Citation: 2007TCC272
Date: 20070517
Dockets: 2003-1188(IT)G, 2003-1231(IT)G,
2003-1232(IT)G, 2002-4231(IT)G, 2003-1239(IT)G,
2003-1240(IT)G, 2003-1187(IT)G, 2003-1242(IT)G,
2003-1230(IT)G, 2003-1197(IT)G,
2003-1198(IT)G, 2002-4221(IT)G, 2002-4220(IT)G,
2003-1196(IT)G, 2003-1195(IT)G,
2003-1191(IT)G,
BETWEEN:
DESMOND A. ADLER, DOUGLAS ALLOWAY,
CAROL AMELIO, DONALD BARNES, MARY-PATRICIA BARRY,
RANDY BAYRACK, JOANNE BEATON, MYRON S. BORYS,
BRUCE R. BRANDELL, HENRY C. BRUNS,
GARY CERANTOLA, DAN DELALOYE, RANDALL L. EDGAR,
JOHN R. HARRINGTON, HENRY P. LAZARENKO
ROY A. VITEYCHUK,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Rowe, D.J.
[1] Each appellant appealed from an assessment
of income tax for the 1998 taxation year. Each appellant had been
provided with a free parking pass by their employer – Telus Communications Inc.
(Telus) either directly or through a wholly-owned subsidiary or division of
Telus within a large organization generally known as Telus Group. The Minister
of National Revenue (the "Minister") assessed each appellant on the
basis the fair market value of the parking pass constituted a taxable benefit
and added the applicable amount thereof into the taxable income of each
appellant. Although the amount included into income of each appellant
representing the fair market value of the parking pass provided by Telus
varies, the common issue is whether the pass is a taxable benefit pursuant to
the relevant provisions of the Income Tax Act. (the "Act")
The position of the Minister is that the provision of those parking passes
falls within the meaning of subsection 6(1)(a) of the Act.
[2] The appellants were represented by Mr.
Curtis Stewart, Ms. Jasmine Sidhu and Mr. Michael Gemmiti. Counsel for the
respondent were Ms. Rhonda Nahorniak and Mr. Kerry Boyd. Counsel for the respondents
and counsel for the appellants agreed these appeals would proceed on the basis
of common evidence to be applied - as required - to each appeal. Four of the
parking facilities provided by Telus to employees – in 1998 - were located in
Edmonton and one was in Calgary. Three of the appellants worked in Calgary and 13 were employed in Edmonton.
[3] Counsel for both parties agreed that a
binder entitled Admissions of Facts and Documents be filed as Exhibit A-1. As
the index indicates, the admissions at tabs 1‑7, inclusive, relate to
admissions of facts and documents – referred to as Global Admissions – that
relate to all 16 appellants. Thereafter, the admissions of facts and documents
are specific to an individual appellant. In addition to the admissions
contained in the Global Admissions, during the direct testimony of the
appellant Mary-Patricia Barry, Curtis Stewart, counsel for the appellants,
advised the Court that the answer provided below by Telus to each appellant for
purposes of satisfying the question posed by the respondent in the process of
written interrogatories was binding on all appellants. In responding to
questions posed within the fourth set of interrogatories, each appellant had
undertaken to ask Telus to advise which factors it had identified - in giving
previous answers - upon which it had relied to issue a free parking pass. The
response was as follows:
Telus has described in various answers the criteria it normally used
in issuing parking passes to employees. Given the passage of time, it may be
impossible to determine the specific factors Telus used in issuing a parking
pass to each of the 50 appellants. Ultimately, it is likely that Telus
would be forced to rely on the rationale provided by the particular Appellant
who is in a much better position to know the particular reasons. Telus
understands that in the previous answers provided by each particular Appellant,
the Appellants have provided the factors he or she believed justified the
issuance of a parking pass by Telus.
[4] Counsel for the appellants agreed there was
no issue with respect to the fair market value of the parking passes issued by
Telus to the appellants in 1998 as adopted by the Minister for the purpose of
reassessing each appellant by including that amount into income. The thrust of
the appellants’ contention is that the Minister was incorrect in assuming the
parking pass primarily benefited an appellant rather than Telus or that the
parking pass was a personal benefit conferred on an appellant because it facilitated
travel to and from the workplace.
[5] All but one of the 16 appellants testified.
In the course of testimony, most appellants dealt with many facts that were the
subject of an admission – either Global – or those within Exhibit A-1 -
applicable to a particular appeal. In the event some matters were not covered
in the course of examination of an appellant on the witness stand and were
relevant to issues before me, I have included those admitted facts after each
segment of these reasons dealing with the evidence of a specific appellant.
[6] Richard George Schroter was examined by Mr.
Stewart. Schroter testified he is a Chartered Accountant and is employed by
Telus as a Director of Taxation. He began working for Telus in 1991 in the
internal audit department and after 2 years was assigned to the tax group where
he carried out various functions with increasing responsibility. In 1998, he
was appointed Director of the Income Tax Section and supervises 20 employees.
Schroter stated that in 1998, Telus was the sole provider of telecommunication
services in Alberta. However, the Canadian Radio-television
and Telecommunications Commission (CRTC) – in 1997 - provided a framework for
competition within the telecommunication industry in Canada.
Up to that point, British Columbia Telephone Company (BC Tel) operated in
British Columbia, Telus in Alberta and Bell Canada Enterprises (Bell) in Ontario and Québec, basically without competition. The change
in structure opened up the marketplace in Canada
and required a major shift in business direction including the need to pursue
certain acquisitions so Telus could operate in Ontario.
In 1999, Telus merged with BC Tel. With respect to the issue of parking
benefits provided to Telus employees, Schroter stated he was involved – in 1997
- with Canada Customs and Revenue Agency (CCRA), the predecessor of Canada
Revenue Agency (CRA) pertaining to the 1994 taxation year. In that instance,
Telus took the position that the primary benefit of the parking pass accrued to
Telus rather than the employee. Two of the workers who were reassessed by the
Minister to include the value of the parking pass into income as a taxable
benefit appealed to the Tax Court of Canada and won their appeals. Schroter
stated the issue of parking passes did not come up again until early March 2002,
when the Minister reassessed certain Telus employees for the 1998 taxation
year by including the value of the parking passes into their income. Schroter
ascertained in the course of discussions with CRA officials that the agency did
not consider itself bound by the two Tax Court decisions with respect to the
same issue - in the 1994 taxation year - since those cases had proceeded by way
of informal procedure and did not have precedential value. Schroter stated he
knew Telus wanted senior employees to have vehicles readily available,
especially for those who worked irregular shifts throughout the entire year.
Telus did not want employees spending time travelling to the office from
another work location nor did it consider the use of public transit to be
adequate. As a Director of Taxation, Schroter relied on the earlier decisions
of the Tax Court and retained counsel to appeal - pursuant to the General
Procedure Rules - those assessments issued by the Minister on the basis the
provision of free parking did not constitute a taxable benefit. Schroter stated
he did not know the reasons for issuing parking passes to certain employees.
Counsel referred Schroter to the binder - Exhibit A-1 – and to paragraph 11 of
the Global Admissions which stated that - in 1998 – “for employees in pay bands
5 and 4, it was an implied condition that overtime would be expected where
required to keep up to the workload and to ensure completion of projects on a
timely basis, and such overtime was generally built into the employee’s overall
compensation.” Schroter stated there were 7 pay bands in 1998. The first 3
pertained to entry-level employees working in clerical and support positions.
Mid‑level managers, some senior staff and some professionals such as
engineers, lawyers, accountants were included in pay bands 4 and 5. The General
Manager and various vice-presidents and other business leaders were remunerated
pursuant to pay bands 6 and 7. Schroter stated there was a lot of work that had
to be performed in 1998 because of the number and breadth of projects in Canada designed to expand the business operation of Telus.
The investigations required before merging with BC Tel or prior to acquiring
other companies generated a substantial volume of work for managers and senior
employees, all of whom were expected to work as long as necessary to complete
their tasks. In order to carry out these onerous duties, Telus wanted its
managers to have the ability to travel, as required. The Telus policy with
respect to reimbursing employees for taxi fares is stated in paragraphs 3, 4
and 5 of the Global Admissions. Summarizing the admissions in paragraphs 6, 7
and 8, Schroter stated Telus did not carry out any analysis to determine
whether it was an economic advantage to Telus to provide parking to its
employees rather than reimbursing them for taxi fares nor whether it was
cost-effective to provide parking to its employees as opposed to paying for
taxis nor was any analysis undertaken to compare the cost of requiring
employees to use their own vehicles in the course of their duties rather than
reimbursing them for taxi fare.
[7] Schroter was cross-examined by Rhonda
Nahorniak. He acknowledged that he was Manager of Taxation in 1998. Since then,
the duties of that position have evolved and the title is now Director. In the
course of dealing with CRA officials with respect to the parking pass issue, he
was assisted by two other members of his group, Ken Bagnall and Trevor
Edmundson. CRA submitted queries which were completed in writing and returned
and meetings were held on a regular basis with the CRA audit team. Schroter
identified a document – Exhibit R-1 – dated November 2, 1999 - as the Telus
response to CRA inquiries. He wrote a letter – Exhibit R-2 – dated January 25,
2002 - to Don Cloutier, Verification and Enforcement Division of CCRA. Schroter
agreed the position stated in paragraph 3 of said letter is the same today,
namely, that Telus provides parking for certain employees because it is
primarily to its advantage to do so considering the nature of the duties
carried out by the recipients of these passes and their rank within the
organization which requires them to work irregular hours, extra hours, and to
work on weekends and holidays. Counsel referred Schroter to a Telus document
entitled Compensation Policies and Guidelines – Variable Pay – Exhibit A-1, tab
4 – effective January 1996. Schroter stated he thought that policy was in
effect during 1998 and also applied to Telus wholly-owned subsidiaries. He
acknowledged the wording of the portion of said document – p. 12/74 – which
stated perquisites “are kept to a minimum and are provided in order to be
market competitive or to enhance an individual’s ability to perform their
role.”
[8] Daniel (Dan) Henry Delaloye - examined by
Curtis Stewart - testified he is Chief Executive Officer of Celera Solutions
Inc. He started working for Alberta Government Telephones (AGT) - the
predecessor of Telus - in 1993. In 1998, at Telus, he was Vice President, Card,
Operator, Pay Phone Services, a position in pay band 6. He was responsible for
3 offices in Edmonton, 3 in Calgary and one each in Grande Prairie and Lethbridge. In 1997, he moved to Calgary
in order to supervise a new division of Telus and was issued a parking pass for
the lot in Telus Tower at 411 – 1st St. SE
in downtown Calgary. Delaloye stated he worked long hours in
1998 and travelled by car to pay phone offices at locations within Calgary. Part of his duties was to attend various community
functions including United Way which held meetings at 7 a.m. and to
participate in activities undertaken by Theatre Calgary and other organizations
with the view to increasing the visibility of Telus. Delaloye estimated
one-third of his time was spent away from the office in 1998. Executive
meetings were held in Edmonton and, if he needed a vehicle there, drove from Calgary. Since joining Telus in 1993, he had always been
assigned a free parking pass and considered it “absolutely essential” in order
to provide him with the opportunity to commute during the day and visit clients
such as CP Hotels that owned or operated facilities in various locations,
including Banff or to attend at the Calgary Airport Authority offices or at
Telus pay phone offices in Calgary. In his opinion, it was extremely difficult
to use other means of transportation to carry out his responsibilities to
Telus. He did not consider the parking pass was a significant item in terms of
compensation since a new card was issued about every 36 months without having
to apply for a renewal.
[9] Delaloye was cross-examined by Kerry Boyd.
He conceded that driving his own car allowed him to commute to and from work at
convenient times. His assigned parking space was a reserved stall, underground,
in a heated parkade. While attending at other Telus offices or when attending
functions at night on behalf of Telus, he used public parking and was
reimbursed by Telus for the cost. He acknowledged he was permitted to park in
the space for personal use – such as shopping – but cannot recall having done
so as it was not conveniently located to the stores. He agreed he could have
taken the LRT public transit from his residential area in Lake Bonavista and that there was a station within 4
blocks of the Telus Tower. Delaloye
stated he did not have any documentation with respect to the reason Telus
provided him with a vehicle – 1997 Honda Acura - but assumed it was inherent in
the position he occupied. He paid income tax on the personal use portion of the
vehicle on the basis it constituted a personal benefit. He knew about the Telus
policy of reimbursing employees who used their own vehicles in the course of
their employment. He was aware of a memorandum establishing his position but
did not have a written employment contract nor was there an official job
description pertaining to his role in 1998. Delaloye stated his out-of-town
travel to Toronto, Vancouver and various cities in Alberta occupied about 70 days. According to the log –
Exhibit A-1, Delaloye label, tab 2 – he used the vehicle 137 days and the
business portion of total distance driven was 70%. Telus had its own air
service but the aircraft were often full and he had to travel by commercial
airlines. The pay phone office in West Calgary was located in a residential
area and Delaloye was able to park without paying. He agreed that parking lots
in the vicinity of Telus Tower in downtown Calgary
all charged for parking space. Delaloye stated he worked from home a few days
in 1998 and could control his hours in the sense he did not “punch a clock.” He
held an executive position and worked long hours. In his opinion, without the
convenience of a parking pass, he would not have been able to fulfill his
responsibilities by using public transit or taxis because some days he made 4
or 5 trips away from his office to locations in Calgary.
Delaloye stated that without a reserved parking space he probably would not
have worked on Saturday. He agreed he had provided an answer to a written
interrogatory that he did not contribute additional hours of work – in 1998 –
as a result of Telus providing the parking pass. He stated he believed the
parking pass allowed him to be more effective and productive. He acknowledged
it would be difficult to calculate the amount of any saving to Telus but
considered it reasonable to assume that each time one called for a taxi the
waiting time would be at least 15 minutes. In his view, that wasted time could
amount to thousands of dollars per year in otherwise billable executive hours,
even though Telus had not carried out any analysis to support this theory.
Delaloye participated in the variable pay program and received a bonus in
excess of $47,000 according to the Direct Deposit Statement – Exhibit R-3 –
which indicated his hourly pay rate was $68.97.
[10] In re-examination, Delaloye stated he was
responsible for various business decisions and considered it essential that he
have a vehicle at his disposal together with an assigned parking space within Telus Tower.
[11] (The following facts were admitted by
Delaloye in these numbered paragraphs of the admissions found behind his label
in the binder, Exhibit A-1.)
5. I did not keep or submit to Telus any records of
any overtime I worked in 1998.
9. I had access to the parking lot with the parking
pass 24 hours per day, 7 days per week in 1998.
11. In 1998 there was never a time where there were
no parking stalls available to me within the parking lot.
13. In 1998 I made use of the parking pass
approximately 3 days per week as I traveled throughout Alberta and Canada the remainder of the week.
14. In 1998 I used the parking pass to attend
community functions located near Telus Tower approximately
20 to 40 times.
[12] Myron S. Borys – examined by Curtis Stewart
- testified he is employed as Vice President of Edmonton Economic Development
Corporation. In 1998, he worked for Telus as Director of Consumer Internet
Services, a strategic business unity comprised of several groups reporting
directly to him. He functioned as general manager to those groups including the
help desk service which had more than 200 employees. Other groups within the
business unit had up to 40 employees. The help desk operated 7 days a week, 24
hours a day and was structured in two tiers with the second level being
staffed by more technologically-advanced personnel capable of dealing with
problems unresolved by the initial responder. Borys stated the internet
services division was the fastest-growing unit within Telus and the milestone
of 100,000 customers was attained. In order to compete with other service
providers, Telus introduced high-speed internet connection. Borys stated he was
at work before 8 a.m. and worked until 5:30 or 6:00 p.m. and considered those
hours to be normal in view of his managerial position - in pay band 5 - which
required extra hours of work to carry out his duties. He understood his pay
rank had been structured to take into account that he would need to work
additional hours which would – otherwise – have been considered as overtime. He
used his own vehicle for Telus business purposes “a couple of days a week.” In
his opinion, it was not convenient to take a bus to off-site meetings and the
frequency of bus service after 6 p.m. was reduced, leading to longer wait
times. In 1998, his household had just one vehicle so he took the bus to work
often but when he had to arrive early or leave late he used the family car.
Telus policy allowed employees to take taxis for business and to claim
reimbursement. Borys stated he had a parking pass but did not have an assigned
stall. Instead, the parking privilege was on a “first come, first served” basis
but he was always able to find a space. In his opinion, the ability to park his
vehicle enhanced his ability to carry out his work. On occasion, he needed to
work at the office during a weekend to access the computers, printers and
related equipment in order to prepare presentations. He estimated that he used
the Telus parking lot once or twice a year for personal reasons.
[13] Borys was cross-examined by Rhonda Nahorniak.
He stated his understanding that objectives were established by his supervisor
and that a bonus was based on meeting or exceeding those goals. He considered
the provision of free parking to be part of his overall compensation since
receiving a pass - in 1994 – when employed as a Manager with Edmonton
Telephones (Ed Tel), a company subsequently acquired by Telus. He acknowledged
Telus did not require him to own or operate a vehicle in the course of his
employment nor did his position demand that he hold a valid driver’s licence.
Borys estimated he used his vehicle 2 days per week - approximately 100 times
per year - and although he knew Telus paid employees for using their personal
vehicle for business, could not recall having submitted any expense claims for
that purpose in 1998. He agreed Telus was not concerned whether he brought his
vehicle to work. As for bus service on Route 66, he acknowledged there was one
bus stop approximately 500 metres from his residence and another approximately
7 blocks away and that the service was every 15 minutes in the morning,
starting at about 6:30. Borys agreed the parking pass was convenient and
reduced travel time to and from work. In 1998, he was not aware of any free
parking available on a daily basis in downtown Edmonton. He stated he may have found alternative modes of transportation if he
had been required to pay for his parking space. In his opinion, the parking
space was most useful when he worked two weekends a month - sometimes as late
at 7 p.m. – because bus service was less frequent during those periods. Borys
identified the print-out of his 1998 expense claim - behind his label in
Exhibit A-1 – and entries showing reimbursement for taxi fares totalling $1,400.00.
He stated Telus policy was to pay for taxis for business purposes even if an
employee had brought a vehicle to work. Borys stated sometimes for business
travel, he took a taxi to work and then to and from the airport. He was not
aware of any reasons for Telus having issued him the parking pass.
[14] (The following facts were admitted by Borys
in these numbered paragraphs of the admissions found behind his label in the
binder, Exhibit A-1.)
3. In 1998 I resided at 8703 - 42 Avenue, Edmonton, Alberta.
5. In 1998 my scheduled hours of work were 7.5 hour
work days from 8:00 a.m. to 4:30 p.m..
6. Despite my scheduled hours of work, in 1998 I
worked 1 to 3 hours of overtime per day virtually every day and 4 to 6 hours of
overtime in the office on the weekend approximately once per month and at home
1 to 2 times per month.
7. I did not keep or submit to Telus any records of
any overtime I worked in 1998.
9. I did not have to apply for my parking pass.
10. The parking pass was available to me for the
entire year of 1998.
11. In 1998 my parking pass was for the parking lot
located in Telus Plaza at 10020-100
Street in Edmonton, Alberta.
