Howlett v. The Queen, docket 97-3435-IT-I (Informal Procedure)

Date: 19981113

Docket: 97-3435-IT-I

BETWEEN:

STEVE HOWLETT,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Somers, D.J.T.C.C.

[1] This appeal was heard at Toronto, Ontario, on October 21, 1998.

[2] The Appellant appeals from an assessment of income tax for his 1995 taxation year arising from the Respondent's disallowance of a claim for moving expenses under subsection 62(1) of the Income Tax Act (the "Act").

[3] In so reassessing the Appellant, the Minister of National Revenue (the "Minister") made the following assumptions of fact which were admitted or denied by the Appellant:

"(a) those facts hereinbefore admitted;

(b) on or about August 31, 1995, the Appellant changed the address of his residence by moving from 60 Burwell Street, Brantford, Ontario (the "Former Residence") to 532 Parkside Drive, Waterdown, Ontario (the "New Residence"); (admitted)

(c) at all relevant times, both prior to and subsequent to the Appellant changing the address of his residence by moving from the "Former Residence" to the "New Residence", the Appellant was an employee of Atlas Trailer Coach (the "Employer"); (admitted)

(d) at all relevant times, the Appellant was a sales representative for the Employer whose sales territory was South West Ontario, which included the City of Mississauga, Ontario, in which the Employer had a branch office; (admitted)

(e) at no time relevant to this matter did the Appellant commence to carry on a business at a new work location in Canada, commence to be employed at a new work location in Canada or commence to be a full-time student; (denied)

(f) the Appellant's move from his "Former Residence" to his "New Residence" did not result because the Appellant commenced to carry on a business at a new work location in Canada, commenced to be employed at a new work location in Canada or commenced to be a full-time student." (denied)

[4] Section 62 of the Act reads in part as follows:

"Moving expenses.

(1) Where a taxpayer has, at any time, commenced

(a) to carry on a business or to be employed at a location in Canada (in this subsection referred to as "the new work location"), or

(b) to be a student in full-time attendance at an educational institution (in this subsection referred to as "the new work location") that is a university, college or other educational institution providing courses at a post-secondary school level,

and by reason thereof has moved from the residence in Canada at which, before the move, the taxpayer ordinarily resided (in this section referred to as "the old residence") to a residence in Canada at which, after the move, the taxpayer ordinarily resided (in this section referred to as "the new residence"), so that the distance between the old residence and the new work location is not less than 40 kilometres greater than the distance between the new residence and the new work location, in computing the taxpayer's income for the taxation year in which the taxpayer moved from the old residence to the new residence or for the immediately following taxation year, there may be deducted amounts paid by the taxpayer as or on account of moving expenses incurred in the course of moving from the old residence to the new residence, to the extent that ..."

[5] The Appellant testified that he changed the address of his residence by moving from 60 Burwell Street, Brantford, Ontario to 532 Parkside Drive, Waterdown, Ontario. Both prior and subsequent to the Appellant moving from his old residence to his new residence, he was an employee of Atlas Trailer Coach. There was a distance of 70 kilometres between the two residences. Before moving the Appellant had to drive 120 kilometres from his old residence to his work location in Mississauga, Ontario. After moving to the new residence the distance to the work location was 50 kilometres.

[6] The Appellant began working in 1990 for the same employer as a sales representative. The employer had its head office in Calgary, Alberta, but had a warehouse in Mississauga, Ontario, where there were two other employees and the Appellant as sales representative. The Appellant covered the territory of south western Ontario. The Appellant, acting for the employer which was a wholesaler, visited the retailers; he rarely visited the warehouse in Mississauga, going to the office once a month.

[7] In 1995, the Appellant became the sales manager which required him to be at the branch office in Mississauga, Ontario 70% of the time and for the remainder 30% he was working from his residence. The Appellant had two sales representatives under his supervision; he continued to act as a sales representative as well as a sales manager and the territory to cover was basically the same. He was required to be in the branch office three days a week and the rest of the time he covered his territory from his new residence as the place of contact.

[8] The issue is whether the Appellant is entitled to deduct the amount of $11,896.06 as moving expenses in computing income for the 1995 taxation year.

[9] In Bracken v. M.N.R., 84 DTC 1813, Judge Christie (C.J.T.C.) of this Court established the following four conditions to meet the requirements of subsection 62(1) of the Act (page 1819):

"My reading of subsection 62(1) is that it contemplates the existence of four separate elements: old work location, new work location, old residence and new residence, and the comparison of two distances, i.e. the distance from the old residence to the new work location with the distance from the new residence to the new work location the former of which must exceed the latter by 40 or more kilometres in order for the moving expenses to be deductible..."

[10] In the present appeal, the Appellant met two conditions: the old residence and the new residence. As to the work location it did not change. The Appellant's working pattern changed due to his new position as sales manager. His change of residence was only for the purpose of being closer to the branch office situated at the same location as before moving from one residence to the other.

[11] The appeal is dismissed.

Signed at Ottawa, Canada, this 13th day of November 1998.

"J.F.Somers"

D.J.T.C.C.