Date: 20020523
Docket:
1999-2399-IT-I
BETWEEN:
PATRICK J.
FARDEAU,
Appellant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Reasonsfor
Judgment
Bowman,
A.C.J.
[1]
These appeals are from assessments for 1995, 1996 and 1997. They
involve the disallowance of moving expenses and employee
expenses. For 1995 no evidence was adduced and so the appeal for
that year must be dismissed. For 1997 no notice of objection was
filed and therefore the appeal for the year will be
quashed.
[2]
This leaves 1996. The appellant is an RCMP officer who was moved
from British Columbia to the province of Quebec in 1996. He was
reimbursed for most of his expenses but there were some amounts
claimed for which he did not receive payment. Also, he claims
$873.31 under subparagraph 8(1)(i)(iii) of the
Income Tax Act.
[3]
I shall deal first with the claim for moving expenses under
section 62 of the Act. Exhibit A-3 sets these
amounts out as follows:
MOVE
fridge
682.59
Van
lines
2450.00
Unpacking
600.00
Rcmp
misc
1880.12
Total2
5588.71
[4]
The expression "moving expenses" in section 62
means amounts actually spent or incurred. It does not include the
cost of goods damaged or lost by the moving company. The fridge
was either damaged or lost and the $682.59 appears to be the cost
of purchasing a new fridge. The $2,450 under Van lines represents
the difference between the $3,500 claimed by the appellant from
the RCMP for damage to various items that was sustained in the
move and the amount of $1,050 paid to him by the RCMP. I do not
think either of these items are "moving expenses"
within the meaning of section 62.
[5]
Under the item RCMP misc. the sum of $1,880.12 represents the
difference between $2,128.80 shown on Exhibit A-2 as amounts
refused by the RCMP and the amount of $248.68 (repas pour 5
personnes). A portion of these amounts appears to have been
reimbursed as "montants forfaitaires". They include
cablevision, Bell Canada, the cost of a course in karate, house
plants that had to be left in British Columbia and a variety of
other items. Whether the RCMP ought to have paid these amounts is
not something I can or should decide, but they are not moving
expenses.
[6]
The final item of $600 for unpacking is simply for the
appellant's own time which he estimates at 36 hours.
This is not an expense at all and in any event the appellant
received an additional 1/12 of his salary to compensate him for
this according to the evidence of Ms. Isabelle
Guilbault.
[7]
The other part of the appellant's claim for a deduction is
certain expenses which he says fall under
subparagraph 8(1)(i)(iii). They are:
RCMP WORK
Shirts
92.18
Socks
15.16
Gloves
27.42
Ties
11.80
Tie
tacks
06.97
Cell
474.80
Pager
244.98
Total
1
873.31
[8]
Subparagraph 8(1)(i)(iii) permits the deduction of
amounts paid by the taxpayer in the year as
(iii)
the cost of supplies that were consumed directly in the
performance of the duties of the office or employment and that
the officer or employee was required by the contract of
employment to supply and pay for.
In French the provision
reads
(iii)
du coût des fournitures qui ont été
consommés directement dans l'accomplissement des
fonctions de la charge ou de l'emploi et que le contrat
d'emploi du cadre ou de l'employé obligeait
à fournir et à payer.
[9]
Some of the conditions are obviously met. The appellant paid the
amounts in question and he was required to supply and pay for
them under his contract of employment. Two questions remain: are
the items listed above "supplies" and are they
"consumed directly in the performance of the duties of the
office or employment" of the appellant? If they were
"consumed" within the meaning of the subparagraph they
obviously were consumed directly in the execution of his
duties.
(a) Are they
supplies?
[10]
The matter was considered in the Exchequer Court in the context
of paragraph 11(10)(c) of the former Income Tax
Act in Luks [No. 2] v. M.N.R.,
58 DTC 1194 at 1198-1199, where Thurlow, J. (as he
then was) said
"Supplies" is a term the connotation of which may vary
rather widely, according to the context in which it is used. In
s. 11(10)(c) it is used in a context which is concerned
with things which are consumed in the performance of the duties
of employment. Many things may be consumed in the sense that they
may be worn out or used up in the performance of duties of
employment. The employer's plant or machinery may be worn
out. The employee's clothing may be worn out. His tools may
be worn out. And materials that go into the work, by whomsoever
they may be provided, may be used up. "Supplies" is a
word of narrower meaning than "things", and in this
context does not embrace all things that may be consumed in
performing the duties of employment, either in the sense of being
worn out or used up. The line which separates what is included in
it from what is not included may be difficult to define precisely
but, in general, I think its natural meaning in this context is
limited to materials that are used up in the performance of the
duties of the employment. It obviously includes such items as
gasoline for a blow torch but, in my opinion, it does not include
the blow torch itself. The latter, as well as tools in general,
falls within the category of equipment.
...
