[OFFICIAL ENGLISH TRANSLATION]
Date: 19981016
Docket: 97-3669(IT)I
BETWEEN:
JACQUES SIMONEAU,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Watson, D.J.T.C.C.
[1] This appeal was heard under the
informal procedure at Sherbrooke, Quebec, on October 9, 1998.
[2] For the 1994 taxation year, the
appellant claimed $770 in moving expenses. Then, on
September 18, 1996, he asked the Minister of National Revenue
(''the Minister'') to adjust his moving expenses
deduction from $770 to $34,595 following the sale of
his old residence. The appellant has appealed from the
Minister's decision; in a July 28, 1997, Notice of
Reassessment, the Minister informed the appellant of his decision
that expenses totalling $22,395 for maintenance of his old
residence in the 1994 taxation year were not allowable.
[3] In making this reassessment, the
Minister relied on the following assumptions of fact, inter
alia:
[translation]
(a) on September 9,
1994, the appellant moved from Kingston, Ontario, to Waterloo,
Ontario, to hold new employment;
(b) the distance
between these two locations is 350 kilometres;
(c) in his income
tax return for the 1994 taxation year, the appellant claimed $770
in moving expenses;
(d) in a September
18, 1996, letter, the appellant asked the Minister to adjust his
moving expenses deduction from $770 to $34,595 following the sale
of his old residence;
(e) these expenses
were broken down as follows:
Maintenance Expenses for Residence
Municipal
taxes
$2,507
Water
taxes
$125
Electricity
$777
Natural
gas
$749
Mortgage
$9,788
Mortgage
insurance
$268
Mortgage administration
costs
$125
Alarm
system
$244
Travel for
maintenance
$7,812
Other expenses
Commission on sale of
residence
$10,700
Sale
costs
$622
Temporary
accommodation
$438
Meals
$223
Travel
costs
$217
Total
expenses
$34,595
(f) expenses
totalling $22,395 for maintenance of the appellant's old
residence were not allowable as moving expenses.
[4] At the hearing, the appellant
admitted the truth of all the assumptions of fact except the one
set out in paragraph (f).
[5] At issue is whether the expenses
claimed were direct consequences of the relocation and whether
they were selling costs in respect of the June 1995 sale of the
appellant's old residence.
[6] The appellant based his arguments
on this Court's decisions in McLay v. Minister
of National Revenue (M.R.N.), 92 D.T.C. 2260, and Graham
v. Her Majesty the Queen, [1997] T.C.J. No. 176 (Q.L.);
the respondent, on the other hand, relied on the Federal Court of
Appeal decision in Séguin v. Canada, [1997] 97
D.T.C. 5457.
[7] Paragraph 62(3)(e) of the
Income Tax Act (''the Act'') reads
as follows:
Definition of "moving expenses"
62(3) In subsection (1), "moving expenses" includes
any expense incurred as or on account of
...
(e) the
taxpayer's selling costs in respect of the sale of the old
residence,
[8] In its decision in Graham,
supra, this Court specified that the purpose of paragraph
62(3)(e) of the Act was to relieve taxpayers'
tax burden where there is duplication of expenses following a
move, and it accepted claimed expenses relating to the sale of
the old residence for insurance, taxes, mortgage interest, and
electricity over a six-month period. The Court points out
that in Séguin, supra, Desjardins J. A. of
the Federal Court of Appeal disposed of this issue as follows, at
pages 5458 and 5459 (French text):
Although the purpose of the provision is no doubt to encourage
mobility of employment, and the enumeration in subsection 62(3)
of the Act is not exhaustive, as is indicated by the use of the
verb "includes" ("comprend") in that section,
since its purpose is not to cover all possible moving expenses,
we do not think section 62 as a whole can be read as it was by
the tax court judge.
What section 62 allows, within its first subsection, is a
deduction by the taxpayer of the amounts
62(1) ... paid by him as or on account of moving expenses
incurred in the course of moving from his old residence to his
new residence
According to the ordinary meaning of the words used, the
provision includes those expenses incurred for physically moving,
changing one's residence, and certain other expenses directly
related to the actual move and resettlement, and not some amount
intended to compensate for accessory damages that are unrelated
to the actual move to and resettlement in the new
residence.2 Thus, it excludes the interest expenses on
the old residence that do not pertain directly to the physical
move of the taxpayer and his family, but instead pertain to the
bank loan he took out on his old residence.
[9] The burden of proof was on the
appellant to establish that the July 28, 1997, reassessment was
unfounded in fact and in law.
[10] I am convinced that the expenses
claimed by the appellant for maintenance of the old residence for
the period from the moving date in September 1994 to the selling
date of the old residence in June 1995 are not ''selling
costs in respect of the sale of the old residence''.
[11] Therefore, the appeal is dismissed.
Signed at Ottawa, Canada, this 16th day of October 1998.
D.J.T.C.C.
Translation certified true
on this 9thday of July 2003.
Sophie Debbané, Revisor
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