Date: 20040512
Docket: A-468-03
Citation: 2004 FCA 189
CORAM: STRAYER J.A.
ROTHSTEIN J.A.
MALONE J.A.
BETWEEN:
DOUGLAS MCGOLDRICK
Appellant
and
HER MAJESTY THE QUEEN
Respondent
Heard at Toronto, Ontario, on April 29, 2004.
Judgment delivered at Ottawa, Ontario, on May 12, 2004.
REASONS FOR JUDGMENT BY: MALONE J.A.
CONCURRED IN BY: STRAYER J.A.
ROTHSTEIN J.A.
Date: 20040512
Docket: A-468-03
Citation: 2004 FCA 189
CORAM: STRAYER J.A.
ROTHSTEIN J.A.
MALONE J.A.
BETWEEN:
DOUGLAS MCGOLDRICK
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
MALONE J.A.
Issue
[1] The issue on this appeal is whether, for the taxation years 2000 and 2001, certain meals provided free of charge to the appellant by his casino employer during his shift break, as well as hams and turkeys given on special occasions, are benefits taxable under paragraph 6(1)(a) of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 (the Act).
[2] The relevant portion of paragraph 6(1)(a) reads:
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6.(1) 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:
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6.(1) Sont à inclure dans le calcul du revenu d'un contribuable tiré, pour une année d'imposition, d'une charge ou d'un emploi, ceux des éléments suivants qui sont applicables:
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(a) 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...
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(a) la valeur de la pension, du logement et autres avantages quelconques qu'il a reçus ou dont il a joui au cours de l'année au titre, dans l'occupation ou en vertu d'une charge ou d'un emploi...
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Facts
[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. HoefeIe, 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).
[6] The quantum of the alleged benefits was not in issue in the Tax Court.
Standard of Review
[7] The standard of review set out in Housen v. Nikolaisen, [2002] 2 S.C.R. 235 applies to appeals from the Tax Court conducted under its informal procedure (see Jastrebski v. Canada, 94 DTC 6355 (F.C.A.); Polygon Southampton Development Ltd. v. Canada [2003] F.C.J. No. 674, 2003 FCA 193). That is, for questions of law, the standard is correctness while for findings of fact, inferences or conclusions of fact, or conclusions of mixed law and fact, the standard is palpable and overriding error.
Analysis
[8] This appeal involves a question of mixed law and fact to be reviewed on the palpable and overriding standard. In my analysis, there are no errors that warrant the intervention of this Court. The factual conclusions reached by the Tax Court Judge were available to her based on the evidence presented and no material evidence was ignored or overlooked. Furthermore, her legal analysis was in accordance with the leading authorities dealing with paragraph 6(1)(a).
[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.
[11] He did not, however, raise a quantum issue in the notice of appeal to the Tax Court. Before that Court, he specifically noted that he was confining his evidence and argument to the question of whether the meals and seasonable gifts were a taxable benefit and did not address the quantum of the benefit. While he might well have been able to challenge the value of the benefit received if it had been an issue before the Tax Court, that was not the case and accordingly that avenue of appeal is not open to him. Of course, this does not preclude him from objecting to the quantum of taxable benefits assessed in subsequent years if he is not out of time to file such objections.
Conclusion
[12] Accordingly, I would dismiss the appeal, but in these circumstances without costs.
"B. Malone"
J.A.
"I concur
B.L. Strayer"
"I concur
Marshall Rothstein"
FEDERAL COURT OF APPEAL
Names of Counsel and Solicitors of Record
DOCKET: A-468-03
STYLE OF CAUSE: Douglas McGoldrick v. The Queen
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: April 29, 2004
REASONS FOR JUDGEMENT BY: Malone J.A.
CONCURRED IN BY: Strayer J.A.
Rothstein J.A.
DATED: May 12, 2004
APPEARANCES BY:
Mr. Douglas McGoldrick Appellant on his own behalf
Ms. Carol Calabrese For the Respondent
SOLICITORS OF RECORD:
Mr. Douglas McGoldrick Appellant on his own behalf
Orillia, Ontario
Mr. Morris Rosenberg
Deputy Attorney General of Canada For the Respondent
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