12. I had access to the parking lot with the parking
pass 24 hours per day, 7 days per week in 1998.
20. Prior to receipt of the parking pass, I traveled
to work by bicycle, public transportation, or car.
21. Prior to receipt of the parking pass, when I
traveled to work by car I parked in a daily surface parking lot and paid from
$5.00 to $7.00 per day.
22. I did not complete a form T2200 for the 1998
taxation year.
27. In 1998, when traveling from work to home, bus
route 66 departed downtown for home approximately every 15 minutes from 4:18
p.m. to 5:33 p.m..
[15] Douglas Alloway – examined by Curtis
Stewart - testified he is employed by Telus as a Director of Human Resources
for Telus and held that position in 1998 where he was responsible for 3
business units and provided support in relation to 1,600 employees. His
scheduled work day was from 8:00 a.m. to 4:30 p.m. but – usually - he arrived
at work around 7:00 a.m. and left about 5:30 in the afternoon. In 1998, his
position did not require him to have a vehicle to carry out his duties nor was
it a condition of employment. He did not submit expense accounts to Telus – in
1998 – in respect of use of his vehicle. Alloway stated he had to attend a work
site in the Greater Edmonton area about two or three times a week in order to
deal with a human resource problem and that it was much easier to use his
vehicle which was parked in Telus
Plaza. Although Telus had a
pool of vehicles for use by certain employees, Human Resources personnel were
not included in that category. In Alloway’s opinion, the parking pass permitted
him to start work earlier and stated he used the pass only two or three times
for personal reasons in 1998. Prior to 1994, he rode the bus to work and
considered he may have done so in later years if he had not been provided with
the parking pass.
[16] Alloway was cross-examined by Rhonda
Nahorniak. He conceded he had not kept any record of hours worked in 1998 and
that he worked overtime in order to achieve a promotion and receive better
raises. As a Director in pay band 4 , he felt he should work extra hours to
justify the privilege of having received – without asking - the parking pass in
1996. In 1998, he used his own car to drive to Edmonton International Airport as there was no direct public
transit from his residence. Although he used his vehicle about 1000 kilometres
for Telus business purposes in 1998, he did not submit an expense claim. In his
opinion, it was reasonable to assume that if he needed to take 8 to 10 taxi
trips per month, that total cost would have exceeded the value of his parking
space.
[17] (The following facts were admitted by
Alloway in these numbered paragraphs of the admissions found behind his label
in the binder, Exhibit A-1.)
12. I had access to the parking lot with the parking
pass 24 hours per day, 7 days per week.
13. In 1998 there was never a time where there were
no parking stalls available to me within the parking lot.
24. In 1998, the nearest bus stop was two blocks from
my residence.
[18] Gary Cerantola was examined by Jasmine
Sidhu. Cerantola stated he is currently self-employed but was employed by Telus
– in 1998 – as a Director, Operations, International Carrier Services. He had
worked for AGT since 1992 and when that entity – formerly owned by the Province of Alberta – became part of Telus Group, it led to
what he called a “confusing period” in that it was a new era in
telecommunications as a result of the CRTC decision to permit competition
within previously restricted areas. His position as Director was in pay band 5.
He worked in the Calgary office and was provided with a parking pass - in Telus Tower - which he understood was for the purpose
of accommodating his travel for Telus business purposes. He used his own
vehicle to travel to business meetings in Edmonton and more often to Red Deer - located midway between Edmonton and Calgary - as that venue was convenient for Telus employees
working in those cities. He estimated he used his vehicle for business between
2 and 10 times per week, with 60% of that usage having been planned with the
remainder as required during the workday. Telus reimbursed him – on a per
kilometre basis - for using his vehicle. He stated the normal Telus working
hours were from 8:30 a.m. to 4:30 p.m. but the parking pass permitted him
to arrive early and stay late which - in his opinion - enabled him to meet
certain objectives. He estimated he worked 4 weekends a month in 1998, a
very busy year during which he worked between 65 and 75 hours each week.
He recalled using his parking pass once when attending a family function. In
1999, he received a variable pay bonus which was based on criteria pertaining
to work performed in 1998. Cerantola stated he had anticipated that as a
Director, Operations, it would be necessary to work overtime in order to
discharge his responsibilities.
[19] Cerantola was cross-examined by Kerry Boyd.
Cerantola agreed it was more convenient to use his personal vehicle even though
there were two bus routes near his residence that connected with an LRT
station. Prior to moving to Calgary in 1995, he used public transit to travel
to work. He stated he did not have any documentation to demonstrate whether he
was required to use his vehicle for business purposes. He drove to Red Deer 8 times in 1998 and also to smaller centres in
southern Alberta. He travelled – by air – to Toronto and Montreal and estimated he was away from Calgary – on business - about 60 days a year. When travelling
by air, sometimes he took a taxi from home to the airport but on other
occasions left his vehicle at Telus
Tower and went to the office
from the airport. He stated he made decisions about transportation based on the
situation and hired taxis and rented various vehicles - including a van - when
it was necessary to transport several people to a meeting. Telus reimbursed him
for parking charges incurred at an airport lot or other facility during the
course of business. Cerantola remained steadfast in his belief that the parking
pass was required for him to carry out his duties at peak efficiency.
[20] (The following facts were admitted by
Cerantola in these numbered paragraphs of the admissions found behind his label
in the binder, Exhibit A-1.)
6. I did not keep or submit to Telus any records
of any overtime I worked in 1998.
7. I received my parking pass in 1992 when I
started with AGT Ltd. in the position of Director and was in pay band 5 at that
time.
12. I did not have an assigned stall within the parking
lot but could park in any unreserved parking stall that was available in 1998.
13. In 1998 there was never a time where there were
no parking stalls available to me within the parking lot.
15. In 1998 I made use of the parking pass on
average 5 days per week.
16. I did not complete a form T2200 for the 1998
taxation year.
19. If I did not receive the parking pass in 1998 I
may have chosen not to drive to work but would have traveled to work by
whatever means were available.
20. In 1998 it was not a condition of my employment
with Telus that I had to have a vehicle to perform my work duties.
[21] Henry C. Bruns was examined by Jasmine
Sidhu. He testified he was employed – in 1998 – by Telus as Director, Business
Management until April when he assumed the role of Director, Partner Relations.
He resided in Calgary and was provided with a free parking pass
for the lot in Telus Tower. In 1998, both positions were in pay band
5, the same as Director, Marketing Operations, a function he had assumed – in
1995 – upon promotion and for which he received a free parking pass. His job in
1998 concerned client relations and involved the help desk service. He stated
he used his vehicle to drive to meetings or to and from the airport. Although
the normal work week was 37.5 hours, Bruns stated he worked extra hours during
evenings and on weekends but had not kept any record. In his opinion, the
additional hours were necessary to achieve objectives and he regarded the
parking pass as a tool that enabled him to work longer hours by eliminating the
need to use other means of transportation or to find alternative parking. He
rarely used the parking space for personal reasons. He estimated he could have
walked to work in about 30 minutes. Non-employees of Telus were permitted to
park in the Tower lot provided there was space available and they paid the
cashier at the gate upon exiting the facility.
[22] Bruns was cross-examined by Kerry Boyd.
Bruns conceded Telus had not compelled him to use his vehicle and that he had
done so based on his own choice even though public transit was available near
to his residence and he could have ridden to work – in about 10 minutes – on
his bicycle. In his opinion, he did not need a vehicle to maintain his
employment but had no documentation to that effect. Although he had no assigned
parking stall in 1998, he was always able to find a space. In his view, he was
more productive as a result of having the right to park in the facility.
Although the majority of the meetings were held on-site – in 1998 – he attended
at other locations. He was entitled to reimbursement for use of his vehicle but
did not bother to submit an expense claim to his employer for short trips
because it took too much time to complete the paperwork. He hired a taxi to travel
to and from airports but when not travelling by air preferred to use his own
vehicle. Bruns was unable to provide details of the amount of vehicle use for
business purposes either in 1998 or in 1997. The majority of his duties were
performed in Calgary but he travelled to Edmonton and to Burnaby, B.C. about 1 or 1.5 days per week - on average -
between January and April, 1998. After assuming his new position in April, he
went to Edmonton once a week and often drove his own car if
he considered it more effective. Bruns stated he was not aware of other parking
lots near his workplace.
[23] (The following facts were admitted by Bruns
in these numbered paragraphs of the admissions found behind his label in the
binder, Exhibit A-1.)
3. I commenced employment in 1988 with AGT Ltd. which later became
Telus.
17. I did not complete a form T2200 for the 1998
taxation year.
20. Prior to receipt of the parking pass I
occasionally used my vehicle to perform job duties but Telus did not reimburse
me for the amount I paid for parking.
21. If I did not receive the parking pass in 1998 I
may have chosen not to drive to work but would have walked or rode my bike
instead.
22. In 1998, I did not contribute overtime to Telus
as a result of Telus providing me the parking pass.
[24] John R. Harrington was examined by Curtis
Stewart. Harrington testified he was employed by Telus – in 1998 – as a
Director, Alliance Management, a position in pay band 5. He met with employees
of BC Tel, Bell Canada, and Stentor
Telephones in the course of dealing with new technology and in the course of
inquiring into the feasibility of certain acquisitions of other
telecommunication entities. He described the working conditions that year as
“intense.” He was provided with a free parking pass to the facility at Telus Plaza in Edmonton and used it each day. Although he did not
have an assigned stall, he always found a parking space. He estimated he worked
between 45 and 50 hours each week in 1998 in order to perform his duties and
believed that without the parking pass it would have been difficult to work
late. However, he assumed he would have found a way to do so in any event
because of his responsibilities to Telus. He used his vehicle to drive to and
from the airport and was reimbursed. Usually, he arrived at work between 7:00
and 7:30 a.m. to facilitate conference calls to people in central Canada in a different time zone and stayed until 5:30 or
6:00 p.m.. Harrington agreed he had never negotiated with Telus to receive a
free parking pass as part of his compensation.
[25] Harrington was cross-examined by Kerry
Boyd. Harrington stated that if he had not been provided with the parking pass
he would have paid for parking elsewhere. He understood the peak hours of bus
service encompassed a two‑hour period each morning and late
afternoon. He considered the use of his own vehicle was more convenient and
because of unrestricted access to the parking facility, it permitted more
flexibility in his work schedule because he lived in southeast Edmonton. When travelling in downtown Edmonton on business, he used the underground portion of the municipal LRT
system which was free within certain zones from 9 a.m. to 3:00 p.m..
Harrington agreed there was no formal requirement by Telus that he drive a
vehicle for business purposes and stated he travelled by air to out-of-town
meetings. In 1998, his vehicle was insured for driving to and from work and for
casual business purposes.
[26] (The following facts were admitted by
Harrington in these numbered paragraphs of the admissions found behind his
label in the binder, Exhibit A-1.)
2. I commenced employment in 1978 with AGT Ltd.
which subsequently became Telus.
5. I did not keep or submit to Telus any records of
any hours worked or overtime I worked in 1998.
6. I received my parking pass in 1986 when promoted
to senior management.
7. Prior to the receipt of the parking pass I drove
to work at Telus.
8. Prior to the receipt of the parking pass in
1986, when I drove to work at Telus I parked at various public parking lots and
it cost approximately $50 per month and Telus did not reimburse me for the
amount paid.
16. I did not complete a form T2200 for the 1998
taxation year.
18. In 1998, the nearest bus stop to my residence was
2 blocks away.
[27] Donald Barnes was examined by Curtis
Stewart. Barnes testified he is Sales Director for See Magazine. In 1998, he
was employed by Telus Advertising Services Inc. (TAS) – a wholly-owned
subsidiary of Telus - as a Sales Manager – in pay band 4 - responsible for
supervising and managing between 8 and 10 sales representatives. TAS was the
entity through which the advertising directory – Yellow Pages – was published.
Barnes stated over 26,000 customers advertised in the directory and the period
from May to the end of October was when the publication was created. He
provided training to sales representatives and accompanied them on sales calls.
Each representative had 400-450 customers on a list and others known as “inside
reps” dealt with up to 1,500 customers, mainly by telephone. Barnes stated
September and October were extremely busy as many customers had waited to place
their advertisements and certain deadlines were approaching. The actual
printing of the Yellow Pages and White Pages directories took 3 months. As
deadlines drew near, Barnes stated he worked between 1 and 4 hours
overtime for a period of about 50 days in 1998. He used his vehicle to travel
on TAS business and had a parking pass - and assigned stall - at the 44 Capital Boulevard building, (44 Capital) 10044-108 Street, Edmonton. He had not negotiated free parking privileges as
part of his compensation package. His work required him to travel from one end
of the city to the other and he carried a cell phone in his car. In his
judgment, the nature of the travel required made it impractical to use taxis.
He did not submit expense accounts to TAS for business use of his vehicle. He
did not keep records of hours worked but most of the extra time was
attributable to work performed during the evening and to time spent by him and
sales representatives at the office on Labour Day and Thanksgiving weekend.
Barnes worked on the Edmonton Yellow Pages directory. He stated it was very
important to have a car available during October. During the months of January
and February, the 40-member sales group and the managers were devoted to
selling national advertising for placement in other directories of which there
were 98 in the western provinces.
[28] Barnes was cross-examined by Kerry Boyd.
Barnes stated his understanding that the parking pass was personal, not to be
used by others, including Telus employees. Although he never rode to work by
public transit, his residence was near a bus route and the LRT station was
one-half block from his office building. Between 9:00 a.m. and 3:00 p.m., the
LRT was free within the downtown core. Barnes considered it was more convenient
to use his own vehicle to travel to and from work. He had not recorded overtime
hours worked in 1998 and received a variable pay bonus for job performance during
that year. He started working for Ed Tel in 1988 and became employed by Telus
when it acquired Ed Tel in 1992. As part of his duties at TAS, he prepared job
postings, some of which required the applicant to hold a valid driver’s
licence. Barnes stated that in carrying out his duties as Sales Manager,
situations arose where he had to leave the office and, because he could not
predict when those might occur, it was convenient to have his vehicle in the
lot in his building. On occasion, sales representatives used taxis and Telus
reimbursed them. Barnes stated there were no free lots in the vicinity of his
office in 1998. He was not aware of the reason Telus had issued him a free
parking pass.
[29] During re-direct examination, Barnes stated
the LRT was not an efficient method by which to visit customers in areas
outside the downtown core. In 1998, 65% of all businesses that advertised in
the Yellow Pages were situated in southeast Edmonton. Barnes stated he understood the entitlement of employees to a variable
pay bonus was tied to the performance of their business unit.
[30] (The following facts were admitted by
Barnes in these numbered paragraphs of the admissions found behind his label in
the binder, Exhibit A-1.)
6. In 1998, my scheduled workday was from 8:00
a.m. to 4:30 p.m. and my salary was based on a 7.5 hour workday.
15. In 1998 I did not contribute any overtime hours
of work to Telus as a result of Telus providing me the parking pass.
17. I did not complete a form T2200 for the 1998
taxation year.
18. If I did not receive the parking pass in 1998 I
may have chosen not to drive to work but would have taken the bus or car-pooled
instead.
[31] Bruce R. Brandell was examined by Curtis
Stewart. Brandell testified he is employed by Epcor Utilities. In 1998, he was
employed - by a Telus subsidiary - as a Senior Manager, Corporate Development –
in pay band 4 - and worked at Telus
Plaza in a group of 7 or 8
people who were involved with acquisitions. Although regular office hours were
from 8:00 a.m. to 4:30 p.m., it was normal to work 10 hours per day and
when he and his co-workers were in the middle of a transaction, they worked up
to 18 hours per day, every day during some weeks, as required. He lived in the
Cloverdale area and although he was assigned a parking pass for the lot in Telus Plaza,
never used it. He had not applied for the pass and stated that one day it
“landed on his desk.” He understood he had been given the pass because his
position was in pay band 4. He never informed his superiors that he was not
using the pass.
[32] Brandell was cross-examined by Rhonda
Nahorniak. Brandell stated he was not paid for working additional hours beyond
the normal work week but participated in the variable pay program pursuant to
which bonuses were paid to individuals based on the achievement of their work
unit. He knew Telus had a policy of reimbursing employees for taxi fares and
for use of a personal vehicle. He owned a car in 1998 but did not use it for
business purposes. He stated his Notice of Appeal included material that was
generic in the sense it was appropriate for most other appellants and that is
the reason it stated that the provision of the parking pass constituted an
economic advantage to Telus rather than to him since he had not incurred any
taxi fares or other travel expenses associated with use of his private
automobile.
[33] Desmond A. Adler was examined by Michael
Gemmiti. Adler testified he was employed – in 1998 – by Telus Management
Services Inc. – a Telus subsidiary - as Director, Network and Corporate
Services, a position within pay band 5. He confirmed his responsibilities were
as described in paragraph 2 of the admissions located behind his label in
Exhibit A-1, as follows:
As Director, Network and Corporate Services I was responsible for
the development, implementation and support of corporate systems (human
resources, finance, treasury, and general services departments, as well as
legacy system support for other Telus departments and subsidiaries) as well as application
of software relating to the Telus fundamental network (applications relating to
planning, provisioning, assignment, activation, inside and outside plant
records, surveillance, alarming, and trouble management systems), and directed,
monitored, and provided overall direction and guidance to approximately 150 personnel
including managers, project managers, software specialists, contractors, and
support staff.
[34] Adler stated he worked from an office in
Telus Plaza, Edmonton and was
responsible for 8 managers and a staff of 150, some of whom provided services
as independent contractors. Because the year 2000 was approaching, there were
compliance concerns throughout the business world. In 1998, Adler lived in
Sherwood Park, Alberta and used his vehicle to drive to and from
work or to drive to and from Edmonton
International Airport, according to entries in his expense
sheet. He did not consider his vehicle was needed – in a direct sense – to
perform his work and he was not compensated – directly – for working supplemental
hours but considered the increased hours had been required to complete tasks
within his area of responsibility. His parking pass did not affect his
performance except it was more convenient to drive to and from work.
[35] Adler was cross-examined by Rhonda
Nahorniak. Adler stated he worked once or twice a month on a weekend. The
distance from his residence to the office was 25 kilometres. In 1998, his wife
also worked downtown and they rode to work together. About 50% of the time, she
dropped him off and then drove to her workplace 10 or 12 blocks away. He never
took the bus to work in 1998. The parking pass allowed unrestricted access to Telus Plaza which was particularly useful during a weekend. He
acknowledged that without the pass he would have had to pay for equivalent
parking space if he used his car to travel to work. Adler agreed he was under
no obligation to bring his car to work and that Telus policy reimbursed
employees for business use of a private vehicle. Counsel referred him to an expense
report – behind Tab 1 – and to entries pertaining to reimbursement of taxi
fares. Counsel pointed out highlighted entries on a printout – Exhibit R-4 –
entitled Telus Employee Expense Reports – in which Adler was reimbursed for
taxi fares for travel between the airport and his home, a distance of
approximately 40 kilometres. In 1998, Telus paid employees 35 cents per
kilometre for using their vehicles. Adler recalled the parking charge at the
airport was $10 and agreed that if he had used his own vehicle to travel to and
from the airport, the total cost would have been approximately $40, an amount
less than the $55 and $52 taxi fares incurred by him for that purpose. Adler
stated there were no free parking lots available in downtown Edmonton in 1998.
