D G Thompson v. Minister of National Revenue, [1978] CTC 2989, [1978] DTC 1726

Delmer E Taylor:—This is a straightforward case of a claim to deductibility of travel expenses by a construction worker. It was evident to the Board that the appellant took the opportunity to voice certain opinions, and that he desired a specific formal response from the appeal procedure. It is for that reason the Board reserved the decision and is providing it in writing.

Mr Thompson is appealing against an assessment of income tax in which the Minister of National Revenue disallowed an amount of $2,352 claimed by him as travel expenses for the year 1975. The respondent submitted that the disallowance was proper because:

(a) the travel expenses were personal or living expenses within the meaning of paragraph 18(1 )(h) of the Income Tax Act and were not incurred in the course of the appellant’s duties of employment within the meaning of paragraphs 8(1)(f) and 8(1)(h), nor were they incurred to produce or earn income within the meaning of paragraphs 8(1)(f),8(1)(h) and 18(1)(a);

(b) the appellant was not ordinarily required to carry on the duties of his employment away from his employer’s places of business nor in different places within the meaning of paragraphs 8(1)(f) and 8(1 )(h) ; and

(c) the appellant was not required under his contracts of employment to pay his travelling expenses incurred by him in the performance of the duties of his employment within the meaning of paragraphs 8(1 )(f) and 8(1 )(h).

The appellant is a construction worker, an electrician by trade, and resides at 159 Harley Street, London, Ontario. He represented himself and gave the following evidence:

I just want to state first I’m not so much concerned about the amounts of money involved here as with what I believe is the principle and that is that I do, in the pursuit of my employment, have expenses which I think should be legitimate, whether they are recognized as such or not.

On my 1975 taxes, I submitted what I considered legitimate expenses and they were disallowed. I understand the Tax Act and I understand all the bulletins surrounding the particular decision. I just do not agree with them and what I am saying is that I think there has to be a change in the Tax Act, there has to be a change or a recognition that certain classifications of employment should have some alleviation or some recognition that they do incur expense in the pursuit of their employment. I want to just briefly then explain the situation that I find myself in. I drive to Sarnia to work. There is no work in London. The Sarnia employer phones the union hall in Sarnia and asks for people. They can’t supply people. They phone the union hall in London and I’m available and I go. Now, I submit that that is the same as that employer phoning me. The means by which he gets me really is irrelevant. He is calling for a man and I answer that call. If he were aware that I was available, he could phone me direct but he has a procedure to follow and he does that and I go to Sarnia and I work down there and I travel back and forth daily.

Now, the alternate to my travelling back and forth is more expensive than staying there. There is no longer, but there was at that time a crush on facilities there, things were not available. They were very expensive and it seemed to me to be ridiculous to stay 80 miles from home when I had a family here. Now, I submit that if I did take up residence down there temporarily, I would be allowed to drive down on Monday morning and that would be a legitimate expense. I would be allowed to drive back on a Friday night to my home and that would be a legitimate expense. I would probably on occasion be allowed to drive back on a Tuesday or Wednesday to look after some family business and that would be a legitimate expense. How is it any different then, if I elect not to stay there and I elect to drive back and forth every day because in the long run, it’s cheaper not only to me but to the taxation department? Why can it not be recognized as being allowed?

Also, there is another situation that I find myself in—it is that some employers do give me an expense allowance. Now, it is according to an agreement with the union in Sarnia over which I have no control because I’m just called from here and I accept the terms of their agreement if I want employment and I might be in receipt of, in this case it was $2.75 a day, travel allowance, from Sarnia to the job site at Corona. I didn’t go from Sarnia to Corona; I went from London to Corona but I was still in receipt of that amount. The employer refused to show that on the T-4 slip when I got it after the fact when I no longer worked there but when I got the T-4 slip, he refused to show that under “allowable expenses” and just included it as ‘‘income weekly” and if I didn't like it, I could go elsewhere to work. I was taxed on that as income and yet I cannot declare an expense against that employment which doesn’t make sense to me. How can money that I’m paid as an expense be deemed to be income and yet the actual expense of going there not be allowable? I can’t understand that at all.

