Date: 19980622
Docket: 97-346(IT)I
BETWEEN:
DONALD RUSSELL WALSH,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
(Given orally from the Bench in Toronto,
Ontario, on October 9, 1997.)
Hamlyn, J.T.C.C.
[1] This is in the matter of Donald
Russell Walsh, Appellant, and Her Majesty The Queen, Respondent.
They are appeals with respect to the 1992 and 1993 taxation
years.
[2] In computing income for the 1992
and 1993 taxation years, the Appellant failed to report
automobile standby charges and automobile operating cost benefits
in the following amounts:
Year
Standby
Charges
Operating Cost
Total Benefit
1992
$1,997
$263
$2,260
1993
$1,997
$244
$2,241
[3] As a result of an audit conducted
on the books of the Appellant's employer, The Municipality of
Metropolitan Toronto ("Metro"), the Minister of National Revenue
(the "Minister") reassessed the Appellant for the 1992 and 1993
taxation years to include in his income the automobile standby
charges and the automobile operating cost benefits totalling
$2,260 and $2,241 for 1992 and 1993.
[4] In reassessing the Appellant, the
Minister made two assumptions of fact that were accepted by the
Appellant:
(a) during the 1992
and 1993 taxation years, the Appellant was using an automobile
leased or paid for by Metro and was required to complete and
submit to Metro an annual Vehicle Report, recording the
kilometres he travelled during each year.
(b) during the
entire 1992 and 1993 taxation years, the Appellant received and
enjoyed the use of an automobile leased by Metro (the "Company
Vehicle").
[5] The Appellant disagreed with the
two following assumptions:
(c) the portion of
the personal use of the Company's Vehicle was 15% of its
total use by the Appellant;
(d) for the 1992 and
1993 taxation years, the Corporation conferred a benefit on the
Appellant in respect of the personal use of the Company vehicle
in the amounts of $2,260 and $2,241.
[6] The issue for this case is whether
the Appellant was properly assessed to include in his income the
benefits for the 1992 and 1993 taxation years. The Appellant has
appealed to this Court by way of an appeal document. In that
appeal document, he states that:
I have concluded from my telephone conversation with a Revenue
Canada representative that my objection had some valid points
that cannot be accepted due to lack of documentation. I
understand that because of that fact, the rules governing such
situations are quite clear. However, I understand that a Tax
Court Judge has more latitude in the process and has the
authority to base his ruling on other facts that may not clearly
conform to the rules. I still feel that I am being taxed unfairly
and would like the opportunity to state my case and provide some
additional documentation related to the vehicle use for
adjudication.
[7] In the document that is attached
to that Notice of Appeal, he states:
In September of 1991, whilst in the employ of the Metropolitan
Toronto Transportation Department - Traffic Division my immediate
manager, Mr. K.R. Wilson passed away after a lengthy battle with
cancer.
[8] The Appellant was eventually
assigned to fill the deceased Mr. Wilson's job.
[9] Upon accepting the assignment, he
was told, amongst other things, to go to Mr. Wilson's
residence and pick up a Metro leased vehicle that had been
assigned to him:
The instructions given to me at that time were that the
vehicle was for Metro use and that if on any occasion I did use
it for any personal use that I was to log that use and also
ensure that I declared it on my income tax. I was also advised
the vehicle was to be used as a "pool" car for any staff that may
require it to attend site meetings or other business. Since I had
just purchased a new '91 Ford Explorer and was the only driver at
home I had no intention of driving the Metro vehicle for personal
use. It was not stated then or ever that personal use would be
considered to and from work.
[10] This is an important point and I will
discuss that later.
ANALYSIS
[11] The Appellant was employed by Metro
during the relevant tax years, 1992 and 1993. The Appellant was
employed as a supervisor, Traffic Division, but was asked to take
on the position of Acting Manager of Traffic Operations during
the years under appeal. This position included a vehicle that was
for Metro use, and any personal use of the vehicle was to be
logged and declared by the Appellant on filing his income tax. In
computing his income for the 1992 and 1993 taxation years, the
Appellant did not include the amounts for the automobile standby
charges and the automobile operating cost benefits.
[12] Subsequently, the Minister assessed the
Appellant for the benefits totalling $2,260 in 1992 and $2,241 in
1993, based on the assumption that the Appellant's personal
use of the Metro vehicle was equivalent to 15% of the total use
by the Appellant.
[13] The Appellant contends, as I have
reviewed, that he had no personal use of the vehicle, as his work
day started the minute he was in the vehicle, due to it being
equipped with both a cellular telephone and a two-way FM radio,
directly linked to traffic maintenance contractor, and that is
Guild Electric Ltd. The result of his car being equipped with
this communication equipment was much of the daily business was
conducted from the car.
[14] In terms of legislation, subsection
6(1) indicates the amounts to be included in income from an
office or employment. There shall be included in computing the
income of a taxpayer for the taxation year as income from an
office or employment a standby charge for an automobile; that is,
an employee must include in income a reasonable standby charge if
his employer provides the employee with an automobile for
personal use.
[15] The word "reasonable" in the phrase
"reasonable standby charge" is somewhat misleading. The formula
in subsection 6(2) is a deeming provision that calculates the
exact amount to be included in income in the circumstances. The
calculation does not leave any room for judgement or
discretion.
[16] So we come down to the point was there
a personal benefit accruing to the Appellant.
[17] On that, we consider the evidence we
have had today, and we have been told that a logbook was kept,
but the logbook has been lost, although there has been a search,
without success.
[18] From the Appellant's
interpretation, he said he used the vehicle personally only on
two occasions for the period in question and he said that his
work commenced from his home.
________________
NOTE: Applicable to 1993: Paragraph (k) of
subsection 6(1) indicates, where an employee is subject to a
standby charge under paragraph 6(1)(e), then personal net
operating costs paid by an employer on behalf of the employee are
also included in the employee's income as a benefit.
[19] However, I have some problems with the
evidence that his work commenced from his home.
[20] From the evidence, I conclude that the
work commenced at the job site, the traffic location or the Metro
office. Thus, there was a personal component between the
residence and the job site, the traffic location or the Metro
office.
[21] No conclusive evidence was submitted by
the Appellant, save his own opinion that his home was the
commencement place of his employment.
[22] The formula, as I have indicated, in
subsection 6(2) is a deeming provision that calculates the exact
amount to be included in income. For the Court to find that no
benefit accrued to the Appellant, it must be done by finding that
the numerator in the formula, that is, the personal use
kilometres is zero. This requires exact records, and this, the
Court does not have. For the Court to indulge in a guesstimate is
beyond the Court's jurisdiction.
[23] From the evidence and the lack of
supporting log books, I cannot find as a fact that the number of
personal use kilometres is zero. Therefore, the Minister's
assessment stands in relation to standby charges and the benefits
conferred.
[24] Thank you for your attendance, Mr.
Walsh. I am sorry I was not able to be more helpful, but the
appeals are dismissed. Thank you.
Signed at Ottawa, Canada, this 22nd day of June, 1998.
J.T.C.C.
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