The tools which the $44.34 was spent to replace included a blow
torch, screw drivers, pliers, and a chalk line, all of which were
items which the appellant was bound by the contract to provide,
and on the evidence it may also have included some small items
which the employer was bound by the contract to provide. There
was evidence that a blow torch can be expected to last more than
a year, that screw drivers and pliers are of uncertain duration,
sometimes requiring replacement in the course of a year and
sometimes more often, and that a chalk line is a type of thing
that is used up completely in the course of a year. There was no
evidence, however, as to when any of these items, or for that
matter any other tools which the appellant was required by the
contract to provide and which were included in the $44.34, in
fact ceased to be useful.
In this situation, the appellant's claim to deduct the $44.34
fails on two grounds.
The first is that, regardless of how long they may last while in
use or how often may be necessary to replace them, the articles
mentioned as having been included in the $44.34, as well as the
other articles which, under the contract, the appellant was
required to provide were all tools falling within the general
category of equipment, and in my opinion none of them can
properly be regarded as "supplies" within the meaning
of that term as used in s. 11(10)(c).
Secondly, even assuming that the tools purchased with the $44.34
were supplies of the kind contemplated by s. 11(10)(c) it
has not been established that they were consumed or worn out in
the performance of the duties of any of three employments in
which the appellant was engaged in 1954. Nor was it established
that they were consumed or worn out by the end of 1954. For aught
that appears, they may not yet be worn out or
consumed.
The language of s. 11(10)(c) is definite in limiting the
deduction to the cost of supplies "that were
consumed" in performing the duties of the employment. In
the French text, it is perhaps even more definite, for the
expression there used is "qui ont été
consommées." In order to succeed in obtaining the
deduction, the taxpayer must show that the amount sought to be
deducted meets the requirement. It is not difficult to see how
readily it can be met when supplies such as gasoline for a blow
torch are involved, for if a record is kept the taxpayer will
know how much of the commodity was consumed in the year, but
difficulty will inevitably be experienced in attempting to apply
this limitation in the case of tools, and this confirms me in the
opinion already expressed that tools are not supplies at all
within the meaning of the subsection. For the present purpose,
however, it is sufficient to say that the claim for the deduction
is defeated by the failure to show that the tools purchased with
the $44.34 were consumed in performing the duties of the
employment.
[11]
A number of the cases in this court were reviewed by
Bell, J. in Cuddie v. R., [1998]
3 C.T.C. 2232. His very useful summary of the cases is
reproduced in part below:
8
In Thibault v. Minister of National Revenue (1986),
86 D.T.C. 1542 (Eng.) (T.C.C.), this Court determined that
clothing could be considered to be "supplies" but could
not be "consumed". In Komarniski v. Minister of
National Revenue (1980), 80 D.T.C. 1134 (T.R.B.) this Court
determined that tools were not "supplies" but were
equipment, the cost of which was not deductible. Judge Tremblay
referred to the case of Luks v. Minister of National
Revenue (1958), 58 D.T.C. 1194 (Can. Ex. Ct.) in which
Thurlow, J., then a Judge of the former Exchequer Court of
Canada, in discussing the distinction between
"supplies" and "equipment" said,
[... reproduced
above]
9
In Brownlee v. Minister of National Revenue (1978), 78
D.T.C. 1571 (T.R.B.), this Court determined that the word
"supplies" did not include items of individual dress
such as a police officer's uniforms. It determined that the
uniforms were not "consumed" in the normal
comprehension of that term. It went further and said that even if
the uniforms were "supplies that were consumed", they
were not "consumed" directly in the performance of the
duties of the office or employment. The foregoing positions are
confirmed in McLeavy v. Minister of National Revenue
(1954), 54 D.T.C. 136 (Can. Tax App. Bd.) and Drobot v.
Minister of National Revenue (1987), 87 D.T.C. 371
(T.C.C.).
10
The submissions made by the Appellant Cuddie were logical, and in
the circumstances described by him, well based. I have no doubt,
from my appraisal of him, about his sincerity and about his
credibility. However, the statutory test that must be met is
strict. The legislature, in using the words "supplies that
were consumed" posed a firm requirement for deduction. The
New Shorter Oxford English Dictionary defines
"consume" as,
That has been
consumed.
and defines consumed,
inter alia, as
Destroyed by or like fire
or (formerly) disease; cause to vanish (away), as by
evaporation.... Use, so as to destroy; take up and exhaust;
use up.... Eat up, drink down; devour.
11
The expenses incurred by the Appellants simply did not result in
supplies being consumed. Accordingly, the appeals are
dismissed.
[12]
There is no unanimity in this court on the question whether such
things as shirts, socks and other similar items are supplies. We
are not talking about tools here. We are talking about shirts and
socks that wear out. With respect I think it is time to
reconsider the approach of Thurlow, J. in Luks. While
it might be right for tools it may be unrealistically narrow for
shirts, socks and boots in the context of modern employment
practices. Such things as clothing are certainly supplies. In
Thibault v. M.N.R., 86 DTC 1542,
Tremblay, J. after referring to the dictionary definitions
held that clothing fell within the term "supplies". I
agree. He was, however, of the view that clothing was not
"consumed". I shall deal with this second point
below.
