Smith v. The Queen, docket 97-1725-IT-I (Informal Procedure)

Date: 19980216

Docket: 97-1725-IT-I

BETWEEN:

EDWARD SMITH,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Rip, J.T.C.C.

[1] Edward Smith resides in Gooseberry Cove, Newfoundland and in 1994 was employed by PCL-Aker-Stord-Steen-Becker (“PASSB”) at a work site in Bull Arm, Newfoundland and was involved in the construction of the gravity-based drilling platform for the offshore drilling program known as Hibernia. During part of 1994 Mr. Smith received $40 a day from PASSB for his board and lodging away from his principal place of residence. The appellant filed his income tax return for 1994 on the basis that no portion of the moneys he received for board and lodging ought to be included in his income in accordance with subsection 6(6) of the Income Tax Act (“Act”). The Minister of National Revenue (“Minister”) disallowed Mr. Smith’s claim on the basis that he did not need the requirements of subsection 6(6) of the Act in that he had not demonstrated that he had incurred board and lodging expenses at a location other than his principal place of residence. The Minister also took the position that Mr. Smith could reasonably be expected to have returned daily to his principal residence from the special work site.

[2] In assessing, the Minister assumed that Mr. Smith’s principal place of residence was at R.R. #1, Hillview, Trinity Bay, Newfoundland. Mr. Smith testified that this was his mailing address but in fact he lived in Gooseberry Cove in Trinity Bay.

[3] Mr. Smith worked as a welder at the work site in Bull Arm, Newfoundland. His employer asked him to move closer to the site since it was anticipated that he would have to work a great deal of overtime. He was entitled to be provided with living accommodations at the work site but because the accommodations were filled by other employees, PASSB agreed to pay him $40 per day if he moved near the site.

[4] Accordingly Mr. Smith obtained living accommodations in the village of Arnold’s Cove.

[5] The distance between Arnold’s Cove and Bull Arm is approximately ten kilometres. The distance between Arnold’s Cove and Gooseberry Cove is approximately 70 kilometres. Mr. Smith testified that the distance between Gooseberry Cove and the guardhouse gate at Bull Arm is approximately 55 kilometres. There is another five kilometres between the guardhouse gate at Bull Arm from which the employer buses the employees to the work site and the actual work site. The majority of the trip between Gooseberry Cove and the guardhouse at Bull Arm is along the trans-Canada highway and takes about 45 minutes to one hour, depending on weather conditions.

[6] Mr. Smith lived in the basement of a home owned by Mr. and Mrs. Spurrell. Mr. Spurrell was also employed at Hibernia and knew Mr. Smith. Mr. Smith’s accommodations at the Spurrell home consisted of a bed and basic furniture. The rent paid to Mr. and Mrs. Spurrell was $20 a week. Mr. Smith lived in these accommodations anywhere from three to four nights per week.

[7] The Minister questioned whether the appellant temporarily resided in Arnold’s Cove. I am satisfied from the evidence of Mr. Leo Mahoney, also an employee of Hibernia who resided at the Spurrell home on a temporary basis and whose appeal was heard on common evidence with that of Mr. Smith, Mr. and Mrs. Spurrell, and the appellant that Mr. Smith did reside at the Spurrell residence at various times in 1994 for periods of three to four nights at a time.

[8] Subsection 6(1) of the Act provides that all amounts received by a taxpayer in the year as an allowance for personal living expenses ought to be included in the taxpayer’s income for the year from an office or employment. Subsection 6(6) provides that notwithstanding subsection 6(1):

... in computing the income of a taxpayer for a taxation year from an office or employment, there shall not be included any amount received or enjoyed by the taxpayer in respect of, in the course or by virtue of the office or employment that is the value of, or an allowance (not in excess of a reasonable amount) in respect of expenses the taxpayer has incurred for,

(a) the taxpayer’s board and lodging for a period at

(i) a special work site, being a location at which the duties performed by the taxpayer were of a temporary nature, if the taxpayer maintained at another location a self-contained domestic establishment as the taxpayer’s principal place of residence

(A) that was, throughout the period, available for the taxpayer’s occupancy and not rented by the taxpayer to any other person, and

(B) to which, by reason of distance, the taxpayer could not reasonably be expected to have returned daily from the special work site, or

(ii) a location at which, by virtue of its remoteness from any established community, the taxpayer could not reasonably be expected to establish and maintain a self-contained domestic establishment,

if the period during which the taxpayer was required by the taxpayer’s duties to be away from the taxpayer’s principal place of residence, or to be at the special work site or location, was not less than 36 hours; ....

[9] The evidence confirms that the sole reason Mr. Smith rented living accommodations at Arnold’s Cove was because his employer asked him to do so. The evidence is quite clear that Mr. Smith could reasonably have been expected to have returned daily from Bull Arm to his principal place of residence in Gooseberry Cove. It is not uncommon in Canada for people to commute 60 kilometres to work, spending an hour or more on a highway. I also find that on the evidence Bull Arm was not remote from any established community, including the community of Gooseberry Cove.

[10] In the circumstances the assessment being appealed from is a good assessment and the appeal must be dismissed.

Signed at Ottawa, Canada, this 16th day of February 1998.

"G.J. Rip"

J.T.C.C.