The other situation that maybe has no bearing on the case directly but it's really why I’m here is that while I’m working on that job in Sarnia, I have a partner who works with me who is an American citizen who comes from Detroit, who travels the same distance from Detroit to Sarnia by Highway 75 as I do from London. He works beside me. I’m a Canadian citizen; he’s a foreigner. He’s there because people from Toronto will not come to Sarnia because they are not being allowed any legitimate expenses on their income tax. They’re collecting unemployment insurance in Toronto, refusing to come to Sarnia. I go to Sarnia to pursue a living. I" work beside this foreigner who is allowed legitimate expense; his. mileage from Detroit to Sarnia, his boots, his clothing, his tools, everything. He is allowed it and I’m not and he is a foreigner and I’m not, and I tell you, like I can’t express strongly enough how I feel about this, that the government will recognize, through some reciprocal agreement with the States, his legitimate expenses as taxable allowance, but they won’t recognize mine.

I can’t say anymore other than that, as a layman, if you want to know why Proposition 13, why it came to California and why it’s coming here, that’s because people are cheesed off. It may not have any direct bearing on this decision but it certainly has or is an extenuating circumstance. It surrounds the entire question and all I’m after is that someone, somewhere, recognize the principles that I’m talking about and give some information to some bureaucrats somewhere and tell them that there need to be changes. I don’t expect to make that change by my individual appeal here but I do expect to add it to the growing number of people who are in this situation. We find ourselves now with a lot of people, and I see it coming very slowly, but it’s coming—a construction worker doesn’t have an automobile more and more because he can’t afford it because he works part of the year, because expenses are going up and yet his income isn’t keeping up with it and we may have to drive out to those jobs, 20, 30, 40, 50 miles away. How do you get there? The employer doesn’t send you there. He doesn’t get you there. I suppose that’s the very principle we’re talking about because he doesn’t—the taxation department says they’re not going to allow any expense and I think it should be recognized that he has to get there somehow. Up to 25% of my income is spent getting there. My choice next time, I say, will be that I won’t go. I’ll sit home on unemployment insurance. Now when I find myself a job, I decide to go because I don’t want to sit home but there’s going to come a breaking point and I’m not going to go and more and more people are feeling that way about it.

Basically, that’s what I’m asking—that you recognize that certain classifications of employment should have allowable expenses and that some of the information bulletins surrounding this thing be looked into and some alleviation given. That’s about it.

Counsel for the respondent outlined the case for the Minister in this manner:

The place of employment was the site at which he was working and the only deductions that he could make from income would be the travelling expenses incurred away from that, acting within the duties of his contract of employment. A trip from his home to his employer’s work site is not considered to fall within that subsection and, as the Board knows, there are several decisions. I refer just to the most recent ones, Evald Vittkar v MNR, [1976] CTC 2089; 76 DTC 1073 and Anthony Mifsud v MNR, [1978] CTC 2537; 78 DTC 1408. In both of these cases, the fact situations were similar to this one and in both cases, the decision basically sets out what I said and indicated, that an employee in Mr Thompson’s position does not qualify under the Act and therefore cannot claim a deduction.

Another basic point to be made is that even an allowance, where it is indicated that it is an allowance, will still be taxable unless the taxpayer is able to fall within the specific provisions of that section, which he (this appellant) doesn’t. So, whether the employer puts it in a special box indicating taxable allowance or whether it remains within general income doesn’t effect the taxpayer’s situation. On a second issue, (what) I think is running throughout the comments (of the appellant) today is—‘I have the expenses here. I need to be reimbursed.’ It’s not necessarily correct that it should be the government’s taxing system that makes these reimbursements, it may be that the employer should be required or is required to recompose the employee for expenses incurred and those amounts go into income and are then taxed. I think possibly the complaint here today is more towards the employer or the union that has made these arrangements with the employer rather than with the taxing system, as we have it.

It is evident that this taxpayer, while eloquent and forceful, has not brought information before this Board which can place him within the parameters of the deductibility provisions of the Income Tax Act for travel expenses. Some recognition of that fact can be seen in the general tenor of the comments he has made, and counsel for the respondent identified and supported the basis for the assessment.

The appeal is dismissed.

Appeal dismissed.