Walsh v. R., [1998] 3 CTC 2935

Hamlyn T.C.J.:

This is in the matter of Donald Russell Walsh, Appellant, and Her Majesty The Queen, Respondent. They are appeals with respect to the 1992 and 1993 taxation years.

In computing income for the 1992 and 1993 taxation years, the Appellant failed to report automobile standby charges and automobile operating cost benefits in the following amounts:

As a result of an audit conducted on the books of the Appellant’s employer, The Municipality of Metropolitan Toronto (“Metro”), the Minister of National Revenue (the “Minister”) reassessed the Appellant for the 1992 and 1993 taxation years to include in his income the automobile standby charges and the automobile operating cost benefits totalling $2,260 and $2,241 for 1992 and 1993.

In reassessing the Appellant, the Minister made two assumptions of fact that were accepted by the Appellant:

(a) during the 1992 and 1993 taxation years, the Appellant was using an automobile leased or paid for by Metro and was required to complete and submit to Metro an annual Vehicle Report, recording the kilometres he travelled during each year.

(b) during the entire 1992 and 1993 taxation years, the Appellant received and enjoyed the use of an automobile leased by Metro (the “Company Vehicle”).

The Appellant disagreed with the two following assumptions:

(c) the portion of the personal use of the Company’s Vehicle was 15% of its total use by the Appellant;

(d) for the 1992 and 1993 taxation years, the Corporation conferred a benefit on the Appellant in respect of the personal use of the Company vehicle in the amounts of $2,260 and $2,241.

The issue for this case is whether the Appellant was properly assessed to include in his income the benefits for the 1992 and 1993 taxation years. The Appellant has appealed to this Court by way of an appeal document. In that appeal document, he states that:

I have concluded from my telephone conversation with a Revenue Canada representative that my objection had some valid points that cannot be accepted due to lack of documentation. I understand that because of that fact, the rules governing such situations are quite clear. However, I understand that a Tax Court Judge has more latitude in the process and has the authority to base his ruling on other facts that may not clearly conform to the rules. I still feel that I am being taxed unfairly and would like the opportunity to state my case and provide some additional documentation related to the vehicle use for adjudication.

In the document that is attached to that Notice of Appeal, he states:

In September of 1991, whilst in the employ of the Metropolitan Toronto Transportation Department - Traffic Division my immediate manager, Mr. K.R. Wilson passed away after a lengthy battle with cancer.

The Appellant was eventually assigned to fill the deceased Mr. Wilson’s Job.

Upon accepting the assignment, he was told, amongst other things, to go to Mr. Wilson’s residence and pick up a Metro leased vehicle that had been assigned to him:

The instructions given to me at that time were that the vehicle was for Metro use and that if on any occasion I did use it for any personal use that I was to log that use and also ensure that I declared it on my income tax. I was also advised the vehicle was to be used as a “pool” car for any staff that may require it to attend site meetings or other business. Since I had just purchased a new ’91 Ford Explorer and was the only driver at home I had no intention of driving the Metro vehicle for personal use. It was not stated then or ever that personal use would be considered to and from work.

This is an important point and I will discuss that later.

Analysis

The Appellant was employed by Metro during the relevant tax years, 1992 and 1993. The Appellant was employed as a supervisor, Traffic Division, but was asked to take on the position of Acting Manager of Traffic Operations during the years under appeal. This position included a vehicle that was for Metro use, and any personal use of the vehicle was to be logged and declared by the Appellant on filing his income tax. In computing his income for the 1992 and 1993 taxation years, the Appellant did not include the amounts for the automobile standby charges and the automobile operating cost benefits.

Subsequently, the Minister assessed the Appellant for the benefits totalling $2,260 in 1992 and $2,241 in 1993, based on the assumption that the Appellant’s personal use of the Metro vehicle was equivalent to 15% of the total use by the Appellant.

The Appellant contends, as I have reviewed, that he had no personal use of the vehicle, as his work day started the minute he was in the vehicle, due to it being equipped with both a cellular telephone and a two-way FM radio, directly linked to traffic maintenance contractor, and that is Guild Electric Ltd. The result of his car being equipped with this communication equipment was much of the daily business was conducted from the car.

In terms of legislation, subsection 6(1) indicates the amounts to be included in income from an office or employment. There shall be included in computing the income of a taxpayer for the taxation year as income from an office or employment a standby charge for an automobile; that is, an employee must include in income a reasonable standby charge if his employer provides the employee with an automobile for personal use.

The word “reasonable” in the phrase “reasonable standby charge” is somewhat misleading. The formula in subsection 6(2) is a deeming provision that calculates the exact amount to be included in income in the circumstances. The calculation does not leave any room for judgment or discretion.

So we come down to the point was there a personal benefit accruing to the Appellant.

On that, we consider the evidence we have had today, and we have been told that a logbook was kept, but the logbook has been lost, although there has been a search, without success.

From the Appellant’s interpretation, he said he used the vehicle personally only on two occasions for the period in question and he said that his work commenced from his home.

NOTE: Applicable to 1993: Paragraph (k) of subsection 6(1) indicates, where an employee is subject to a standby charge under paragraph 6( 1 )(e), then personal net operating costs paid by an employer on behalf of the employee are also included in the employee’s income as a benefit.

However, I have some problems with the evidence that his work commenced from his home.

From the evidence, I conclude that the work commenced at the job site, the traffic location or the Metro office. Thus, there was a personal component between the residence and the job site, the traffic location or the Metro office.

No conclusive evidence was submitted by the Appellant, save his own opinion that his home was the commencement place of his employment.

The formula, as I have indicated, in subsection 6(2) is a deeming provision that calculates the exact amount to be included in income. For the Court to find that no benefit accrued to the Appellant, it must be done by finding that the numerator in the formula, that is, the personal use kilometres is zero. This requires exact records, and this, the Court does not have. For the Court to indulge in a guesstimate is beyond the Court’s jurisdiction.

From the evidence and the lack of supporting log books, I cannot find as a fact that the number of personal use kilometres is zero. Therefore, the Minister’s assessment stands in relation to standby charges and the benefits conferred.

Thank you for your attendance, Mr. Walsh. I am sorry I was not able to be more helpful, but the appeals are dismissed. Thank you.

Appeal dismissed.