[36] (The following facts were admitted by Adler
in these numbered paragraphs of the admissions found behind his label in the
binder, Exhibit A-1.)
6. In 1998, my scheduled workdays were from 8:00
a.m. to 4:30 p.m. and my salary was based on a 7.5 hour workday.
7. Notwithstanding my scheduled hours of work in
1998, I generally worked until about 5:30 or 6:00 p.m. during the weekdays and
typically worked on the weekend once or twice a month on either a Saturday or a
Sunday and only rarely on both days.
8. I did not work any holidays in 1998.
9. I did not keep or submit to Telus any records of
any overtime I worked in 1998.
11. I did not apply for my parking pass as it was
provided automatically to me based on my position as Director.
12. I understood that in 1998 it was Telus policy to
provide parking passes to employees based upon their position and that
employees at the level of Director and above received parking passes.
15. I had access to the parking lot with the parking
pass 24 hours per day, 7 days per week in 1998.
16. I did not have an assigned stall within the
parking lot but could park in any unassigned parking stall that was available
in 1998.
17. In 1998 there was never a time where there were
not parking stalls available to me within the parking lot.
20. My position with Telus in 1998 did not require
that I have a vehicle in order to perform my job duties.
24. In 1998 I was never required to use my vehicle to
perform work duties at all.
26. In 1998 I contributed overtime above my scheduled
hours of work in order to complete tasks on a timely basis and not as a result
of Telus providing me with the parking pass.
[37] Joanne Beaton was examined by Jasmine
Sidhu. Beaton testified she is employed by Telus and in 1998 was a Director,
Information and Process Solutions. In that role, she was in charge of various
processes and functions. As a result of Telus and Ed Tel combining their
business operations, there was a substantial volume of work required to
coordinate the two systems. Although Beaton was based in Edmonton, she travelled to other major centres in Alberta. When she began working for Telus, her position was
in pay band 5 and she had received a parking pass – free – in 1997 when she
assumed the position of Director. Beaton acknowledged it had not been a
condition of her employment that she have a vehicle to carry out her duties.
Beaton stated the new business environment had transformed Telus – formerly AGT
- from a provincially-owned corporation to an entity comprised of a group of
companies that carried on a telecommunications business in a highly competitive
marketplace. She stated the arrival – from the United States - of a new Telus President led to a cultural change
in the workplace. Beaton stated her new position greatly increased her responsibilities
both in scope and duration because she was involved in several major projects.
Prior to receiving her parking pass, she rode the bus or went to work with her
husband in their family vehicle. As a member of senior management, Beaton
stated she found the demands were great and that she worked many 12-15 hour
days including weekends. She estimated she worked until after 7:00 p.m. 3 days
per week and at least 3 Saturdays a month. Because 1998 technology was
inadequate – compared to today – it did not permit a significant amount of work
to be performed from home due to security and confidentiality requirements so
Beaton preferred to work at her office. She used her vehicle to drive to
Camrose, Fort McMurray and Calgary and 3 times per week – on average – drove
to the airport. At Telus Plaza, she did not
have an assigned stall but always found a space. Beaton stated she believed her
efforts would be rewarded by advancement within Telus and she received a
variable pay bonus. She stated the parking pass permitted her access to work in
a secure setting which enabled her to travel to and from work outside regular
office hours. The heated parking lot was located in the same building as her
office. The pass had been issued to her by the Telus Real Estate Department.
[38] Beaton was cross-examined by Rhonda
Nahorniak. Beaton acknowledged there had been no discussion with anyone at
Telus prior to receiving the parking pass. She had no written employment
contract with Telus. The nearest bus stop was two blocks from her residence but
she appreciated the convenience of the parking pass which provided her with a
sense of security not afforded by parking at night on the street. Before
receiving the free pass, she parked at Canada Place – where her husband worked - at cost of $140.00 per month and was not
reimbursed by Telus. Beaton stated she drove to Camrose – 100 kilometres from
Edmonton – and to Red Deer, about 150 kilometres, and to Calgary, but
not to Lethbridge and could not recall the number of trips
to these locations. She used her vehicle to attend meetings in Edmonton, some scheduled and some unplanned. She submitted an
expense claim to Telus for business use of her vehicle and used a diary to
record distances but it is no longer available. She did not know the number of
days away from her office in 1998. She did not recall when the second family
car was purchased but had used public transit to travel to and from work on
some occasions prior to 1998. Beaton stated there was no obligation imposed by
Telus that she have a vehicle to perform her duties and agreed the free parking
pass saved her the expense of having to pay for parking elsewhere. In her mind,
the pass enabled her to work longer hours and provided the ability to perform
her duties more efficiently. In 1998, she took taxis from time to time since
there was a taxi stand nearby and she was reimbursed for those fares. If she
used her vehicle and had to pay for parking at some location, she was
reimbursed by Telus. Counsel referred Beaton to a bundle of expense reports –
Exhibit R-5 – for 1998 - in which she had claimed reimbursement for 22 taxi
fares, according to the highlighted entries. Beaton agreed Telus had been
unable to provide specific reasons or criteria underlying the provision of her
parking pass.
[39] (The following facts were admitted by
Beaton in these numbered paragraphs of the admissions found behind his label in
the binder, Exhibit A-1.)
5. I did not keep or submit to Telus any records
of any hours worked or overtime I worked in 1998.
7. Telus provided me the parking pass as part of
my benefits as a Director.
16. I did not complete a form T2200 for the 1998
taxation year.
[40] Mary-Patricia Barry was examined by Jasmine
Sidhu. Barry testified she is employed by the City of Edmonton as a Manager, Communications Branch. In 1998, she worked for Telus as
a Director – Telus Leadership and Learning, Human Resources at the Telus Plaza in Edmonton. Her
position was in pay band 5 and she received a parking pass in July, 1996, upon
assuming her role as Director. Her division had an annual budget of $7 million
and a staff of 65. Barry stated she understood the parking pass had been
provided to her – without cost – as result of attaining the level of Director
and that it was for the purpose of enabling her to carry out her duties.
Although the regular work week consisted of 37.5 hours, she worked from 2 to 4
hours extra per week and sometimes on Sunday. Telus policy was to pay employees
a bonus if certain business objectives were attained. Her mandate was to
provide high-quality training to 13,000 Telus employees and classrooms were
used to deliver 20,000 student-days of instruction in 1998. Barry stated she
was not required to use her vehicle, per se, in the course of her job
but it was convenient because she travelled to locations both in and out of Edmonton. There was no requirement that she hold a valid
driver’s licence to perform her duties as Director. She estimated she used her
vehicle between 6 and 8 times a month for business purposes.
[41] Barry was cross-examined by Rhonda
Nahorniak. Barry acknowledged her residence – in 1998 - was only one block
away from a bus stop. She agreed that attaining the level of Director was the
reason she was issued the parking pass and that she could have used other
transportation. On occasion, she hired a taxi but it was more efficient to use
her vehicle to transport learning materials and equipment to training sessions
and Telus reimbursed her at the rate of 35 cents per kilometre. In her opinion,
it was more efficient to drive to work and to park in the lot at Telus Plaza by using her pass. She was not aware of
any free parking lot in the downtown area in 1998. Without the parking pass,
she would have examined other options for parking but still would have used her
car to travel to work rather than take public transit.
[42] (The following facts were admitted by Barry
in these numbered paragraphs of the admissions found behind his label in the
binder, Exhibit A-1.)
6. I did not keep or submit to Telus any records
of any overtime I worked in 1998.
16. I provided overtime hours to Telus in 1998 in
order to achieve objectives and business results for which I could be
recognized, and the parking pass supported and facilitated this.
17. I did not complete a form T2200 for the 1998
taxation year.
20. In 1998 I used the parking pass very occasionally
(perhaps 1 or 2 times in 1998) to attend an event or park downtown for personal
reasons unconnected with my employment.
[43] Randy Bayrack – examined by Curtis Stewart
– testified he is a realtor but was employed by Telus – in 1998 – as an IT
Project Manager – pay band 4 - at the 107 Street and 100 Avenue – Edmonton
office. He worked in the advanced communication unit which provided ADSL
connections to the Internet and assisted various Telus business units to
understand the advantages to customers of this new product which was faster
than dial-up and afforded the opportunity to use one telephone line for voice
and data. At first, there were not many employees in his business unit but
later he managed 50 people, many of whom worked in the ADSL category. He had
been an employee of Ed Tel since 1979 and had a parking pass for the facility
at 107 Street and 100 Avenue. He used his vehicle for business and drove to Calgary once a week, on average. He was reimbursed by Telus
on a per‑kilometre basis. He had not applied for the parking pass and,
before receiving it, had driven to work. Owing or operating a vehicle was not a
job requirement but he believed it increased his efficiency and allowed him to
accomplish more work and to get home faster. As a salaried employee, he often
worked before 8:00 a.m. and after 6:00 p.m.. and typically worked at the
office on Saturday and from home on Sunday. He had a written agreement with
Telus Advanced Communications that he could continue to enjoy the privilege of
the parking pass issued to him while an employee of Ed Tel. Bayrack stated he
had always been able to find a parking space in 1998.
[44] Bayrack was cross-examined by Kerry Boyd. Bayrack
agreed there was bus service available two blocks from his residence in Mill
Woods subdivision but considered it was more convenient to drive his vehicle
particularly before and after peak hours. The LRT station was close to his
office. He did not keep a record of hours worked in 1998. He used his vehicle
for business purposes in Edmonton and if he parked in Telus
Plaza he had to pay for the privilege since his pass was
not authorized for that facility. He drove to meetings in Red Deer but flew to Calgary after having driven to the airport. He agreed he
could have taken a taxi and claimed the fare on an expense account. During some
extremely busy periods lasting up to 3 weeks, he worked until 1 a.m. or
later and drove home. He estimated the cost of a taxi from his office to home
would have been at least $30.
[45] (The following fact was admitted by Bayrack
in this numbered paragraph of the admissions found behind his label in the
binder, Exhibit A-1.)
16. I did
not complete a form T2200 for the 1998 taxation year.
[46] Randall Lee Edgar
was examined by Michael Gemmiti. Edgar testified he is an accountant. In 1998,
he was employed by Telus Management Services Inc. – a subsidiary of Telus – as
a Corporate Financial Analyst in pay band 4. He started working for AGT in 1987
and continued with Telus after the takeover where he carried out financial
planning and dealt with debt issues involving bond rating agencies, securities
documentation, preparation of annual reports, filling requirements of the CRTC
and matters relating to mergers and acquisitions. He was aware of the taxable
benefit issue arising from provision of a parking pass because he was a friend
of Dan Chow who also worked at Telus Plaza and had won his
appeal from an assessment by the Minister. Edgar stated he had not used his
vehicle for business in 1998. Although he had recorded overtime worked up to
the end of February, he had not continued for the remainder of 1998. The
additional hours of work were required to meet certain filing deadlines set by
regulatory agencies. He did not apply for the parking pass and it had been
handed to him by his executive assistant. He did not have an assigned stall but
there was always a space available in 1998. He took a bus to work before
receiving the parking pass but realized he could work an extra hour a day by
driving his car to and from the office. At most, he used the parking space two
or three times for personal reasons in 1998.
[47] Edgar was cross-examined by Rhonda Nahorniak. Edgar
identified certain entries in his diary – Exhibit R-6 – for January and
February in which he recorded hours worked including during weekends. He
acknowledged it was not a condition of his employment with Telus – in 1998 -
that he own a car or hold a valid driver’s licence. He could not recall any
instance in which he used his vehicle for business purposes during that year.
He received a variable pay bonus with respect to his performance in 1998 and
agreed with the statement in the Telus guideline that “[I]ndividual performance
is not a factor in the payout.” Edgar received his bonus by direct deposit in
accordance with the statement filed as Exhibit R-7. He stated he had assumed
the parking pass was to facilitate him working additional hours during certain
periods as it was more convenient to drive to work earlier or stay later when
bus service was less frequent. Although he had ridden the bus to work for many
years and was accustomed to that form of transit, he did not use public transit
in 1998 even though the service to his residential area was adequate. He did
not recall having taken a taxi for business in 1998. He stated if he had not
received the free parking pass he would have had to perform whatever amount of
work was necessary to meet the strict deadlines for filing certain
documentation.
[48] Roy Albert Viteychuk was examined by Jasmine
Sidhu. Viteychuk testified he is an instructor at Northern Alberta Institute of
Technology (NAIT). In 1998, he was employed by Telus as a Manager, Switch
Maintenance and Analysis, in pay band 3. He started working with Ed Tel in 1970
and stayed on to work for Telus after the merger in 1996. In 1998, he was
responsible for approximately 40 employees who were technicians dealing
with upgrades, fault corrections and surveillance of the overall system every
moment of the year. The switching equipment was situated inside 8 central
offices or hosts. Due to emergencies in 1998, Viteychuk stated he believed he
worked more hours than normal but does not know how many days, weekends or holidays
or the number of hours per day he worked during that year. He stated the
electronic components fail from time to time and despite a back-up for many
systems, there are occasions when some event can cause between 20,000 and
80,000 telephones to be out of order. He worked from an office at 104 Street
and 104 Avenue and received his pass when transferred there but cannot recall
the date. Prior to receiving the pass entitling him to an assigned stall, he
drove to work and parked in other lots operated by Telus for which he paid
$13.85 every two weeks. He did not use his free pass for personal reasons but
could lend it to other Telus employees. His position with Telus did not require
that he have a vehicle. He does not know how often – in 1998 – he used his vehicle
during the course of his employment but had transported spare equipment to
sites, as needed. He was a member of the Disaster Recovery Team and it was
advantageous to have his vehicle parked at work so he could access it quickly
even though at the Main Wire Centre there were two Telus vehicles available.
However, if both were being used, he could use his own vehicle to carry
equipment or replacement circuit packs.
[49] Viteychuk was cross-examined by Kerry Boyd.
Viteychuk stated Telus operated according to the “N plus one” philosophy common
within the telecommunications industry. The idea of having his car available
for an emergency was his own, not a directive from his superiors. He parked in
a heated, underground, assigned stall and agreed there were no other comparable
facilities available without charge. He stated he could have taken a bus to
work since the bus schedule was adequate. During working hours, he often used
one of the two Telus vehicles, if available. He was aware of Telus policy to reimburse
employees for business use of a personal vehicle but could not recall whether
he submitted an expense claim for that category in 1998. Viteychuk stated that
without the free parking pass, he may not have driven to work but would have
used the shuttle bus between his home in Sherwood Park and his Edmonton office.
[50] (The following fact was admitted by
Viteychuk in this numbered paragraph of the admissions found behind his label
in the binder, Exhibit A-1.)
24. In 1998 I did not contribute any overtime hours
of work to Telus as a result of Telus providing me the parking pass.
[51] Carol Amelio was examined by Curtis
Stewart. Amelio testified she is a lawyer, employed by a pharmaceutical company
in Edmonton. In 1998, she worked for Telus as a Director,
Customer Relations. She confirmed her duties were as stated in paragraph 2 of
her admissions in Exhibit A-1:
As Director, Customer Relations, I was responsible for managing
three separate inbound call centres (in three different cities), effectively and
efficiently resolving customer complaints and concerns for the Telus group of
companies (excluding Telus mobility), investigating and resolving customer
complaints on behalf of the CEO and senior executives of residential and
business services, analyzing customer feedback to identify root causes of key
issues and recommending problem prevention strategies and customer satisfaction
improvement plans, and communicating trends in customer feedback to the
organization monthly as a catalyst to drive process improvement efforts.
[52] Amelio worked in Edmonton at Telus Plaza in a specialized contact centre for
complaints, investigations and responses. Her position was in pay band 5 and
she supervised employees who provided service every day of the year, including
those working from an office in Calgary. It was Telus policy to respond to a
customer complaint within 24 hours and to provide a full answer to an inquiry
within 48 hours. Her conservative estimate of hours worked – in 1998 – was
50 hours per week but she did not keep nor submit to Telus any records of
overtime worked in addition to the regular work week of 37.5 hours. The volume
of work fluctuated and some weeks required more than 50 hours. She was not
compensated specifically for working supplemental hours but the Telus corporate
structure was such that nearly everyone - particularly at senior levels -
worked long hours. There had been layoffs in 1993 – and a hiring freeze imposed
- but the amount of work was the same and remaining employees had to work
harder. She received her parking pass in 1992 when she started working for the
Telus group of companies. She had 5 managers reporting to her and had to
perform quarterly reviews. Amelio stated she considered the pass had
facilitated working late because she could park inside and enlist the aid of a
security person to walk her to the car. Because she had 3 children, she chose
to stay later at work instead of bringing work home. She was never instructed
by Telus that she had to have a vehicle to perform her duties and the car was
used – primarily - to travel to and from work, although she did drive to
certain locations to conduct investigations or to visit complainants. In 1998,
the nearest bus stop was two blocks from her residence. In 1992, when she was
interviewed for a Legal Counsel position, that pay band did not entitle her to
a parking pass but the General Counsel requested one in any event and it was
issued to her by the Telus Real Estate Department. She lost her pass once and a
replacement was issued by the same department.
[53] Amelio was cross-examined by Kerry Boyd.
Amelio stated it was more convenient to drive her car to work and an important
aspect of the parking pass was the security afforded by the underground,
lighted facility with “panic buttons” installed at various places. In her
opinion, public transit was not a viable alternative but agreed she could have
used taxis for early or late travel from her home in Riverbend, south-east Edmonton. She did not have a scheduled start time in the morning
and did not record hours of work in 1998 nor did she submit any time sheets to
Telus. She did not have to own or operate a car in order to perform her job but
used it 3 or 4 times a week to accommodate working beyond regular hours. She
went to Calgary with commercial airlines and drove her car
to the airport or took a taxi. Sometimes, on returning from Calgary she went to the office before going home. She worked
at 44 Capital which was close to the Corona LRT station and from time to time
used the system in the downtown area but when she had to carry “an armload of
materials” she used her car. Telus reimbursed her for taxi fare. There were no
other free parking lots available in 1998 and it was difficult to find any
space since nearby facilities were usually full.
[54] Curtis Stewart, counsel for the appellants
advised the Court the appellant – Henry P. Lazarenko – was in Florida and would not be testifying. However, since all
appeals proceeded on the basis of common evidence, Lazarenko wanted his appeal
to remain in force.
[55] (The following facts were admitted by
Lazarenko in these numbered paragraphs of the admissions found behind his label
in the binder, Exhibit A-1.)
1. In 1998, I was employed by Telus as a
General Manager of Engineering and Construction.
2. I commenced employment with Ed Tel, the
predecessor of Telus, in 1965.
3. In 1998 I resided at 6125 – 157A Avenue, Edmonton, Alberta.
4. In 1998, my pay band with Telus was pay
band 5.
5. In 1998, my scheduled workday was from
8:00 a.m. to 4:30 p.m. and my salary was based on a 7.5 hour workday.
6. In 1998, I never worked beyond my
scheduled hours of work.
7. I received my parking pass in 1990 when
working for Ed Tel.
