional contractor. Even though the taxpayer had several employers, none of the employers required the taxpayer to perform , his duties at any place other than the institution. where the taxpayer had been hired to give his classes. Subparagraph 8(1 )(h)(i) does not apply to the facts of the case at bar, and subparagraph 8(1)(h)(ii) does: not apply either, since it deals with travel expenses arising when the employee is regularly required to perform his duties away from his employer’s place of business. The taxpayer in the case at bar was not placed in such a position. Subparagraphs 8(1 )(j)(i) and (ii), which refer to paragraph (h), and subsection 8(4), do not apply for the same reason.

Subparagraphs 8(1 )(i)(i) and (ii) read as follows:

(i) Dues and other expenses of performing duties.—amounts paid by the taxpayer in the year as

(i) annual professional membership dues the payment of which was necessary to maintain a professional status recognized by statue,

(ii) office rent, or salary to an assistant or substitute, the payment of which by the officer or employee was required by the contract of employment.

In the letter from Saint Paul University dated September 10, 1976 and the letter from the University of Montreal dated September 8, 1976, details of the contract of employment are given, stipulating that the taxpayer’s expenses for travelling to the institution are his own responsibility. There is nothing in the Income Tax Act which would allow the taxpayer to deduct these travel expenses. These expenses are no more deductible than the travel expenses that. every employee must pay to get to his employer’s place of business. The fact that a taxpayer has several employers does not in any way alter this undisputed principle of the Income Tax Act. .

As regards the expenses of an office, furniture, books and documentation referred to in the above-mentioned two letters, which state that these expenses were the taxpayer’s responsibility, there is still nothing to suggest that these items are a condition of the taxpayer’s employment; Even if they could be interpreted as such, the taxpayer has not adduced any proof that the contract of employment required him to supply them and pay for them, as required in subparagraph 8(1 )(i)(iii), and furthermore, the taxpayer has not supplied the Board with any evidence as to the total amount claimed, nor has he stated to whom these amounts were paid.

It now remains to be determined whether the taxpayer is, contrary to the tenor of his notice of appeal, a professional contractor, as he alleged during the hearing of his appeal.

Exhibits A-1 and A-2 are contracts or agreements of employment under which the taxpayer committed himself to the teaching institutions and which establish the taxpayer’s remuneration, the responsibilities which the board of governors assigned to him, the hours of teaching, and so on.

In my opinion, these contracts establish between the taxpayer and the boards of the respective institutions an employer-employee relationship in which the taxpayer, although he has the greater freedom in the way he gives his courses and the greater initiative which university teachers are now permitted, is still bound by the directives and discipline which institutions must impose on all teachers so that they can attain the goals set for each educational institution. The taxpayer took part in the*programs of the various institutions at which he taught, not as a professional contractor but as an employee teaching part- time. This opinion merely reflects the principles which flow from the many cases cited by the respondent when this appeal was heard.

I therefore conclude that the respondent did not err in refusing to allow as deductible expenses the amount of $5,453.01 claimed by the taxpayer for the 1974 taxation year.

The appeal is dismissed.

Appeal dismissed.