[13]
In Le Petit Robert 1 Dictionnaire alphabétique et
analogique de la langue française
"fourniture" is defined as
follows:
◆1 ° Action
de fournir. Être chargé de la fourniture des
vivres, du fourrage. V. Approvisionnement,
livraison.
◆2 ° Ce
qu'on fournit, ce qu'on livre (généralement
au plur.). V. Provision. On trouve dans cette librairie
toutes les fournitures scolaires.
◊Spécialt. Ce que fournissent, en dehors de la
matière principale, les artisans à façon
tels que tailleurs, couturiers, tapissiers. Il m'a pris
tant pour la façon et tant pour les fournitures.
— Dr. comm. Livraisons faites par des
commerçants à des non-commerçants, pour des
besoins non commerciaux.
◆3 °
Cuis. Fines herbes que l'on mêle à la
salade. V. Assaisonnement.
[14]
In the Multi-Dictionnaire de la langue lrançaise
(Québec Amérique) "fourniture" is defined
as follows:
1.
Approvisionnement. La fourniture de bois. SYN.
livraison.
2.
(GÉN. AU PLUR.) Petit materiel
spécialisé. Des fournitures scolaires, des
fournitures de bureau. SYN.
accessoires.
(b) Are they
"consumed"?
[15]
I think, adopting a teleological approach to the interpretation
of this provision, it seems obvious that items of clothing that
have to be worn by a police officer as part of his or her job are
supplies that are consumed. If one steps back and asks what sort
of employment expenses is subparagraph 8(1)(i)(iii)
aimed at it seems the items of clothing that RCMP officers have
to supply and pay for out of their own pockets are precisely what
the subparagraph is intended to cover. No purpose is served by
adopting a narrow and technical interpretation where ordinary
common sense requires a different conclusion. Consumed is a word
of some elasticity. The Oxford English Dictionary
("OED") has three quarters of a page of
definitions of consume. It is true that some of the definitions
carry a connotation of destruction (as by fire) devouring (as by
eating) or spending (as in the case of money). I do not however
think there is any justification for requiring that there be
instant annihilation. Consumption can be gradual. Perhaps one
cannot consume a hammer but it does no violence to language to
say that one consumes items of clothing by wearing them out.
Indeed, one of the definitions of consume in the OED
is:
d. To wear out
by use.
1878 HOOKER &
BALL Marocco 156 The thin slippers universally used by the
people are very soon consumed.
[16]
What of the monthly cost of the pager and cell phone? Certainly
those services are "supplies". Just as obviously they
are consumed.
[17]
Interpretation Bulletin IT-352R2 draws a distinction between the
cost of
(d)
telegrams, long-distance telephone calls and cellular telephone
airtime that reasonably relate to the earning of employment
income.
which it says is deductible
under subparagraph 8(1)(i)(iii) and the cost
of
(a)
the monthly basic service charge for a telephone line;
(b)
amounts paid to connect or licence a cellular
telephone;
which it says is
not.
[18]
I suppose that in dealing with income tax matters we should be
used to drawing subtle distinctions but this distinction is a
little too subtle for me. Indeed, it makes no sense whatever. If,
as here, the officer has to supply his own cellular phone and use
it in the course of his duties the monthly service charge is as
much a cost of a service that is supplied as is the cellular
telephone airtime.
[19]
The appeal for 1995 is dismissed and the appeal for 1997 is
quashed. The appeal for 1996 is allowed and the assessment is
referred back to the Minister of National Revenue for
reconsideration and reassessment to allow the deduction under
subparagraph 8(1)(i)(iii) of $873.31.
Signed at Ottawa, Canada, this 23rd day of May
2002.
"D.G.H. Bowman"
A.C.J.
COURT FILE
NO.:
1999-2399(IT)I
STYLE OF
CAUSE:
Between Patrick J. Fardeau and
Her Majesty The Queen
PLACE OF
HEARING:
Montréal, Quebec
DATE OF
HEARING:
April 3, 2002
REASONS FOR JUDGMENT
BY: The Honourable D.G.H.
Bowman
Associate Chief Judge
DATE OF
JUDGMENT:
May 23, 2002
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Annick Provencher
COUNSEL OF RECORD:
For the
Appellant:
Name:
--
Firm:
--
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
1999-2399(IT)I
BETWEEN:
PATRICK J. FARDEAU,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on April 3, 2002, at
Montréal, Quebec, by
The Honourable D.G.H. Bowman, Associate Chief
Judge
Appearances
For the
Appellant:
The Appellant himself
Counsel for the Respondent:
Annick Provencher
JUDGMENT
It
is ordered that the appeal from the assessment made under the
Income Tax Act for the 1995 taxation year be
dismissed
It
is further ordered that the appeal from the assessment made under
the Income Tax Act for the 1996 taxation year be allowed
and the assessment be referred back to the Minister of National
Revenue for reconsideration and reassessment to allow the
deduction under subparagraph 8(1)(i)(iii) of
$873.31
It
is further ordered that the appeal from the assessment made under
the Income Tax Act for the 1997 taxation year be
quashed.
Signed at Ottawa, Canada,
this 23rd day of May 2002.
A.C.J.
Email this Content