8. I did not apply for my parking pass.
9. My parking pass was for the parking lot
located at the 44 Capital Boulevard building located at 10044 – 108 Street in
Edmonton, Alberta.
10. I had access to the parking lot with the
parking pass 24 hours per day, 7 days per week in 1998.
11. I had an assigned stall within the parking
lot in 1998.
12. My stall in the parking lot in 1998 was
stall 55.
13. I did not pay Telus for use of the parking
pass.
14. In 1998, it was not a condition of my
employment with Telus that I had to have a vehicle to perform my work duties.
15. In 1998, I received a monthly vehicle
allowance from Telus in the amount of approximately $120 per month.
16. In 1998 I did not submit expense reports to
Telus in respect of the use of my vehicle.
17. Prior to receipt of the parking pass, I
either drove to work or took public transportation.
18. Prior to receipt of the parking pass, when
I drove to work I parked at a local parkade, paid for parking, and was not
reimbursed for the cost of parking.
19. If I did not receive the parking pass in
1998 I think I would have still driven to work and paid for parking.
[56] Counsel stated that pursuant to the
admission contained in a letter dated December 29, 2006 - in Exhibit A-1 – Tab
A – at the back of the binder, the appellants accepted the fair market value of
the parking space in each of the 5 facilities as attributed by the
Minister to an individual appellant in the 1998 taxation year.
[57] The appellants closed their case.
[58] Sharon Verenka was examined by Kerry Boyd.
She testified she works as an Administrative Assistant but was employed for 12
years - until 2001 – by Telus. In 1998, she worked in the Real Estate
Department with 3 others, all of whom reported to Harold Latham. Their job was
to administer the issue of parking passes to Telus employees - for facilities inside
3 building in Edmonton – who were at or above a certain pay band
or held the title of Director. There was a waiting list of applicants for a
parking spot for which they had to pay. As a result of a merger with – or
acquisition of – Ed Tel by Telus, the parking passes of certain employees were
“grandfathered” even though the holders thereof were not in a pay band that
would have entitled them – automatically – to a parking pass in accordance with
Telus policy. Verenka identified an application for a parking stall – Exhibit
A-1, tab 6 – and another similar form – tab 7 – that was modified to include
the admonition that the assigned stalls and passes were not to be “sub-leased,
re-assigned of transferred by the Renter at anytime, and so doing will result in
the immediate loss of parking privileges without notice.” In order to issue a
parking pass to a Telus employee not covered by the grandfathering provision,
said employee had to be in pay band 5 and above. In that case, Verenka stated
her department did not need to know the job description of the applicant nor
whether the individual would be working overtime nor if they required a vehicle
to perform their job. The same criteria applied to all parking facilities. The
pass could be used for personal reasons and could be loaned for a limited
period to another Telus employee provided notice was given to Verenka’s
department. The Telus Real Estate Department charged a monthly fee for each
pass and billed – internally – the division or business unit in which the pass
holder was employed.
[59] Verenka was cross-examined by Curtis
Stewart. She stated she did not know why employees in pay band 5 and above
automatically received parking passes nor was she privy to the nature of duties
performed by them. She administered the parking guidelines and policy. The
monthly fee was charged to the cost centre which was later attributed to a
section, group, or department within the Telus organization. She stated a
parking pass was specific to a particular parking facility.
[60] Douglas Brian Connor was examined by Kerry
Boyd. Connor testified he has worked for Edmonton Transit System (ETS) for 30
years. He is a Scheduler, responsible for the bus service for every day of the
year, including holiday periods and special events. Connor referred to an ETS
Ride Guide, Fall & Winter 1998/99 – Exhibit R-8 – that included general
information about fares, links and other matters. The Guide was issued twice a
year and contained 3 maps, titled Day Map, Late Night Service, City Centre Service
and included a Route Frequency Chart. Each map had a legend dealing with items
such as basic service, peak hour and late night service, bus zones, and related
topics. Connor referred to an enlarged copy of the Day Map – Exhibit A-9 – on
which the colours magenta and blue denoted peak service and basic service
hours, respectively. The boxes with various numbers inside indicated the
numbers of the buses that would arrive – at some point – at that location and
whether a stop is also an LRT station. The Late Night Service map ‑ part
of Exhibit R-8 - illustrated the route structure after 10:00 p.m. on weekdays
as well as during weekends and on holidays. Connor stated ETS attempts to
provide bus service to residents within a range of 800 metres of their homes.
The City Centre Service Map – also part of Exhibit R-8 – shows the downtown
core and the location of LRT stations which are underground. The black dots
thereon enclose an arrow to indicate direction of travel. The Route Frequency
chart illustrated the routes and the frequency of service by using appropriate
symbols to impart information to the reader, including the use of the symbol “
- ” within a space to indicate no service during that time period. Connor
stated that a Book of Routes – Exhibit R-10 – effective August 30, 1998 - was
available to members of the public. The scheduling of routes is based on the
season and by September all buses are operating because schools and
universities are in session. At the end of the university scholastic year and at
the end of June when schools close for the summer, certain adjustments are made
to the bus service. During the summer, the service on some routes is scaled
back, mainly on those which carry a high number of students. One section within
ETS deals with requirements for special events. Connor referred to Exhibit
R-10, tab 8, pp. 1 and 2, pertaining to a large area called Route 8. The map
uses letters A B C, etc. as symbols to denote timing points and the express
service on certain routes is indicated by using the symbol listed in the
legend. The weekday schedule for Route 8 is listed on pp. 3 and 4 shows timing
points and times of departure from a particular stop. Connor stated there is a
route extension service on some routes that offers less stops on the way
downtown from an area such as Mill Woods. The Saturday schedule for Route
8 is at p. 5 within Tab 8 and schedules for Sunday and holidays are included in
the subsequent page followed by a page with all Route 8 bus link numbers
providing location of stops and direction of travel. Connor stated information
was available in 1998 via touchtone telephones through which a user could
access automated schedule information by entering a 4‑digit code. Connor
stated that an extract from the guide – Exhibit R-11 – pertained to Route 35, a
late-night route which operated after 10:00 p.m. prior to August 31, 1998 when
it was replaced by Route 325. Connor stated he used his computer equipped with
appropriate software to produce maps in the context of a particular residential
address. The bundle of sheets were filed as Exhibit R-12. The software –
identified by the acronym SLIM – was available in 1998 to personnel in
departments of the City of Edmonton to identify various installations. Connor
utilized the program to locate bus stops, marked with a small circle. On
separate sheets - within Exhibit R-12 – he identified the address of the Edmonton residence of each appellant in 1998, as follows:
p. 1: Carol Amelio – 714 Burley Drive NW
p. 2: Douglas Alloway – 3 Blue Quill Crescent
NW
p. 3: Donald Barnes – 7208 -100 Ave. NW
p. 4: Mary-Patricia Barry – 16045 – 123A St. NW
p. 5: Randy Bayrack – 3640 – 30 St. NW
p. 6: Joanne Beaton – 8704 – 142 St. NW
p. 7: Myron S. Borys – 8703 – 42 Ave. NW
p. 8: Bruce Brandell – 9607 – 96 St. NW
p. 9: Randall L. Edgar – 72
Ekota Crescent NW
p. 10: John Harrington – 21
Greenoch Crescent NW
p. 11: Henry Lazarenko – 6125-157A Ave. NW
[61] Connor referred to Exhibit R-12, p. 1, a
map of the neighbourhood where Carol Amelio lived in 1998 and to nearby Bulyea
Road which was serviced by Routes 30 and 31 and by Route 35 later in the
evening. The frequency of service to Mill Woods was high because it was a
highly populated area. The first two routes connected to Southgate where a passenger could transfer to Route 9 to
proceed downtown or could choose a bus on Route 17, an express route. The map
on p. 2 of said exhibit, is a map of the area where Douglas Alloway lived.
There were 2 bus stops on 28 Ave. near to the Alloway residence at 3 Blue Quill Crescent. The map on p. 3 – relevant to Donald
Barnes - indicates there were 2 stops on 101 Ave. on Route 1 that were serviced
every 15 minutes during peak hours and every 30 minutes during the rest of
the day in 1998. The residence of Mary-Patricia Barry at 16045 – 123A St. –
illustrated on the map at p. 4 - was closest to Route 162 on 121 St. and the buses went downtown from there. Also Route
16, about one and one-half blocks from her home provided service until 1:00
a.m.. Connor stated the map – p. 5 – refers to the residence of Randy Bayrack
at 3640 – 30 St. NW which was situated in a neighbourhood serviced by 3
different routes that – in combination – provided service within a 15-minute
period due to overlapping schedules. The buses ran down 31A St. and transported
passengers to one of two transfer points for continuation to downtown. During
peak hours, the buses on Routes 69 and 72 ran in both directions along the
street and ended up at the same transfer point so one could take whichever bus
arrived first. Joanne Beaton lived at 8704 – 142 St. NW, as shown on the map on
p. 6. There was a stop within a block and Route 112 provided service to
downtown every 15 minutes during the day until evening when it became Route 115
with service every 30 minutes. Myron S. Borys lived at 8703‑42 Ave. ‑ map
on p. 7 – and his area was serviced by Route 66 which ran every 15 minutes
before 10:00 p.m. and every 30 minutes thereafter. The closest stop for Borys
was at Millbourne Road NW and 42A Ave., about two blocks from his
house. The map on p. 8 shows the residential area in which Bruce Brandell lived
in 1998. His house at 9607-96 St. NW was serviced by Route 85 with a stop two
blocks away. That area is close to downtown and the buses running on Route 85
during the day and Route 86 at night provided frequent service. Randall L. Edgar’s residence is shown on the map - at p. 9 – at 72 Ekota Crescent NW. Route 64 made 5 trips downtown in the morning and
8 returning in the afternoon. Edgar’s closest bus stop was on Knottwood Road E, about 3 ½ blocks away. The area was also serviced by
Route 8 which took passengers to a transfer point at Lakewood. Connor stated Edgar could have taken a bus from 102 St and 102
Ave. – near Telus Plaza – at 9:38 p.m. and transferred to a 10:13
p.m. 76 bus at Lakewood and arrived at the stop near his home at
approximately 10:23 p.m.. By so doing, Connor estimated the entire trip from
downtown bus stop to Edgar’s door would have been less than one hour. In 1998,
John Harrington lived at 21 Greenoch
Crescent NW as depicted on
the map at p. 10. The closest bus stop was at 40 Ave. and 55 St. on Route 60 which went to Millgate. The buses on that
route made 7 trips downtown in the morning and 5 back in the afternoon. At
night, the area was serviced by Route 75 which ran every hour until 10:00 p.m.
but the last stop was further from Harrington’s residence. Connor stated that
to arrive at the stop nearest to his house, Harrington would have had to arrive
at Lakewood in time to catch the 10:15 p.m. bus.
Henry Lazarenko lived at 6125 – 157A Ave. NW, shown on the map – p. 11 – and
his neighbourhood was on Route 181 which ran along 156 Ave. and provided
service every 30 minutes from 2 bus stops located less than 800 metres
from the Lazarenko residence. However, there was no service on those routes
after 6:00 p.m. and he would have had to take the LRT at 5:48 p.m. from
downtown in order to be on the last bus on Route 181. Otherwise, he would
have a one and one-half kilometre walk to his home. Connor stated that many
people in that area drove their vehicles to the Park ‘N Ride lot and parked –
free – during the day. Connor stated the cost of an adult monthly transit pass
– in 1998 – was $50.00 and the adult cash fare was $1.60 per trip. The LRT
downtown was free between 9:00 a.m. and 3:00 p.m..
[62] Connor was cross-examined by Curtis Stewart
who referred him to Exhibit R‑12 and to the Route Frequency chart in
Exhibit R-8. Using a trip home by Carol Amelio as an example, Connor also
referred to the Book of Routes – Exhibit R-10 – and stated if she left
downtown at 9:00 p.m. – southbound on Route 9 – she would have arrived at
Southgate at 9:51 p.m. and at the stop nearest her home at 10:06 p.m. - 65
minutes after departing from downtown - and would walk home. Connor stated most
routes had peak service until 6 p.m.. With respect to Douglas Alloway – 3 Blue Quill Crescent NW – p. 2 of Exhibit R-12 – Connor
stated Alloway could leave downtown at 9:01 p.m. and travel on Route 9 to Southgate, arriving at 9:45 p.m., in time to take the bus for a
12-minute ride to the stop nearest home. Connor pointed out the departure time
from the transfer point is important as wait times vary depending on the route.
Connor estimated that during this evening period, it would take about 15-20 minutes
to drive from downtown to Southgate. With respect to service available to
Donald Barnes - p. 3 map – Connor stated he could have taken a bus - running
every 30 minutes - from a stop one block from Telus Plaza at 9:24 p.m., and arrived home by 9:38 p.m.. Connor stated Mary‑Patricia
Barry could have used Route 9 from downtown which was serviced every 15
minutes. By taking the bus at 9:08 p.m., she would have arrived at Northgate 32
minutes later and then transferred to 16 bus at 10:00 p.m. which
arrived at the stop nearest her home at 10:19 p.m. Connor estimated the same
trip home by car would have taken about 25 minutes. Connor calculated the
amount of time required for Randy Bayrack to travel home at night by public
transit. By leaving the downtown stop at 9:08 p.m., he would have arrived at
Millgate at 9:30 p.m. and then taken bus 78 – at 10:15 a.m. - to arrive at
the stop nearest home 15 minutes later. Connor estimated the same trip by car
would take about 25 or 30 minutes. Joanne Beaton lived in an area serviced
by Route 1. Connor stated that if Beaton left 101 St. and Jasper Ave. at 8:58 p.m., she would arrive at the stop at 142 St. and Stony
Plain Road at 9:26 p.m., just
in time to watch the 115 bus drive away without her. The next bus would not
arrive until 10:12 p.m. – 44 minutes later - and she would have a 5-minute ride
to the stop nearest her home, leaving her with a short walk. In Connor’s
opinion, it would have been faster for Beaton to walk home from the 142 St.
stop rather than waiting for the next bus. He estimated the same trip by car
would take about 15 minutes. Connor outlined the best route home – by public
transit – for Myron Borys whose residence is shown on the map at p. 7 of
Exhibit R-12. By leaving downtown – 102 St.
and 102 Ave. - at 9:08 p.m. he would arrive at Millgate station by 9:30 p.m.
and then take the 66 bus at 9:45 p.m. which would drop him off at the stop
nearest home 6 minutes later. In Connor’s opinion, Borys would not have saved
much time by driving home as the buses did not make many stops at that time of
night. The projected route and duration of travel relevant to Randall L. Edgar
- 72 Ekota Crescent NW - was dealt with by Connor in his direct examination but
he had not mentioned the option open to Edgar
to leave downtown at 9:08 p.m. and arrive at Lakewood by 9:43 p.m. and transfer
to a 64 bus which would take him to his home at about 9:55 p.m. which
amounted to less travel time than via another route. Connor stated that John
Harrington could have travelled from his home at 21 Greenoch Crescent NW – on map at p. 10 – on the 9:08 p.m. bus from
downtown, arriving at Millgate at 9:30 p.m. and taking 60 bus at 9:31 p.m.
to his home stop by 9:40 p.m.. Connor stated most bus drivers waited until the
Route 8 bus arrived at the station but some did not which meant those
passengers had a longer wait. Connor stated transit riders were advised to
choose the most efficient travel times because an earlier departure sometimes
turned out to be a longer trip. Connor estimated that Harrington evening trip
would take 25 minutes by car. Connor stated the residence of Henry
Lazarenko at 6125 – 157A Ave. NW. – on map at p. 11 – was located in an area
that would make it very difficult to take the bus after 6 p.m.. Connor stated
that while ETS makes every effort to provide a safe environment for both its
passengers and drivers, problems sometimes arise due to unruly or criminal
behaviour by some transit users. The LRT is staffed by unarmed security
personnel.
[63] Harold Latham was examined by Kerry Boyd.
Latham testified he is employed as a Purchasing Agent for Elk Island Public
Schools. In 1998, he worked for Telus as Manager, Client Services, a division
of the Real Estate Department. He had been employed with Ed Tel - since 1978 -
as a buyer. In 1996, he became Manager at Client Services and had 6 people
reporting to him - including Sharon Verenka - and was responsible for Telus
parking services from Red Deer north. He reported to the Director of Real
Estate Services. Latham stated that at Ed Tel, parking was on a first-come,
first-served basis and the parking lots were outside except for 6 or 7 stalls
at the Main Wire Centre and the lot inside the building at 44 Capital. Ed
Tel had collective agreements with the union that included parking privileges
for employees at a certain rank. The merger of Ed Tel with Telus caused turmoil
and a new Telus parking policy was developed which considered various factors
including the pay band of the employee and the location of the facility. A
condensed – one-page – statement of policy was handed out to Telus employees.
Previous rankings of employees at Ed Tel – known as levels – became pay bands
in the new Telus system. Although only some employees in pay band 4 received
parking passes, all employees in pay band 5 and above were issued with passes.
There were some free passes issued to others who qualified pursuant to a
grandfather clause. Latham stated his department charged the sum of $189 per
month by billing the appropriate cost centre responsible for the employment of
the pass holder. All surface parking lots operated by Telus in Alberta were free. Telus employees submitted an application
form on which they provided details of the vehicles to be used and stated
therein the pay band applicable to his or her position. He identified the older
version of the form – Exhibit A-1, tab 6 – and the replacement at the following
tab. Latham stated his policy was to put applicants on a waiting list even if
they were in a higher pay band than someone who already held a pass or an
assigned stall. Latham stated he presumed that – somehow – each employee paid
for parking within the context of what was referred to within the organization
as “Telus dollars” in the sense there was no real exchange of money but merely
entries in an internal accounting mechanism. From time to time, Latham’s
department established fair market values for parking but the intent was not to
generate any profit from the provision of parking to employees. If there was no
space available within Telus Plaza for an employee who was entitled to
a free parking pass, Telus rented a space in a nearby facility owned or
operated by an independent entity such as Expert Parking Inc. in accordance
with an agreement like the one in Exhibit A-1 at tab 3. Expert Parking Inc.
also operated the gate for the portion of the facility open to the public for
pay parking. Latham stated the inside facilities were equipped with cameras and
panic buttons at various locations and security guards could be summoned but
there were no security personnel specifically assigned to any parking facility.
The policy was to escort female employees to their vehicle within a distance of
8 blocks if they had to park in an outside lot or on the street. Prior to
issuing a parking pass, Latham stated there was no consideration of factors
such as the nature of the position nor any requirement to work overtime. The
pass was effective for every hour of every day of the year.
[64] Latham was cross-examined by Mr. Curtis
Stewart. Latham stated he allocated the cost of a monthly pass to a specific
department and did not know whether employees within the qualifying pay bands
paid real dollars for the parking privilege by way of deduction from salary or
otherwise. However, he confirmed that no employee paid for any surface parking
in any lot owned by Telus.
[65] Counsel filed – as Exhibit R-13 – the
affidavit of Richard Grajkowski, Coordinator of Route Analysis and Safety
Inspections at Strathcona County Transit in Sherwood Park, Alberta. The affidavit of Doug Morgan, Manager of
Service Design, Calgary Transit was filed as Exhibit R-14. The Request to Admit
Facts was filed as Exhibit R-15 and Read-Ins of the Respondent were filed as
Exhibit R‑16.
