Bowie T.C.J.:
1 The Appellant was employed by the Ministry of the Attorney General as Senior Regional Crown Attorney at Sault Ste. Marie. Upon the regionalization of the court system in Ontario in 1989, he was asked by senior management in the Ministry to move to Ottawa and take on the job of Senior Regional Crown Attorney for the Eastern Ontario Region. It was a difficult job, and it required a senior Crown Attorney with considerable experience. He accepted the transfer, although it involved neither a promotion nor a salary increase for him. The normal out-of-pocket expenses of moving his family and their belongings were reimbursed to him by the Ministry under its normal relocation compensation plan. The cost of housing in Ottawa proved to be significantly higher than in Sault Ste. Marie, however. As a result, the Appellant found himself having to pay considerably more to buy a suitable house in Ottawa than he could obtain for his house in Sault Ste. Marie. He applied successfully for additional financial assistance from the Ministry under its “Enhanced Relocation Plan”, and it is that financial assistance which gives rise to these appeals. The assistance granted to him was in the form of a $5,000 payment made to him in each of the years 1989, 1990, and 1991. The Minister of National Revenue has taken the view that these amounts are taxable in the Appellant's hands pursuant to subsection 6(1) of the Income Tax Act (the Act), and has assessed him accordingly. It is from those assessments that these appeals are brought.
2 The text of the Ministry's Enhanced Relocation Plan was made an exhibit at the trial. The relevant part of it reads as follows:
Extent of assistance
The extent of the financial assistance is determined by the actual cost differential of comparable living accommodation based on current indices of real-estate values, first-mortgage interest rates and property taxes up to a maximum of $15,000. Three lump-sum payments are made so that the employee can adjust gradually to the higher costs that must be borne, Note: This is a taxable benefit.
3 There is no doubt that upon his move to Ottawa, Mr. Douglas found himself faced with higher housing prices than those in Sault Ste. Marie. According to his evidence, he had to pay $235,000 for a less desirable residence in a less desirable location, while his former house in Sault Ste. Marie fetched only $180,000. He suffered other financial detriments as a result of the move. His mortgage rate increased from 11% to 13.5% per annum. His property taxes were higher in Ottawa, as was the general cost of living. His wife's income was reduced considerably. The value of his house in Ottawa dropped soon after he bought it, due to a general decline in the Ottawa market; his former house in Sault Ste. Marie retained its value throughout the same time period. The Appellant summed these matters up in a letter to the Chief of Appeals of Revenue Canada by saying “I was worse off financially in Ottawa than I was in Sault Ste. Marie”.
4 During the hearing of these appeals, I indicated that I considered this case to be indistinguishable in principle from Fish v. R..[FN1: <p>(1996), 96 D.T.C. 1680 (T.C.C.).</p>] In that case I concluded, on the basis of the recent jurisprudence emanating from the Federal Court of Appeal[FN2: <p><em>Splane v. R.</em>(1990), 90 D.T.C. 6442 (Fed. T.D.), aff'd(1991), 92 D.T.C. 6021 (Fed. C.A.);<em>Phillips v. Minister of National Revenue</em>, [1994] 2 F.C. 680 (Fed. C.A.);<em>Hoefele v. R.</em>(1995), [1996] 1 F.C. 322 (Fed. C.A.).</p>] , that an amount paid by an employer to assist an employee with the higher cost of housing, including mortgage rates, which resulted from his move from Saskatoon to Southern Ontario, was a taxable benefit, save only for that part of it which was attributable to the higher cost of mortgage money (which included the loss of a provincial government subsidy available in Saskatchewan). Subject to this exception, the payment was to enable the taxpayer to purchase a more expensive house in his new location. The new house having a greater value than the old one, the payment had the effect of increasing his net worth, and thus was a benefit to him within subsection 6(1), notwithstanding that the move had greatly increased his cost of living.
5 The Appellant sought to distinguish Fish on the basis that, in order to purchase his house in Ottawa, he had sold a cottage and a building lot in Sault Ste, Marie, in which he had a combined equity of $60,000. This, together with the equity in his house there, which was $130,000, came to $190,000. In Ottawa he bought a house for $235,000, and had a mortgage on it of $40,000. His equity therefore was $195,000, which is not $15,000, but only $5,000, greater than his equity in real estate before his move. As I understood him, he argues that this at least limits any benefit arising out of the $15,000 he received to $5,000.
6 I disagree. The analysis of what is a benefit for the purpose of subsection 6(1) is not affected by the source of funds from which the Appellant chose to purchase his house in Ottawa. Obviously, he could have chosen to place a larger mortgage on it, and his equity in Ottawa real estate would have been reduced accordingly. Taxation of the payments made by the employer is not governed by the taxpayer's choice of the source of funds to pay the purchase price of his new home. It is governed by the purpose for which the funds are given. Here, as in Fish, they were given for two purposes; to assist with the higher capital cost of buying a home at the new location, and to compensate for the increased mortgage interest rate resulting from the move. The first is a contribution to a capital asset, and improves the Appellant's personal balance sheet. This fact is not affected by the subsequent downward movement in the market value of houses in Ottawa.
7 The Appellant, after his move, found himself with a $40,000 mortgage, at a rate of 2.5% per annum higher than he was paying before his move. He would have had the benefit of the lower rate on his previous mortgage for 21/2more years. The value of this is $40,000 × 2.5% × 2.5 = $2,500. Considering that the $15,000 payment was spread over three years, and considering its purpose, I think it is fair to conclude that no part of the first $5,000 payment was intended to compensate for the higher rate of interest; all of it would have been necessary, I should think, to assist with the house purchase price. I would, in the absence of any evidence to the contrary, conclude that the $2,500 attributable to the mortgage rate is equally distributed between the second and third installments, paid in the 1990 and 1991 taxation years.
8 There is no dispute that the Appellant failed to deliver a Notice of Objection to his assessment for the 1989 taxation year within the time limited for doing so. He devoted much of his submissions to the proposition that this was a technical default from which I could, and should, grant him relief as a matter of equity and fairness. It has long been settled that this Court has no such jurisdiction.[FN3: <p>See, for example,<em>Smith v. Minister of National Revenue</em>(1989), 89 D.T.C. 299 (T.C.C.), at 302 .</p>] For the same reason I am unable to accede to the Appellant's argument that I can, to import fairness into the taxing statute, find that the payments to him were not benefits within subsection 6(1) of the Act.
9 In the result, the advice which is given in the concluding words of the passage quoted above from the Ministry's Enhanced Relocation Plan is substantially, but not totally, correct. The appeal for the taxation year 1989 is dismissed. The appeals for the 1990 and 1991 taxation years are allowed, and the assessments are referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that, of the $5,000 relocation payment received by the Appellant in each of those years, $3,750 only is a benefit within subsection 6(1) of the Act.
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