[66] The respondent’s case closed. The
appellants did not adduce any rebuttal evidence.
[67] Curtis Stewart, counsel for the appellants
submitted the primary issue before the Court was whether the parking provided
by Telus to the appellants constituted a benefit to them within the meaning of
paragraph 6(1)(a) of the Act, since that provision requires
employees to include in income those amounts that are not salary or wages
pursuant to subsection 5(1) of the Act. The difficulty arises in
determining the value of any benefit which must be measurable in monetary terms.
Counsel conceded the parking passes were provided to the appellants by Telus –
and received by them – in the course of their employment. However, counsel
submitted the term “benefit” is not defined in the Act and there is
jurisprudence which supports the appellants’ position that the parking passes
did not confer an economic benefit on them because the provision of the parking
was primarily for the benefit of Telus and any personal enjoyment accruing to
any appellant was incidental to the overarching Telus business purpose. In
counsel’s view, the parking provided by Telus was not a material acquisition
which conferred an economic benefit on any appellant because it did not
increase a recipient’s net worth if one took the whole of the transaction into
account. Further, counsel submitted the law is clear that a payment made
primarily for the convenience of the employer will not be taxable in the hands
of the employee. As a consequence, it is important to determine who is the
primary beneficiary of such payment. Counsel referred to two decisions of the
Tax Court of Canada (dealt with later in these reasons) in which the Court held
the provision of a free parking pass – by Telus – to employees did not confer a
taxable benefit. In another case involving employees of Saskatchewan
Telecommunications (SaskTel), the Tax Court judge found the provision of
parking was more beneficial to SaskTel than its employees and the employees had
not received any taxable benefit with respect to the parking privilege extended
during that 70% portion of their employment when their vehicle was not needed
for business purposes. Counsel submitted the evidence was clear that the
provision of free parking passes to the appellants by Telus was open and
above-board in accordance with stated policy and was not a means by which to
disguise extra remuneration. In addition, the evidence demonstrated the
provision of parking primarily benefited Telus because of the nature of the
duties performed by the appellants, all of whom had substantial responsibilities
and a heavy workload as a consequence of either holding a position in pay band
5 and above or – if in pay band 4 –also performing duties that required them to
arrive early, work late or to work a significant amount of overtime not only
during the week but on some holidays and weekends. Counsel submitted it was
apparent the availability of parking pursuant to the pass privileges allowed
the appellants to carry out their duties in an efficient manner because of the
flexibility of a work schedule inherent in the parking arrangement. Counsel
submitted it was Telus – overall – that benefited from the parking pass because
it permitted senior personnel to have ready access to their vehicles for
business purposes and facilitated their ability to work beyond normal business
hours during an extremely busy period in Telus corporate history and that Telus
had made a business decision to provide free passes to certain employees.
Counsel pointed out Telus policy was to reimburse employees for taxis and for use
of personal vehicles and that senior management in each Telus department or
business unit decided who would receive a parking pass.
[68] Rhonda Nahorniak, counsel for the
respondent, submitted the position of the Minister was clear. The provision of
free parking was a perquisite, received in the course of employment and
constituted a taxable benefit. In her view of the evidence, the appellants were
not required by Telus to use their vehicles for business purposes and were able
to hire taxis or other forms of transportation and to be reimbursed. Since
Telus had not made it a condition of employment of any appellant that he or she
have a vehicle or hold a valid driver’s licence, it was apparent the parking
passes had real monetary value since the appellants would have had to pay for
parking in a similar facility. In her view of the jurisprudence, that was a
benefit of significance that satisfied the de minimus test applied in
cases where the real worth of a benefit enjoyed by an employee was trivial, not
worth measuring for purposes of inclusion into income. Counsel submitted an
annual free parking pass had substantial fair market value and that those
appellants who used it enjoyed the convenience, comfort, and security afforded
by 24-hour, year-round accessibility to a parking facility rather than using
public transit. Since the cost of travelling to and from work – without more -
is not deductible under the Act, counsel submitted parking costs are
just another expense associated with employment whether one works regular hours
or overtime. Counsel conceded the Minister should not second‑guess the
business acumen of Telus but the evidence made it clear the only demonstrable
criteria utilized by Telus prior to issuing a parking pass was the recipient’s
rank or placement within a pay band unless he or she otherwise qualified
pursuant to a grandfathering arrangement arising from the merger of Ed Tel and
Telus. Counsel submitted the Tax Court decisions relied on by the appellants
arose in relation to the 1994 taxation year during which the Telus policy was
different – as set out in paragraphs 3 of the Global Admissions – and the
relevant facts in those cases were not present in the within appeals. Counsel
conceded Dan Delaloye was in a different position than other appellants in that
he did use his vehicle – leased for him by Telus - for business purposes 95
days a year as recorded in a mileage log and that Bruce Brandell - who never
used the pass – was at the other end of the spectrum. However, the rest of the
appellants clearly enjoyed a benefit that was far from being merely incidental.
Counsel referred to the agreement with counsel for the appellants concerning
the fair market value of the stalls utilized by the appellants and submitted
there had been no evidence adduced to permit the Court to arrive at any other
value whether based on the cost of the benefit to Telus or the value to an
appellant as an employee, although the Court might be willing to pro-rate the
benefit between Telus and an individual appellant.
[69] Counsel for the appellant – in reply –
submitted the current jurisprudence is that if a court finds that something is
provided to an employee primarily for the benefit of the employer, then no
benefit accrues to the employee and that is the end of the matter. As for the
business rationale by Telus with respect to the issue of passes, counsel
suggested the policy of assigning them to senior people was reasonable,
particularly in the context of the extremely onerous workload during 1998 as
demonstrated by the evidence.
[70] The relevant provision of the Act is
paragraph 6(1)(a) which reads:
Amounts to be included as
income from office or employment -
There shall be included in
computing the income of a taxpayer for a taxation year as income from an office
or employment such of the following amounts as are applicable:
a) value of benefits – the value of board, lodging and other benefits
of any kind whatever received or enjoyed by the taxpayer in the year in respect
of, in the course of, or by virtue of an office or employment, except any
benefit …
The term
“benefit” is not defined in the Act.
[71] The Supreme Court of Canada in The Queen
v. Savage (1983), 83 DTC 5409 adopted this passage taken from
the judgment of Evans J.A. in The Queen v. Poynton [1972] 3. O.R. 727
at p. 738, [72 DTC 6329 at pp. 6335-6] as follows:
I do not believe the language to be restricted to benefits that are
related to the office of employment in the sense that they represent a form of remuneration
for services rendered. If it is a material acquisition which confers an
economic benefit on the taxpayer and does not constitute an exemption, e.g.,
loan or gift, then it is within the all-embracing definition of s.3.
[72] The position of the appellants is that
under the circumstances in the within appeals, the provision of free parking
did not represent a material acquisition in the sense that there was an
economic benefit conferred because there was no increase to the net worth of
the recipient of a parking pass.
[73] In Attorney General of Canada v. Hoefele
et al 95 DTC 5602, the Federal Court of Appeal considered whether
taxpayers who were required by their employer to move from Calgary to Toronto
and who received a mortgage subsidy to defray high housing costs in Toronto had
received a taxable benefit within the meaning of paragraph 6(1)(a) of
the Act. At p. 5604 of his reasons, Linden J.A. stated:
According to the Supreme Court of Canada, then, to be taxable as a
"benefit", a receipt must confer an economic benefit. In other words,
a receipt must increase the recipient's net worth to be taxable. Conversely, a
receipt which does not increase net worth is not a benefit and is not taxable.
Compensation for an expense is not taxable, therefore, because the recipient's
net worth is not increased thereby.
[74] At p. 5605, Linden J.A. continued, as
follows:
... If, on the whole of a transaction, an employee's economic
position is not improved, that is, if the transaction is a zero-sum situation
when viewed in its entirety, a receipt is not a benefit and, therefore, is not
taxable under paragraph 6(1)(a). It does not make any difference
whether the expense is incurred to cover costs of doing the job, of travel
associated with work or of a move to a new work location, as long as the
employer is not paying for the ordinary, every day expenses of the employee.
[75] In the within appeals, the provision of
free parking by Telus to the appellants had the obvious effect of eliminating
the need for them to pay for the same privilege out of their own pockets. In
that sense, and without more, there was a benefit conferred on them that had a
fair market value ranging from $1500.00 to $2800.00 per year depending on the
location of the facility and whether the stall was assigned. The provision of
free parking by Telus was not a zero-sum transaction in the sense that term was
used in Hoefele. Instead, it conferred a measurable economic advantage.
[76] More important is the question whether that
advantage accrued primarily to Telus. The position of the appellants is that
the economic advantage was enjoyed by the employer and therefore is not a
taxable benefit to them. They argue that Telus incurred other expenses when
employees worked outside regular business hours and that it had a policy – in 1998
– of paying for taxis fares between an employee’s home and their place of work
when beginning or ending work late at night or early in the morning, as
admitted at paragraph 3 of the Global Admissions in Exhibit A-1. Further, Telus
policy was to pay for taxi fares required for travel during regular business
hours where such transportation was required in the course of carrying out
their duties. As a result, the appellants contend that if certain employees
arrived early or worked late by utilizing their vehicles, then Telus gained the
benefit of having them work beyond regular business hours, thereby becoming the
primary recipient of the advantage derived from the use of those employee
parking passes.
[77] In respect of the general principles of
section 6(1), Professor Vern Krishna in his book Fundamentals of Canadian
Income Tax (9th ed.) (Carswell, 1996) at pp. 229-230
stated:
A
benefit is an economic advantage or material acquisition, measurable in
monetary terms, that one confers on an employee in his or her capacity as an
employee. Thus, there are several elements to this analysis:
1.
Did the employee receive or
enjoy an economic advantage?
2.
Is the economic advantage
measurable in monetary terms?
3.
Was the economic
advantage for the benefit of the employee or for the benefit of his or her
employer? and
4.
Did the employer confer the
economic advantage on the employee in respect of, in the course, of, or by
virtue of the employment relationship with the employee?
If
we answer all these questions in the affirmative, the economic advantage or
material acquisition is a taxable benefit from employment unless the statute
specifically exempts it from tax.[emphasis
added]
…
The
third question to consider is whether the economic advantage was for the
benefit of the taxpayer or for the benefit of the employer who conferred it. A
payment that is primarily for the convenience of the employer is not taxable to
the employee. Thus, the key is: who is the primary beneficiary of the
payment. For example, where an employer requires an employee to take
computer courses so that he or she is better trained for his or her job, the
cost of the job training is not a taxable benefit to the employee even though
he or she becomes a better qualified and more valuable person. The benefit to
the employee is ancillary to the benefits that the employer derives.
Similarly,
where an employer sends her employee for second language training, the expenses
are primarily for the benefit of the employer even though the employee is
better trained and marketable. What if the employer sends one of its senior
executives on a fully reimbursed basis to Paris for three years? Would it make a difference if
the executive was 45 years of age or 70 years?
There
is no bright-line test, however, to determine what constitutes a benefit to the
employee and convenience to the employer, particularly where there are mutual
benefits. The convenience to
the employer test does not imply that the employee cannot derive pleasure from
the task entrusted to him or her. For example, a hotel manager who is
“compelled” to live in a luxury suite in a resort hotel is not taxable on the
value of the suite if the manager’s job requires him or her to be on the
premises. [emphasis added]
[78] In R. Peter B. Lowe v. Her Majesty the Queen
96 DTC 6226, the Federal Court of Appeal dealt with the case of a taxpayer who
was an account executive employed by an insurance company. At the request and
expense of his employer, he and his wife attended a conference in New Orleans. The Minister included a benefit in the taxpayer’s
income by assessing a value equal to the cost of the trip to the employer minus
the estimated amount attributable to the business portion of the trip. Stone
J.A. – writing for the Court – at p. 6230 of his reasons stated:
… It seems to
me in light of existing jurisprudence that no part of the appellant's trip
expenses should be regarded as a personal benefit unless that part represents a
material acquisition for or something of value to him in an economic sense and
that if the part which represents a material acquisition or something of value
was a mere incident of what was primarily a business trip it should not be
regarded as a taxable benefit within subparagraph 6(1)(a) of the Act. The Tax
Court Judge found that the primary purpose of the appellant's trip to New
Orleans was not for personal pleasure but for the purposes of the employer's
business and allowed 80% of the appellant's costs as the business portion of
the trip. His refusal to allow the whole as business expenses was based on the
view that the trip to New Orleans was to an extent to 'reward' him and because
he derived some pleasure from the trip. When the time spent in New Orleans by
the appellant on the employer's business is considered, it can be readily seen
that the appellant had precious little time left over for personal pleasure.
Nor is it clear that there was any element of 'reward' for the appellant. It
may well be, depending on the circumstances, that a true 'reward' situation
could support a conclusion that a trip was somehow earned by an employee so as
to make the cost thereof, in whole or in part, taxable in the hands of the
employee. The essential question in the present case, it seems to me, is
whether on the facts the principal purpose of the trip was business or
pleasure. Here it was found to be the former. Any pleasure derived by the
appellant must, in my view, be seen as merely incidental to business purposes
having regard to the fact that the overwhelming portion of the appellant's time
in New Orleans was devoted to business activities.
[79] In McGoldrick v. Canada [2003]
T.C.J. No. 502, Woods J. considered the appeal of a taxpayer who worked at a
casino where employees were allowed one free meal per shift from the cafeteria
at the work site. The employer also provided entertainment events and free hams
and turkeys. At paragraph 20 of her reasons, Woods J. stated:
The testimony
of the Vice President, Human Resources of Casino Rama was that the required use
of the Turtle Island Café was for the benefit of the employer. If the personal
element is incidental, it should not constitute a taxable benefit. In my view
the personal element is not incidental. The fact that Mr. McGoldrick did not
like eating at the Turtle Island Café should not be determinative. Also, the
amount of the expense saved is not immaterial compared with the amount of the
taxable benefit and it should not be ignored.
[80] At paragraph 23 of her reasons, with
respect to the entertainment events, Woods J. found they were only occasionally
attended by Mr. McGoldrick and did not accept that a benefit has been
“received.” Woods J. decided the cost of the free hams and turkeys received by
the taxpayer from the employer should be included in income pursuant to
paragraph 6(1)(a) of the Act.
[81] The taxpayer appealed to the Federal Court
of Appeal. The judgment of the Court was delivered by Malone J.A. as reported
in 2004 FCA 189. At paragraphs 3-5, inclusive, Malone J.A. stated:
[3]
Mr. McGoldrick works for Casino Rama at a large casino complex near Orillia, Ontario. Casino Rama provides one free meal per shift to its employees at
an employee cafeteria. Employees are not permitted to bring food onto the
casino premises for sanitation reasons, and it is impractical to eat off-site
due to the casino's location. The only alternatives to eating at the employee
cafeteria are not to eat or to use coin-operated vending machines provided by
the employer. Most days Mr. McGoldrick ate at the employee cafeteria even
though he did not enjoy the experience.
Tax
Court Proceedings
[4]
Before the Tax Court, Mr. McGoldrick argued that the provision of these meals
was not a taxable benefit because they were not provided for employee relations
purposes. Rather, they were provided solely because of business considerations,
namely sanitation, which gave rise to a rule precluding all employees from
bringing their own food onto the casino premises. He urged that the provision
of these free meals is not a taxable benefit if any personal enjoyment is
merely incidental to the business purpose. In the alternative, he claimed that
the meals were not taxable because they were reimbursement for his being denied
the right to bring a meal to work. Reimbursement for out-of-pocket expenses is
also an established exception to paragraph 6(1)(a) (see The Queen v. Hoefele, 95
DTC 5602).
[5]
The Tax Court Judge canvassed a number of leading authorities, made a number
of factual determinations and concluded that the cost of the meals and the free
hams and turkeys were taxable benefits to be included in computing the
appellant's income for the taxation years in issue pursuant to paragraph
6(1)(a) (reported as McGoldrick v. Her Majesty the Queen, 2003
DTC 1375). The Judge determined that while there was testimony that the
meals were provided for a business purpose, the personal benefit to Mr.
McGoldrick could not be said to be incidental in this case; the amount of the
expense saved being material when compared with the amount of the taxable
benefit. The appellant's reimbursement argument was similarly rejected as, on
the basis of the evidence presented, the meals were not reimbursement for
out-of-pocket expenses so as to fall within the reimbursement exception to
paragraph 6(1)(a).
[82] At paragraphs 9 and 10, inclusive, Malone
J.A. continued:
[9] As a
general rule, any material acquisition in respect of employment which confers
an economic benefit on a taxpayer and does not constitute an exemption falls
within paragraph 6(1)(a) (see The Queen v. Savage, 83
DTC 5409 at 5414 (S.C.C.)). In this case, the benefit is the money saved by
the taxpayer in preparing a lunch or in making a food purchase from the casino
vending machines while at work. Where something is provided to an employee
primarily for the benefit of the employer, it will not be a taxable benefit if
any personal enjoyment is merely incidental to the business purpose (see Lowe
v. The Queen, 96
DTC 6226 at 6230). The Tax Court Judge found that although the meals were
provided for a business purpose, the personal benefit to Mr. McGoldrick could
not be said to be incidental. That was a factual finding, and no palpable and
overriding error on the basis of the evidence has been established. Indeed, Mr.
McGoldrick voluntarily signed an authorization for the employee meal tax
benefit at the commencement of his employment.
[10] In oral
argument, the appellant frequently noted that, in his view, the meals were not
worth the $4.50/day ascribed by the employer as the taxable benefit. That
amount was based on the cost to the employer of providing the meals and
seasonal gifts, including the PST and GST. He also indicated that although
assessed a tax benefit on the basis that he received such a meal
every day he worked more than five hours, in fact he often declined to go to
the cafeteria. As a person living alone, he often did not take the turkeys or
hams offered at holidays.
[83] I will review the decisions in various
“parking cases.” In Saskatchewan Telecommunications v. Her Majesty the
Queen 99 DTC 1306,
Beaubier J. heard an appeal from an assessment of Goods and Services Tax
(GST) in the course of which it was necessary to deal with the issue whether
any portion of the parking provided to the employees of SaskTel constituted a
“benefit amount”, required under paragraph 6(1)(a) of the Act to
be included in computing such employees income. The Minister had assessed
SaskTel for a certain period on the basis it had not withheld - at source from
the subject employees - any amounts under the Act in respect of the
parking privileges provided to them and had not collected and remitted the
proper amount of GST in respect thereof. At paragraphs 11-14 of his reasons,
Beaubier J. stated:
[11] The
Appellant's evidence is that the employees who were provided parking stalls
which remain subject to assessment did not have the use of particular stalls.
They were expected by the Appellant to travel, from time to time, from their
assigned offices in the course of various duties assigned to them by the
Appellant in the course of their employment, which they did. On average this
travel occurred on more than 30% of their working days. Their vehicles and they
had access to that parking 24 hours a day, 7 days a week throughout the year.
The subject employees could use the parking facilities after office hours for
their personal use in their discretion. Their usage during office hours was for
the benefit of the Appellant. The Appellant provided business parking and its
employees used their own vehicles located in that parking for the Appellant's
business from time to time as required by their duties. As a result, business
travel occurred more quickly and efficiently. This benefited the Appellant, not
the employees.
[12] However,
each subject employee paid the Appellant the rates described and these rates constituted
reimbursement for the personal aspect of their occasional use of the parking
after office hours. Thus, any personal benefit was paid for in the rates levied
on the employees by the Appellant.
[13] In the
Court's view this is an evidentiary issue. The Appellant proved its contention
respecting the parking. The Respondent did not prove that the employees
received any personal benefit from the parking or that the rates it calculated
represented either the correct value or the fair market value of the portion of
the parking which constituted personal benefit to the employees. Rather, the
Appellant and its employees were at arm's length and they made mutual deals
respecting the parking in which each got consideration for what it gave.
[14] Thus, any value
which an employee received was for that employee's occasional use of the
parking facilities for shopping or entertainment similar to the personal use
described by Mr. Unick. The Appellant and its employees agreed on a rate of
payment by each employee that is commensurate with the personal parking value
that those employees received. For this reason, this portion of the appeal is
allowed.
[84] In Monteith v. Canada [1997] T.C.J.
No. 1282, although the judge did not agree with the methods used by the Minister
to assess the value of parking provided to the taxpayer by his employer, the
provision of an assigned stall was held to constitute a taxable benefit.
[85] In Richmond v. Canada [1998] T.C.J.
No. 258, the taxpayer was provided with a reserved parking stall at Metro Hall
which he used only about 20 per cent of the year because the rest of the time
he walked to work. The argument of the appellant was that a benefit not used is
not a benefit received and he should have been assessed a benefit based on his
actual usage rather than the value for the entire year. In his reasons, Bell J.
referred to the case of Soper v. M.N.R. 87 D.T.C. 522 and at
paragraph 7 of his reasons commented:
Whether the Appellant used the property is of little consequence. It
was available to him and was accordingly a benefit to him. He adduced no
evidence to establish that the value of the assigned exclusive parking spot was
less than that assessed by the Minister.
[86] The Tax Court in Todd v. R. [2001]
3. C.T.C. 2816 held that a taxpayer who worked for a company in Red Deer in the morning and in Calgary
during the afternoon did not receive a taxable benefit with respect to free
parking because that provision was for business purposes and was of no personal
benefit to the taxpayer.
[87] The appellants relied – strongly - on the
decision of Teskey J. in Chow v. Canada [2000] T.C.J. No. 902 which also
included the appeal of Brian Topechka heard on common evidence. Both appellants
were employed by Telus and worked at Telus Plaza
in Edmonton. Both were assessed by the Minister on the
basis they had received a taxable benefit within the meaning of the Act because
they had been provided with parking space. With respect to the appellant Chow,
these facts are set forth in paragraphs 6 – 14:
[6] Chow was
required to report to work at the Telus south -- Telus Plaza, South Tower at
120 - 100 Street, Edmonton, Alberta.
[7] Chow's
salary was determined in accordance to pay band level 26 which was generally
applicable to employees with similar functions and/or responsibilities.
[8] Telus
provided parking to all its employees who wishes parking in pay band level 26
whether they are required to work downtown locations or in other areas of Alberta. In
most of the other Telus areas parking is available to its employees on streets
without charge.
[9] Telus
provided Chow with parking at the Telus Plaza parkade, which was a two floor structure owned
by Telus and formed part of the Telus
Plaza. Chow did not
have a reserved spot for his exclusive use in the parkade but was entitled to
the parkade on a first-come first-serve basis. The parkade was open to the
general public and sometimes was full and unavailable.
[10] Chow used
his parking privileges in the parkade almost exclusively for business use in
connection with his employment.
[11] Telus
employees in pay band 26 who report to work at Telus Plaza,
south tower, are entitled to parking privileges in the parkade but do not
receive additional compensation if they elect to forego such parking privileges
and some employees do this.
[12] Chow was
not economically enriched if the other employees did not use the parking
privileges in pay band level 26 as a result of this privilege.
[13] Although
Chow used his vehicle for limited business purposes, he did not receive any
reimbursement for the use of his vehicle for business purposes within the City
of Edmonton. Chow used the vehicle one or two
times a month on Telus business. Fifty percent of his work for Telus
was required after hours work. He could use public transportation in
the morning but after six p.m. public transportation was not an option as there
would have been several transfers, together with a two to three kilometre walk
at end. Taxis would have been paid for for the late work but Telus
elected to provide the parking pass as it was more economical to
Telus. The parking pass for Chow gave Telus many extra hours of
employment, which undoubtedly Telus received from all of its pay band 26
employees.
[14] It is
Telus's practice to reimburse employees working late for taxi fares incurred on
such occasions as public transportation would not be available.
[88] The facts pertaining to Topechka were
stated in paragraphs 15-18, as follows:
[15] In
regards to Brian T-O-P-E-C-H-K-O, or K-A (Brian). Brian was employed
through the '94 taxation year as a corporate financial analyst in the treasury
division of Telus. Brian was required to report to work at the Telus Plaza, south tower, at the same address as Chow. Brian's
salary was determined according to pay band level 24, which is generally
applicable to employees with similar functions and/or
responsibilities. Employees in pay band 24 do not receive a parking
pass.
[16] Due to the
nature of his work with Telus, Brian is required to begin the work day at five
a.m. each weekday. Telus benefit by having Brian report to work at this time in
that it provided Telus with the possibility of investing its cash assets in
financial markets during the prime hours of operation in Canada
and thus enabling it to better products and returns.
[17] Brian was
not able to use the municipal public transportation network in order to report
to his place of work at five a.m. each weekday.
[18] Telus
provided Brian with a parking privilege at the parkade. Brian did
not have a reserved spot for the exclusive use of the parkade but was entitled
to park in the parkade on a first-come first-serve basis. Brian used
his parking privileges in the parkade exclusively for business use in
connection with his employment and did not utilize such privileges for any
personal use or purpose and when he was absent from his job his replacement had
his parking pass. Brian was two or three times a month required to use his
vehicle for business purposes and did not receive any reimbursement for the use
of his vehicle for business purposes within the City of Edmonton
which was part of the quid pro quo for the parking pass.
[89] At paragraphs 19 and 20 and in part of
paragraph 21, Teskey J. commented:
[19] The
respondent's position in law is not accurate. Parking is different from
travelling to and from the place of employment. The argument that
some employees pay for parking and, therefore, these employees that receive a
parking space receive a benefit does not carry the day.
[20] Each and
every contract of employment must be looked at individually to determine all of
the terms thereof and then the court must determine is there an economic
benefit to the employee as opposed to the employer?
[21] Free
parking is provided to many groups of employees from one end of this country to
another. These groups are too numerous to even name a
few. The Minister is wrong to start with the premise that if an
employee receives free parking from an employer there is a taxable benefit
pursuant to paragraph 6(1)(a)….
[90] After referring to the quotation in The
Fundamentals of Canadian Income Tax, supra, by Professor Krishna and
reviewing relevant jurisprudence with respect to what constituted a taxable
receipt – including the decisions in Savage, Hoefele, and Lowe,
supra - and after finding the economic benefit flowing from the provision
of parking spaces to the appellants was gained by Telus, as their employer,
Teskey continued - at paragraphs 27-30, inclusive, as follows:
[27] In the
Chow appeal, the parking space allowed Chow to use his own motor vehicle once
or two a month on Telus business and to receive month in and month out many
times the value of the parking privilege in extra hours of overtime work that
was to Telus's economic advantage.
[28] The
economic benefit arose to Telus by having this mid level executive work these
late hours and it was cheaper for Telus to provide a parking space than to pay
the taxi fares, so the benefit was to Telus, the employer.
[29] In the
Brian appeal, the parking space allows Telus to obtain better performance from
its employee by coming to work at five a.m. daily a week, making it possible
for Brian to use his own vehicle two or three times as well as for business
without expenses to Telus.
[30] It was
Telus's economic advantage to provide the parking privilege and at the most
economically way, therefore, both these appeals are allowed with costs.
[91] It is important for the purposes of
analysis to summarize the facts in the Chow case – first, pertaining to
Chow - as follows:
1. Chow did not have a reserved spot for his
exclusive use but was entitled to park in the facility on a first-come,
first-served basis, sometimes referred to as “scramble parking”.
2. The parkade was open to the public and sometimes
was full.
3. Chow used his parking privileges almost
exclusively for Telus business.
4. Chow was not reimbursed by Telus for using
his vehicle for business once or twice a month within the City of Edmonton.
5. He was required to work 50% of the time
after regular hours.
6. Chow could have used public transit in the
morning but in order to return home after 6 p.m. would have needed to take
several transfers leaving him with a two to three kilometre walk at the end.
7. Telus paid taxi fares for employees
working late on occasions when public transportation would not be available.
8. Telus elected to provide a parking pass as
it was more economical to Telus and it gave the company many extra hours or
employment which it undoubtedly received from all other employees in the same
pay band ‑ 26 – who received parking privileges.
[92] With respect to the appellant – Topechka –
in the Chow decision, the relevant facts were:
1. Even though Topechka was in pay band 24, a
rank not entitling him to a parking pass, he received one for the lot at Telus Plaza and could park on a first‑come, first served basis.
2. He had to start work – as a Corporate
Financial Analyst - at 5 a.m. each weekday and could not use municipal public
transportation.
3. Topechka used his parking privilege
exclusively for business purposes and when absent his replacement used the
pass.
4. He used his vehicle for business purposes
within the City of Edmonton two
or three times a month and did not receive any reimbursement.
5. The lack of reimbursement for business use
of his vehicle was part of the quid pro quo for the free parking pass.
6. Topechaka’s early arrival at work
facilitated participation during prime hours in the financial markets in Canada which provided Telus with the opportunity
to invest cash assets, thereby enabling it to earn better returns on capital.
[93] There are several major differences in the
facts in the within appeals as follows:
1. Even though most appellants did not have
an assigned stall in the particular facility, each of them could always park
his or her vehicle.
2. Telus reimbursed them on a per-kilometre
basis for use of their vehicles for business purposes.
3. Telus reimbursed the appellants for
parking expenses - at other locations - incurred in the course of their
employment.
4. No other Telus employee could use their
pass for Telus Plaza or 44
Capital without notification to the Real Estate Department and a pass was
specific to a particular facility.
5. In 1998, Telus paid for taxi fares incurred
during regular business hours and outside regular hours, including
transportation between home and work for those periods earlier than 6:45 a.m.
or later than 11:00 p.m..
6. There was no evidence of any analysis
carried out by Telus to determine whether it was more cost effective to provide
parking to its employees as opposed to reimbursing them for taxi fares.
7. There was no evidence adduced of any
comparative examination by Telus of the cost of having employees use their own
vehicles when working outside of regular business hours and reimbursing them
for taxi fares.
8. Even though in relation to employees in
pay bands 4 and 5 there was an implied condition that overtime was expected
when required, payment for additional hours was generally built into the
employee’s overall compensation and the bonuses were paid pursuant to the
variable pay policy.
9. Parking passes could be used for
non-business purposes every day of the year.
10. None of the appellants asserted they had
worked overtime because they had received a free parking pass.
11. The majority of appellants had a work
schedule – in 1998 - that permitted them to take public transportation to and
from work, even though that was not – generally - as convenient during late
evening hours, weekends or holidays compared to using their personal vehicle.
12. None of the appellants was required to work
50% of the time outside regular business hours.
13. The Real Estate Department issued a pass –
automatically – to those employees in pay band 5 and above and to those in
lower pay bands if covered by a grandfather clause as a result of a merger or
acquisition.
[94] As Bowman J. (as he then was) commented in Pezzelato
v. The Queen, 96 D.T.C. 1285, at p. 1288:
It is easy to point to extremes at either end of the spectrum, but
the cases that come with increasing frequency before the courts are not at
either end. They fall somewhere in between. The courts must decide on which
side of the line each case falls.
[95] Recently, in Toutov v. R. 2006
D.T.C. 2928, Chief Justice Bowman stated:
[2] The general rule of course is that the cost of traveling from
one’s home to one’s place of work is not a deductible expense. This has been
settled law for many years.
[96] I am ready to decide these cases, beginning
with the appeals of Dan Delaloye and Bruce Brandell as each occupies an unusual
point along the spectrum.
Dan Delaloye:
[97] Delaloye was transferred to Calgary – in 1997 – from Edmonton, to supervise a new
division of Telus and as a Vice-President in pay band 6, was responsible for
several other offices in Calgary, Lethbridge, Edmonton and Grande Prairie. He testified that part of his duties was
to increase the visibility of Telus in Calgary since AGT throughout its history
had been based in Edmonton. Telus provided him with a leased vehicle
and issued a free parking pass for the lot in Telus
Tower. He assumed the Honda Acura had been provided to him
because of the position he occupied as Vice-President and the nature of his
duties which required him to use the vehicle both in Calgary and for travel to Edmonton and other places in Alberta.
When he travelled by air, he drove the car to the airport. Delaloye testified
that he considered it “absolutely essential” that he had a parking pass which
provided him the opportunity to use his car during the day to visit Telus
clients and other Telus pay phone offices in Calgary. He stated it was
extremely difficult to use public transportation to carry out those duties
particularly when participating in between 20 and 40 community activities and
functions as a representative of Telus, some of which were held at 7:00 a.m. or
during the evening. Some days, he made 4 or 5 trips away from his office.
He could not recall having used the parking space for personal reasons although
he was entitled to do so. Delaloye kept a log and the business portion of
vehicle use – in 1998 - was 70% during the course of 137 days and he paid
income tax on the personal benefit attributable to the remaining 30%. Delaloye
conceded there had been no analysis undertaken either by him or Telus to
compare the cost of taxi fares with the Minister’s assessment of fair market
value - $1,800.00 plus $126.00 GST for a total of $1,926.00 per year - of the
parking space assigned to him but considered it reasonable to assume that his
lost time – at $68.97 per hour – waiting for a taxi would amount to
several thousand dollars per year. Delaloye enjoyed the convenience of driving
to and from work at his convenience, particularly during weekends. He received
a bonus for his performance in 1998 and did not consider the value of the
parking pass was factored into his basic compensation. He was away from Calgary on business about 70 days in 1998 and it is
reasonable to assume his assigned parking stall was empty during those times.
[98] The key question is who is the primary
beneficiary of the payment for the parking stall. The definition of “primary”
according to The Canadian Oxford
Paperback Dictionary – Oxford
University Press – 2000 – is:
1a. of the first importance; chief (our primary concern)
b. fundamental, basic.
3. of the first rank in a series;
[99] It is important not to get sidetracked by
becoming ensnared in a numbers game. That sort of exercise is often necessary
when dealing with a GST case where it is important to decide whether a
“passenger vehicle” was acquired “primarily” for a certain specified use within
the ambit of the relevant provisions of the Excise Tax Act or whether it
was used “all or substantially all” of the time for a particular purpose. In
the case of Ruhl (W.) v. Canada [1998]
G.S.T.C. 4, Bowman J.T.C.C. (as he then was) held that a truck which was used
to transport passengers or equipment over 80% of the time amounted to
substantially all of the time. There was also a finding that the truck was
designed primarily to carry goods and equipment and the carriage of passengers
was a secondary purpose. Counsel for the respondent had submitted that
“primarily” meant over 50% as opposed to “substantially all” which Revenue
Canada – as it then was – decided was 90% of the time.
[100] In another GST case - Myshak (D.) v.
Canada [1997] G.S.T.C. 59, involving the use of a particular vehicle, Judge
Sobier – at paragraph 19 stated:
While the Vehicle may have been used primarily for commercial
purposes and in the transportation of goods, et cetera, it was not used all or
substantially all of the time for those purposes. Its use must be more than
passing. By using the word “all”, we are invited to give a meaning to the word
“use” which means all of the time or only for that purpose. The insertion of
the word “substantially” in this sub‑paragraph is to make the word “all”
less intrusive and less encompassing but still of greater weight than merely
primarily.
[101] The reason I mention these cases is that in
the context of Delaloye’s appeal, the extent of vehicle use by Delaloye,
measured either in the number of days – 137 - or the proportion – 70% – for
business purposes – which did not include driving between home and work – is
not determinative as in those scenarios when it must conform to requirements
imposed by specific language in a statutory provision. Instead, it requires an
examination of the totality of the evidence with a view to assessing on a
reasonable, practical, basis whether under the particular circumstances,
Delaloye’s enjoyment of the parking privileges afforded by the free pass
supplied by Telus was ancillary to the benefit derived by his employer. I
consider it significant that Telus provided him with a leased vehicle which was
used 70% of the time for business purposes in 1998. To also supply a parking
space for that vehicle is reasonable, particularly in view of the nature of the
duties performed by Delaloye, not only in the course of his ordinary work -
which required him to travel by car in Alberta – but also to visit important
clients such as Fairmont Hotels in Jasper, Banff, Golden and to facilitate his
role as the new point man in Calgary assigned the task of promoting and
enhancing the corporate image of Telus.
[102] I have taken into account the nature and
extent of the use of the vehicle and the parking space and the purpose for
which it was provided. I have considered the special circumstances of
Delaloye’s position in 1998 and his employer’s requirement that he travel in
the course of his employment not only in pursuit of Telus business but also as
a corporate ambassador. There is no basis on which to find that the type of
business travel recorded by Delaloye in the log would have been more efficient
had he used other modes of transportation. As an executive charged with certain
responsibilities, he made business decisions on a regular basis, including when
to travel by air. In the Reply to Delaloye’s Notice of Appeal, the Minister
assumed in subparagraphs 8(x) and 8(y) that the parking pass primarily
benefited him and not Telus and that it was a personal benefit conferred to
facilitate travel to and from the workplace. The evidence leads me to conclude
otherwise. I find Telus was the primary beneficiary of the benefit afforded by
the parking pass. In so holding, I have drawn a reasonable inference that
notwithstanding the lack of formal documentation with respect to Delaloye’s
position and the lack of a written employment contract, that his conduct
throughout 1998 was consistent with an understanding that he use the
Telus-supplied Honda for business purposes and that the free parking space was
provided as an accessory to facilitate its efficient use. The enjoyment or
personal benefit flowing to Delaloye from the ability to drive to work and to
park in a heated, underground, assigned stall was ancillary to the one accruing
to Telus bearing in mind the extent of his travel both in and out of Calgary -
and to and from the airport - and the probable cost of alternative transportation
to achieve those business purposes. I appreciate there is no direct evidence on
that point but Telus policy was to reimburse employees at a rate of about 35
cents per kilometre in 1998 and to pay for taxi fares. It is reasonable to
assume that Delaloye’s travel to various locations in Calgary
and to the airport would have represented a considerable outlay over the course
of a year.
[103] The appeal of Dan Delaloye is allowed and
the assessment is referred back to the Minister for reconsideration and
reassessment on the basis the sum of $1,926.00 included into income for the
1998 taxation year as a taxable benefit be deleted.
Bruce Brandell:
[104] Brandell never drove to work in 1998 and
did not use the free parking pass supplied by Telus. He testified it landed on
his desk one day and assumed he had received it because he was employed in a
pay band 4 position. He did not notify anyone in Telus management that he was
not using the pass. Earlier, I referred to the Richmond case in which Bell J. found the parking space provided was a personal
benefit and upheld the Minister’s assessment of value for the entire year even
though the taxpayer had used it only 20% of the time. The situation with
respect to Brandell is different. He did not intend to receive the pass and
never used it. It is reasonable to assume some other employee of Telus parked
in that space since it was not an assigned stall to be used exclusively by the
pass holder, as in Richmond. Or, it may have been sold as a
paid-parking spot by the parking management company’s cashier - to a member of
the general public if that space was not occupied on certain days. In Soper,
referred to in Richmond, supra, the taxpayer’s employer maintained a
house in Florida for her use whenever she wished, to the
exclusion of everyone else. The fact she chose to use it only 3 weeks a year
did not affect the amount of the fair rental value – for the whole year -
assessed by the Minister as a taxable benefit. In the within appeal, it strikes
me that assessing Brandell with a taxable benefit is a throwback to those bad
old days of marketing when companies – usually selling cookbooks or a set of
encyclopedia – delivered their wares to unsuspecting householders with the
written admonition – usually inside the carton - that if they did not want to
purchase that product for the stated price they had to return it within the
specified period, usually 7 to 10 days. That technique came to be banned in
most jurisdictions even remotely concerned with consumers’ protection. When a
national cable television provider attempted to employ the same basic tactic a
few years ago - albeit a bit more sophisticated in keeping with our new
technical age - by attempting to foist additional channels on subscribers -
using what came to be known as “negative option billing” - there was a massive
public outcry. Counsel for the respondent suggested the parking space was
provided to Brandell in view of the important work he was performing for Telus
and represented a status symbol. If so, it had no monetary value to him and the
evidence does not lead me to believe it boosted his ego nor enhanced his
prestige in the neighbourhood as he walked to work each day. Brandell did not
use a vehicle in the course of his employment and did not need the parking
space. Taking into account these unusual circumstances, even if Brandell did
not elect to take whatever steps were necessary within the Telus bureaucracy to
rid himself of the pass and his acquiescence in keeping it could be regarded –
somehow - as leaving open the potential for some use at some point during the
year, that remote possibility had no practical, measurable monetary value.
Therefore, no taxable benefit accrued to him in respect of that pass even
though it was provided by Telus in the course of his employment.
[105] The appeal of Bruce Brandell is allowed.
The assessment is referred back to the Minister for reconsideration and
reassessment on the basis the sum of $1,926.00 included in his income as a
taxable benefit in the 1998 taxation year be deleted.
Myron S. Borys:
[106] Borys held the title of Director of
Consumer Internet Services - in pay band 5 – and worked from 8:00 a.m. to
between 5:30 p.m. and 6:00 p.m., a schedule he considered normal for his
managerial position. He testified he used his vehicle for Telus business “a
couple of times a week” in 1998. Although he often took the bus to work, if he
had to work later than usual, he drove his vehicle because it was not
convenient to take a bus to off-site meetings during the day and he believed
the frequency of bus service after 6 p.m. required longer waits. Even without
an assigned stall he always found a space. He used the pass for personal
reasons once or twice a year. In his view, the pass permitted him to work at
the office during weekends and overall enhanced his ability to carry out his
duties. Borys received his parking pass from Telus and considered it part of
his total compensation since he had been entitled to free parking privileges –
since 1994 - as a manager with Ed Tel. Even though he used his vehicle 100
times a year for Telus business and was aware of Telus policy to pay employees
for using their vehicles, he did not submit any expense claims in respect of
that use. His position with Telus did not require that he own a vehicle or hold
a valid driver’s licence.
[107] The evidence established that Borys worked
1-3 hours of overtime nearly per day, and 4 to 6 hours once a month on the
weekend and also worked at home once or twice a month. In 1998, he lived at
8703-42 Ave. NW, which according to the evidence of Douglas Connor, ETS
Scheduler, received adequate service from downtown to his residence and he
could have left downtown at 9:08 p.m. and arrived at the stop near home 43
minutes later, in about the same time as a trip by car at that time of night.
Telus policy was to reimburse employees for taxi fares incurred for business
purposes and Borys used taxis to travel to off-site meetings during the day but
usually took his own car to and from the airport. He claimed approximately $1,400
on his expense sheets for taxi fares in 1998.
[108] People are free to live where they want
relative to their work, the neighbourhood pub or their in-laws. In the Borys
situation, he chose to take his car to work for the purpose of attending
off-site meetings or when he planned on working later than normal. That choice
was his, based on his appreciation of the convenience and comfort afforded by
the ability to park in the lot. Borys did not attempt to quantify any possible
increase in his productivity as a result of having the parking pass.
[109] In my view, the chief benefit of the
parking pass accrued to Borys. There is no reasonable basis upon which I can
find that the primary beneficiary of the payment for the parking space was the
employer, particularly in light of the fact the pass was provided to Borys
based on his position in pay band 5 and in recognition of an entitlement to it
when he worked as a manager for Ed Tel.
[110] The assessment of the Minister is correct.
The appeal is dismissed.
Douglas Alloway
[111] In 1998, Alloway held the position of
Director, Human Resources with responsibility for as many as 1,600 employees.
He was in pay band 4 and his position did not require that he have a vehicle to
carry out his duties as a condition of employment. When using his vehicle for
business purposes in the Greater Edmonton area once or twice a week, he had not
submitted any expense claims to Telus even though he drove about 1,000
kilometres in 1998. He used the pass for personal reasons two or three times
that year. Before receiving his pass from Ed Tel in 1994, he rode the bus to
work. The bus service to Alloway’s neighbourhood ran at peak frequency until
6:00 p.m. and even if he worked late and caught the bus downtown at 9:01 p.m.,
he would have arrived at his home stop by 9:57 p.m., a trip probably 35 minutes
longer than by car. Alloway preferred to use his car to travel to work as a bus
ride required a transfer at Southgate station. In his opinion, he considered it
was reasonable that he work extra hours to justify the privilege of the parking
pass which he had received – without asking – from Telus in 1996. He estimated
the expense incurred by taking 8 to 10 taxi trips per month for business
purposes would have exceeded the payment - by Telus - for his parking space
which the Minister assessed as having a fair market value of $160.50 per month,
including GST.
[112] There is insufficient evidence before me to
conclude that Telus was the primary beneficiary of the payment for the parking
pass which Alloway used to find – always – a space in 1998. It may be that some
business trips could have been taken by riding free on the LRT during the late
morning and early afternoon. Alloway chose not to bill Telus for using his car
to drive 1,000 kilometres on business that year which - at 35 cents per
kilometre - would have amounted to $350.00. Certainly, the taxi trips from
Edmonton to St. Albert or Sherwood Park would have been relatively expensive
compared to fares in downtown Edmonton since the total distance was 50 and 70
kilometres respectively but there was no evidence with respect to the frequency
of these trips and the extent of that travel as a proportion of total Alloway’s
business use - 1,000 kilometres – of his vehicle. It is apparent Alloway
worked hard in carrying out the onerous duties associated with his executive
position but the better view of the evidence is that the use of the parking
space was inextricably linked to personal choices made by him throughout the
year rather than pursuant to any direction or requirement - either express or
implied - on the part of his employer. Alloway admitted he considered the
parking pass had enabled him to work overtime and to receive better raises and
achieve promotion within Telus. As a result of Alloway’s decisions to use his
vehicle for personal convenience and to facilitate working overtime or for
direct business purposes and not billing for that usage, Telus received an
ancillary benefit which even though not quantifiable on the evidence was far
less than the lion’s share of the total benefit flowing from the provision of
the pass. That main, primary benefit was received by Alloway and for that
reason it is taxable.
[113] The assessment of the Minister is correct.
The appeal is dismissed.
Gary Cerantola:
[114] In 1998, Cerantola was a Director,
Operations, International Carrier Services, a position in pay band 5 and was
provided with a parking pass which he used for the facility in Telus Tower,
Calgary. He drove his vehicle to Red
Deer and Edmonton and estimated total business use was between 2 and 10
times per week, with only about 60% of those trips having been planned. Telus
reimbursed him for using his vehicle. Cerantola testified the pass enabled him
to meet certain objectives because he could arrive at work early, leave late
and it facilitated his ability to work 4 weekends a month in 1998, an
extremely busy year when his typical work week ranged between 65 and 75 hours.
He used the pass once for personal reasons. Cerantola conceded it was more
convenient to use his vehicle as opposed to taking public transit. In the
course of his employment, he rented vehicles and hired taxis, depending on the
situation, and Telus reimbursed him for these expenses and for parking at other
facilities. He could find a space to park whenever he wanted and used the pass
an average of 5 times a week when not absent from Calgary
on business about 60 days in 1998. It was not a condition of his employment
that he have a vehicle. Cerantola admitted that without the pass he may not
have driven to work and may have relied on other means of transportation.
[115] According to the affidavit of Doug Morgan –
Exhibit R-14 – there was adequate bus service from Cerantola’s residential area
in Calgary to the LRT which ran downtown from Anderson station. Prior to moving
to Calgary, Cerantola had taken public transit to
work. In 1998, he chose not to do so, mainly because of the convenience
afforded by the free parking pass. His 8 trips to Red Deer by vehicle and to
other centres in Alberta were probably planned whereas some of the
local business trips may have arisen suddenly in the course of a workday. The
evidence does not support the proposition that he was required by his employer
to use his vehicle for those purposes, particularly when he could have taken a
taxi and claimed reimbursement. The weight of the evidence with respect to this
appellant tilts the balance heavily in favour of a finding that the parking
pass was primarily for his benefit rather than for his employer. As a
consequence of his position as Director, he was given a free parking pass and
used it to park his vehicle in a comfortable, convenient facility when
commuting to and from work. Not a surprising choice on his part, but one that
was not directed by Telus nor can it be inferred from the evidence that his
position – without more – required him to have his vehicle parked in Telus Tower in order that he could carry out his
duties throughout the year.
[116] The assessment of the Minister is correct.
The appeal is dismissed.
Henry Bruns:
[117] In 1998, Bruns held the title of Director
in two different divisions – both in pay band 5 - at Telus and had a parking
pass for Telus Tower in Calgary. He received the pass following a promotion in
1995. Bruns used his vehicle to drive to meetings and to and from the airport.
He had not maintained any record of hours worked beyond the normal work week of
37.5 hours but worked extra hours some days and during weekends, as required.
He regarded the parking pass as an effective tool that enabled him to work
flexible hours and eliminated the need to find other means of transportation.
From his residence, he could have walked to work in about 30 minutes or ridden
a bicycle – during those rare months in Calgary
without snow – or taken the bus, as there is no evidence to suggest service was
inadequate at any time during his working hours in 1998. The amount of vehicle
use for business purposes was not significant that year and even though Telus
would have reimbursed him, he elected not to submit a claim because of the
small amount involved compared to the mandatory paperwork. He used taxis to
travel to and from airports but drove his car – on occasion – to Edmonton if he decided it was more effective for purposes of a
specific trip. Most of his Calgary meetings were held in his office building.
He rarely used the pass for personal reasons and was able – always – to find a
space to park. In 1998, his business travel outside Calgary
– mainly by air - averaged one and one-half days per week.
[118] The evidence does not permit me to find
that Bruns required a vehicle in the course of his employment nor that he
needed a parking space in his office building to discharge his responsibilities
to Telus in 1998. Bruns chose to take his car to work even though it was not
necessary because his duties were carried out during times when public transit
or other means – including walking and riding bicycle – were not only readily
available but also reasonably efficient, requiring maximum travel of about 30
minutes.
[119] I fail to see how Telus was the primary
beneficiary of the economic advantage provided by the parking pass. There is
nothing before me that would permit me to infer the Telus bottom line was
enhanced at any point in 1998 because Bruns parked his car in the Telus lot or
that the payment for the parking space was primarily for the convenience of
Telus. Instead, the chief advantage or benefit accrued to Bruns who parked for
free in a space he would have had to pay for, like other Telus employees in
lower pay bands or members of the public.
[120] The assessment of the Minister is correct.
The appeal is dismissed.
John Harrington:
[121] In 1998, Harrington worked as a Director
for Telus - in pay band 5 - and was provided with a free parking pass to the
lot in Telus Plaza. He testified that 1998 was extremely busy
and estimated he worked between 45 and 50 hours per week in order to perform
his duties. In his opinion, the parking pass allowed him to work late. He was
reimbursed for using his vehicle for travel to and from the airport. Usually,
he arrived at work between 7:00 and 7:30 a.m. and since he lived in southeast Edmonton, decided it was more convenient to drive. He used the
free LRT downtown service for business purposes and travelled by air for
meetings outside the city. Harrington conceded there was no requirement that he
drive a vehicle for business and had not negotiated – with Telus – to obtain
free parking as any part of his total compensation. Harrington had been
employed with AGT since 1976 and later - when the Telus brand was used by that
entity - was given a parking pass when promoted to a position in senior
management in 1986. He did not keep any records of overtime worked in 1998.
Before receiving his free parking pass, he drove to work and parked in public
lots at a cost of approximately $50.00 per month.
[122] The evidence established there was a bus
stop two blocks from Harrington’s residence in 1998. His neighbourhood was
serviced by Route 60 which went downtown 7 times in the morning and returned 5
times in the afternoon. Even if he worked late, he could have taken the 9:08
p.m. bus from downtown to Millgate station, and transferred to another one
which would have dropped him near home at 9:40 p.m. unless the transfer bus did
not wait for the connection to be made. In that case, he would have been forced
to wait for the next bus to his residential area. Connor – the ETS scheduler –
estimated that same trip would have taken about 25 minutes by car.
[123] There was no requirement – by Telus – that
Harrington drive his car to work. There is no evidence that he worked past the
service hours of ETS and could have travelled to and from work by public
transit. However, he chose to use his vehicle as a matter of convenience. The
benefit of the parking pass was something enjoyed by him and did not flow to
his employer. One must ask: would Telus have any legitimate business interest
in how he commuted to work; what difference would it have made to its business
operation; what economic advantage was gained by continuing to provide
Harrington with the free pass he had held since 1986 when employed by AGT, a
predecessor corporate entity. The answers to the above questions are: no, none
and none.
[124] The assessment of the Minister is correct.
The appeal is dismissed.
Donald Barnes:
[125] Barnes was employed as a Sales Manager – in
pay band 4 – by TAS, a wholly-owned Telus subsidiary. He played a major role in
publishing the Yellow Pages directory for Edmonton and worked from the 44 Capital Building. He had a parking pass which
entitled him to an assigned stall. His work required him to travel from one end
of the city to the other and he communicated with his office by cellular
telephone. In his opinion, the nature of his work made it impractical to use
taxis for business purposes. He did not submit expense claims to Telus for
using his vehicle and did not record overtime worked. During extremely busy
periods when deadlines were approaching, he worked evenings and on weekends and
holidays. He estimated he had to work between 1 and 4 hours overtime for a
stretch of about 50 days in 1998 to prepare the directory for publication.
The critical month was October. Sales representatives working on the same
project took taxis and were reimbursed by Telus. Barnes asserted that – as
Sales Manager – he could not predict when situations might arise that required
him to attend at a particular location in the city. The LRT was not an
efficient means of travel for his purposes because 65% of all Yellow Pages
advertisers were located in southeast Edmonton.
[126] There was no formal requirement that he use
a vehicle in the course of his employment. Part of his duties at TAS was to
write job postings so he was familiar with that prerequisite for certain
positions. Barnes had held the parking pass since 1988 when it was provided to
him by Ed Tel where he had worked in a position later regarded as one in a
Telus pay band 3. The evidence is that Barnes had frequent – every 15 minutes -
bus service to his area during peak times with adequate 30-minute service in
the evening which would have permitted Barnes to leave a downtown stop – one
block from Telus Plaza – at 9:24 p.m., arriving at a stop near his home only 14
minutes later.
[127] In terms of placement on the continuum,
Barnes is in a different position than most other appellants. There is no doubt
there were busy periods between September and the early part of November during
which it was an advantage to Telus that he have ready access to his vehicle to
facilitate travel throughout Edmonton in his role as Sales Manager supervising
up to 10 sales representatives, each of whom was required to call on between
400 and 450 customers. The problem is there is no evidence upon which I can
determine the extent of that advantage to Telus compared with the cost of taxi
fares or paying for Barnes to park somewhere for that two-month period. For the
remainder of the year, it was convenient for Barnes to drive to work even
though he lived only 30 blocks from work. However, the work had to be done
whether on holidays or during weekends to meet publishing deadlines. The choice
to travel to work – by car – was made by Barnes and not directed by Telus. One
would expect some documentation flowing from Telus management to its Sales
Department with respect to the economic practicality of using their own
vehicles during certain intense periods of activity rather than relying on
other means of transportation. Instead, when I look at the year as a whole, and
taking into account the nature of the work carried out by Barnes, it is
apparent the primary economic benefit in respect of the parking pass was
enjoyed by him rather than his employer even though the busy two-month period
was critical to the achievement of objectives by the Sales Department. I have
no evidence of comparative costs between taxi use and the amount needed to
reimburse Barnes for using his own vehicle - if he had submitted a claim - and
the fair market value - $1,926.00 including GST - of his assigned parking space
in 1998. In his admissions of fact, Barnes acknowledged that without the pass
he may not have driven to work and would have taken the bus or participated in
a carpool. There is no doubt there was a significant business component to the
use of the assigned parking stall by Barnes in 1998. Unfortunately, it did not
constitute the majority of the economic advantage attributable thereto even
though it was more convenient for Barnes to travel back and forth to work
overtime during that intense 50-day period and to make sales calls and
undertake training of sales representatives during other less‑hectic
periods during that year. Had Telus undertaken some analysis of the costs
involved and made a business decision based on it – rather than merely renewing
a parking pass based on his former entitlement as an Ed Tel employee – it may
have been possible to find the primary benefit accrued to Telus. Even omitting
the requirement to own or operate a vehicle as part of the job description of
Sales Manager would not have been particularly damaging to Barnes’s appeal if
the evidence otherwise permitted me to draw the conclusion that the subsequent,
actual use of his vehicle was a reasonable condition of that employment - even
though not expressed in formal documentation - and that the parking space was
required.
[128] The assessment of the Minister is correct.
The appeal is dismissed.
Desmond Adler:
[129] Adler worked as a Director in pay band 5
and received a parking pass when he was promoted to that position in 1997. He
lived in Sherwood Park, a community about 25 kilometres from his
office in Telus Plaza. About 50% of the time – in 1998 – he and
his wife rode to work together and she dropped him off at his building. Adler
conceded that without the free pass he would have had to pay for parking on
those days when he drove to work. He was under no obligation to use his vehicle
in the course of his employment but the pass made it more convenient to drive
to work and he was able to find a space each time. In 1998, he never used his
vehicle for any Telus business purpose. He was reimbursed for taxi fares
including those incurred travelling to and from the airport and his home and
was aware of Telus policy to pay 35 cents per kilometre to employees for using
a private vehicle for business. Although he did not work on holidays, he
generally worked until 5:30 or 6:00 p.m. on weekdays and once or twice a month
either on Saturday or Sunday. He contributed overtime in order to complete
tasks and not as a result of Telus having provided him with the parking pass.
[130] The affidavit of Richard Grajkowski –
Exhibit R-13 – with attached exhibits of schedules therein - demonstrates the
frequency of bus service from Sherwood Park Transit Centre and the City of Edmonton during the week. The trip would have taken Adler 25
minutes from that Centre to a stop at 103 St. and 103 Ave., only a few blocks
from Telus Plaza. After 6:00
p.m., the bus left that stop every hour – on the hour – until 11:00 p.m.. There
was no evidence adduced concerning the frequency of bus service during the
weekend but it is safe to assume it operated on a reduced schedule.
[131] It is apparent the parking pass was
utilized by Adler as a matter of convenience whenever he decided to drive to
work. The pass did not have any identifiable business component to it and its
use did not provide any economic advantage to Telus. It did not receive any
primary benefit nor any practical ancillary benefit. The free pass was provided
to Adler upon his promotion to Director without any consideration of its use in
connection with his employment duties. As such, it was “perk”, a symbol, and a
demonstration that rank has its privileges in the corporate structure; it
provided Adler with an economic benefit.
[132] The assessment of the Minister is correct.
The appeal is dismissed.
Joanne Beaton:
[133] Beaton received her parking pass - in 1997
- when she was promoted to Director, Information and Process Solutions, a
position in pay band 5. She travelled to major centres in Alberta 3 times per week – on average - and drove to some of
them. If travelling by air, she took her car to the airport. Beaton testified
that 1998 was an extremely busy year as a result of changes due not only to
expansion within the Telus organization but also to a cultural shift within the
workplace to permit it to compete in a highly-competitive business environment.
Beaton worked several 15‑hour days and after 7:00 p.m. 3 days a week and
went to the office at least 3 Saturdays each month. In her opinion, the
pass afforded secure accessibility to her office from a heated, lighted,
underground parking facility and enabled her to perform her job more
efficiently, particularly outside regular office hours. Even though she was not
assigned a stall, she found – always – a space. Before receiving the parking
pass, she rode to work with her husband in the family vehicle or used public
transit. She used her vehicle for business within Edmonton and also used taxis 22 times in 1998, according to her expense sheet.
Telus paid her for vehicle use and parking fees incurred in other locations
while on business. Beaton acknowledged in her admissions of fact that Telus
provided her with the parking pass as part of her benefits as Director and that
use of her vehicle was not a condition of her employment. Prior to receiving
the free pass, she paid $140.00 per month out of her own pocket to park at Canada Place.
[134] The later evening transit service to
Beaton’s residence was not very convenient, compared to the 15-minute
equivalent by car. However, she could have taken a bus earlier than the 8:58
p.m. on Route 1 which required her to choose between walking home from a stop
on Stony Plain Road and waiting 54 minutes for the next bus to take her on a
5-minute ride to the stop nearest her residence.
[135] There is no doubt Beaton worked long hours
in her role as Director. That sort of commitment came with the territory. She
made the decision to drive to work on those occasions when she did not need to
use her vehicle for out-of-town business travel. Unfortunately, the diary used
by Beaton to record that usage is no longer available and she did not offer an
estimate in the course of her testimony. It may be the provision of the parking
space was an economic advantage to Telus in the context of the extent of travel
by car required in the course of her employment both in and out of the city.
However, there is no evidence before me to support that theory and her expense
claims demonstrate that she used taxis on numerous occasions for various
business purposes. Beaton enjoyed the safety, convenience and ready
accessibility to her office building afforded by the parking pass. She used it
to her advantage and it enabled her to receive – free – a service for which she
was required to pay prior to her promotion to Director. The evidence does not
permit me to conclude that any factor other than the achievement of that rank
motivated Telus to issue the pass. Similarly, it does not allow me to find
Telus was the primary beneficiary of the payment associated with the provision
of that parking space. Instead, the chief economic advantage was enjoyed by
Beaton and constituted a taxable benefit.
[136] The assessment of the Minister is correct.
The appeal is dismissed.
Mary-Patricia Barry:
[137] In 1998, Barry was a Director in pay band 5
working from an office in Telus
Plaza. In her Human Resources
unit, she was responsible for training Telus employees in classroom settings.
She was not required to use her vehicle in the course of her employment but
found it convenient to drive to locations both in and out of the city for
business purposes - between 6 and 8 times a month - particularly when
transporting materials for training sessions. When she used her vehicle for business,
she was reimbursed at the applicable per-kilometre rate. She received her free
parking pass when promoted to Director in 1996 and assumed it had been provided
for the purpose of enabling her to work as many as 4 extra hours per week and
on a Sunday, as required. Barry conceded that without the free pass she would
have preferred to drive to work rather than use public transit even though
there was a stop only one block from her house. She conceded there were no free
parking facilities in downtown Edmonton that she could have used in 1998.
[138] Barry did not work many hours overtime and
had ready access to adequate bus service from downtown to her residence. As a
matter of choice, she decided to drive her car to work. There is no evidence
upon which to conclude it was advantageous to Telus – from an economic
standpoint – to provide her with parking at a fair market value of $1,926. 00
per year - according to the Minister – rather than paying for taxi fares when
travelling for business purposes in the city. There was no evidence regarding
the extent of out-of-town travel in 1998. There is no evidence of any criteria
used by Telus prior to issuing the free pass to Barry but it is reasonable to
conclude that her elevation to rank of Director was the trigger which
permitted her to enjoy this economic advantage. Any benefit accruing to Telus
was incidental and the connection between Barry’s free parking privileges and
the duties performed by her in the course of employment was – for the most part
– nebulous.
[139] The assessment of the Minister is correct.
The appeal is dismissed.
Randy Bayrack:
[140] Bayrack was a Project Manager in pay band 4
and had a parking pass for the facility at 107 St.
and 100 Ave. He had been an employee of Ed Tel – since 1979 – which became part
of AGT, then Telus. Bayrack worked for TAS, a wholly-owned Telus subsidiary. He
had a written agreement with TAS which included a provision that he continue to
enjoy the privilege of free parking. He used his vehicle for business once a
week – on average – to travel to Red
Deer and was reimbursed on a
per kilometre basis. It was not a job requirement that he own or operate a
vehicle but considered it had increased his efficiency by enabling him to drive
to work and park in the facility. Often, he worked earlier than 8:00 a.m. and
later than 6:00 p.m. Before receiving the pass, he had driven to work.
Although his space was not assigned, he was able to park in a space every time
he drove to work which he considered was more convenient than using public
transit even though bus service was available within one block of his house and
there was an LRT station close to his office. During busy periods lasting up to
3 weeks, he worked until 1:00 a.m. and was aware of Telus policy to reimburse
employees who worked late (past 11:00 p.m.) and acknowledged he could have
taken taxis home instead of driving. He estimated the fare would have been at
least $30. He decided to drive to the airport when travelling by air to Calgary rather than paying for taxis and claiming
reimbursement.
[141] According to the evidence of Connor from
ETS, there was 15-minute off-set bus service to the stops near Bayrack’s
residence during peak periods because he could catch one going either way
around the route to Millgate station for LRT transportation downtown. Bayrack
could have left downtown at 9:08 p.m., and arrived at Millgate by 9:30 p.m.,
then travelled by bus to a stop two blocks from his home, arriving at 10:30
p.m.. That trip by car would have taken about 30 minutes.
[142] The evidence established that Telus elected
to continue the free parking privilege enjoyed by Bayrack during his tenure
with predecessor telecommunication entities that became part of the Telus
organization. He did not have apply for that pass and received it even though
his position was in pay band 4. Before receiving the pass from Ed Tel or –
perhaps – AGT - he drove to work. When visiting Telus Plaza on business, he drove - a few blocks - even though his pass did not
permit him to park there and he had to pay for a space.
[143] I cannot conclude on the evidence that
there was any substantial economic benefit accruing to Telus as a result of
having provided the parking pass to Bayrack. The major portion of the economic
advantage accrued to Bayrack even though the cost of reimbursing him for as
many as 20 taxi trips after 11:00 p.m. during a busy period could have amounted
to between $600.00 and $700.00. The Minister assessed the fair market value of
the space at $1,926.00 in 1998. The Minister assumed the appellant worked in
the building at 44 Capital – 10044 – 108 St.
- and assessed the benefit on that basis. The evidence is confusing on this
point as Bayrack testified he had a pass for the lot at 107 St. and 100 Ave.
and in paragraph 7 of his admissions (Exhibit A-1) stated his pass was for the
“parking lot located in the building” at that address. I draw the inference
that the parking space which is the subject of this appeal was the one inside
44 Capital as there is no basis for finding that this assumption by the
Minister is incorrect when examining the whole of the evidence relative to this
point. The parties agreed the fair market value of a space in the lot at 107
St. and 100 Ave. was only $720.00 per year.
[144] The assessment of the Minister is correct.
The appeal is dismissed.
Randall L. Edgar:
[145] Edgar was a former AGT employee and - in
1998 - worked for TAS as a Corporate Financial Analyst, a position in pay band
4. He had not applied for a parking pass and received it from his executive
assistant. He was able to park on every occasion even without having an
assigned stall. Before he received the pass, he used public transit to travel
to work but discovered he could work an extra hour each day if he drove
instead. At most, he used the parking space 3 times for personal reasons in
1998. It was not a condition of his employment that he own or operate a vehicle
and did not recall having used his car for business purposes that year nor was
he required to take any taxis. He was accustomed to using public transit but
used the pass which he assumed was to facilitate him working additional hours.
He acknowledged that without the pass he would have had to work as late as
required in order to meet specific filing deadlines. He had recorded overtime
worked – on weekends - up to February 1998, but not after. Public transit
during peak hours provided 5 trips downtown in the morning and 8 returns in the
afternoon. Even leaving a downtown stop - near Telus
Plaza - as late as 9:38 p.m., he would have arrived at the
stop near his home at 10:38 p.m. or by choosing the 9:08 p.m. bus, could have
been at his home stop by about 9:55 p.m., a trip of 47 minutes.
[146] The evidence demonstrates that the use of a
vehicle was not required for Edgar to perform his job. He did not use it in the
course of his workday and did not have to travel by taxi for business during
1998. The free pass provided him with the opportunity to drive his own car to
work rather than take public transit. He chose to do so but acknowledged that
without the pass he would have used other means of transportation to discharge
his responsibilities to Telus. The economic benefit flowing to Telus from the
provision of the parking pass was negligible. However, it was important to Edgar since it had a fair market value of $1,926.00 per
year, including GST. He was the primary beneficiary of that benefit.
[147] The assessment of the Minister is correct.
The appeal is dismissed.
Roy A. Viteychuk:
[148] Viteychuk was employed as a Manager – in
pay band 3 – in 1998 and was responsible for about 40 employees in the Switch
Maintenance and Analysis department. He worked from an office at the Main Wire
Centre at 104 St. and 104 Ave. and received his pass at some point during
his employment – since 1970 - with Ed Tel. Before receiving the pass, he paid
for parking in lots operated by Telus. Afterwards, he parked in a heated,
underground stall and did not use the pass for personal reasons but did lend it
– on occasion – to other Telus employees. He did not require a vehicle to
perform his job but found it advantageous to have it parked nearby in the event
of interruptions to telephone service due to some occurrence, often related to
weather conditions, that would have required him to attend at one of the 8
central service or host locations to restore service by installing replacement
circuit packs. Viteychuk acknowledged that without the pass, probably, he would
have used the shuttle bus service between Edmonton and his home in Sherwood
Park. He admitted that any
overtime hours worked in 1998 were not as a result of Telus having provided him
with a parking pass and could not recall any emergencies that had required
additional hours of work.
[149] The facts establish there was no
significant business component in the use of the parking pass by Viteychuk. It
was convenient for him and eliminated the need to ride the shuttle bus to and
from Sherwood Park or to find alternate parking and pay for
it. The free parking constituted a benefit that provided an economic advantage
to him and not to his employer. As a result, it is taxable in his hands.
[150] The assessment of the Minister is correct.
The appeal is dismissed.
Carol Amelio:
[151] Amelio worked for Telus as a Director,
Customer Relations, a position in pay band 5. Although she did not maintain any
time records in 1998, she estimated she worked an average of 50 hours per week.
She acknowledged she had not been compensated directly for overtime and – at
her executive level – considered that was expected in the context of Telus
corporate culture. She received her free parking pass in 1992 and, although she
had not applied for it directly, had indicated during her interview for a legal
counsel position that if hired, she wanted secure parking in Telus Plaza. During the course of her employment in 1998 – as a
Director - she was never instructed by Telus that he had to use her vehicle for
business purposes. Instead, it was used primarily for travelling to and from
work, although she did drive to certain locations to conduct investigations in
response to complaints. Amelio was concerned about security and the
underground, lighted, facility in Telus Plaza suited her needs as it had accessible panic buttons
and she could request a security person to accompany her to the vehicle. Amelio
lived within 2 blocks of a bus stop but had not considered public transit as a
viable alternative. She could have used taxis to travel to and from her home in
southeast Edmonton when working early or late and could have
taken taxis to the airport and would have been reimbursed by Telus. Without the
free pass, Amelio would have had to pay for similar parking privileges in
downtown Edmonton in 1998. She had no difficulty parking in
a space in the Telus Plaza lot throughout the year, even though she
did not have an assigned stall.
[152] It is apparent Amelio chose to drive her
vehicle to work and to use the free parking pass provided by Telus. Her reasons
for doing so are completely reasonable both from the perspective of her own
sense of security and to facilitate working flexible hours at the office rather
than taking work home where she preferred to devote time to her family. I
cannot see how Telus received any substantial benefit from having provided the
parking pass to Amelio and there is no evidence there was any consideration
given to the supply of that privilege other than her rank within the
organization. Amelio received something of substantial value that provided her
with a level of comfort and convenience that could only have been attained
otherwise by paying fair market value to someone operating a similar facility
in downtown Edmonton. Amelio – not Telus – was the primary
beneficiary of the economic advantage of the benefit.
[153] The assessment of the Minister is correct.
The appeal is dismissed.
Henry Lazarenko:
[154] Lazarenko did not testify. However, there
are certain assumptions of fact relied on by the Minister in the Reply to the
Notice of Appeal and admissions of fact forming part of Exhibit A-1 that are relevant
to his appeal. In 1998, Lazarenko was General Manager of Engineering and
Construction, a position in pay band 5. He had a 7.5 hour workday and never
worked beyond those hours during that year. He started working for Ed Tel in
1965, and received his free parking pass – in 1990 - for an assigned stall in
the lot at 44 Capital. It was not a condition of employment that he have a
vehicle to perform his duties. However, he did use his vehicle for business and
received the flat sum of $120.00 per month from Telus rather than submitting
expense claims for actual kilometres travelled. Before obtaining the pass, he
either drove to work or took public transportation. Without the pass, he would
have driven to work and paid for parking.
[155] It is highly probable that Lazarenko’s
entitlement to the free pass – and assigned stall – was based on a combination
of his rank in the organization and length of service with Ed Tel as there was
no identifiable business purpose otherwise connected with its issue. The pass
did not facilitate any overtime work and Lazarenko was paid an agreed sum for
using his vehicle in the course of his employment. With respect to the pass, he
received something of considerable value and Telus received no measurable
monetary benefit in return. The entire benefit – in my view – accrued to
Lazarenko and the economic advantage derived was assessed at $1,926.00 by the
Minister.
[156] The assessment of the Minister is correct.
The appeal is dismissed.
[157] In the course of submissions, counsel for
the respondent invited me to embark on an attribution of benefits in the
appropriate case so if I were to find Telus was the primary beneficiary I could
assign a proportionate benefit to the recipient - for example, 30% or more - in
the Delaloye appeal. I declined to do so and suggest that in taxable benefit
situations – more so if they are parking cases – the courts do not embark on
this exercise. I think it would occupy a considerable amount of time by
requiring a detailed examination of circumstances in each case. It would
clutter up the main issues and any decision with respect to apportionment of
benefits would probably be based on rough estimates because it is doubtful the
quality of evidence adduced – in most appeals - would accommodate findings of
fact based on reliable, precise information. In my opinion, it is better to
stick with the all-or-nothing approach suggested by Professor Krishna and as
adopted in the jurisprudence to date. According to that philosophy, once the
tipping point has been attained and the primary beneficiary of the payment has
been identified, then any ancillary benefit derived by the employee is ignored
and no attempt is made to quantify it for the purpose of inclusion into income.
[158] It is apparent these taxable benefit
appeals will continue to be case-specific. The range of results will encompass
clear-cut, resounding victories, nail-biting overtime shoot-out wins,
hitting-the-goalpost efforts that fall just short, decently‑played
contests ending in a loss, and complete blowouts where one party never had any
greater chance of survival than a tiny ice floe in a future envisaged by Al
Gore.
[159] With regret, I doubt any magic formula or
template is capable of resolving the central issue in most circumstances but
there are some factors that could be considered by employers prior to providing
a benefit to an employee if the matter of taxation is a matter of concern.
1. Is the benefit
provided automatically upon attainment of a certain rank or pursuant to an obligation
in some agreement without reference to the nature of the duties performed.
2. If there are
criteria of entitlement – particularly those relating to security concerns –
have they been examined with respect to employees in specific positions or in
special categories, departments or business units.
3. If a vehicle is
required in the course of employment, is that need expressed in the job
description and if the matter of vehicle use arises subsequently, is there a
policy in relation to that.
4. If there are times
in the year when any benefit accrues primarily to the employer and others when
it does not, how are those periods identified and the details of relevant
circumstances recorded.
5. Has there been a
cost analysis undertaken in the course of a comparative examination - to some
reasonable standard - to determine whether the payment with respect to the
benefit will be primarily for the convenience of the employer.
6. Is there a method
of review to determine whether a material change in circumstances has
invalidated the original reasons for providing the benefit.
7. Instead of
providing parking space on an individual basis, has the concept of a pool
parking been considered whereby a certain number of spaces can be used by
different employees as and when required for specific business purposes.
[160] The thrust of modern jurisprudence is to
avoid second-guessing business decisions made by taxpayers with respect to
their conduct whether attempting to attain a reasonable profit or in choosing
to make a certain expenditure or writing off a bad debt in a certain taxation
year. There is a developing philosophy in the judiciary to give greater weight
to the clearly-expressed intentions of the parties in the course of determining
the status of a working relationship. It is reasonable to expect judges would
be reluctant to interfere in business decisions made by employers with respect
to payments for benefits, on condition there was some reasonable basis for
providing them rather than having done so under circumstances where the only
rational conclusion is that they were dispensed as a perquisite, a status
symbol or a reward for long service.
[161] I am indebted to all counsel for their
efficient and competent conduct of these appeals, particularly with respect to
their preparation of binders containing exhibits, admissions of fact and other
relevant material including submissions.
[162] The respondent is entitled to costs on a
party to party basis. Since two appeals were allowed – out of 16 – and the
proceedings were based on common evidence, I consider it reasonable that the
respondent’s costs correspond to that level of success, i.e. 14/16 or 87.5%.
However, I will hear counsel if they wish to deal otherwise with the matter of
costs.
Signed at Sidney, British
Columbia, this 17th day of May
2007.
"D.W. Rowe"
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