0001
TAX COURT OF CANADA
____________________________________
Court Number 2006-407(IT)I
BETWEEN:
RICHARD DRAKE
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
______________________________________________
EXCERPT (RULING)
May 31, 2007
Held at the Courts Administration Service
Calgary, Alberta
Volume 1
_______________________________________________
TAKEN BEFORE:
The Honourable Mr. Justice Rip
0002
APPEARANCES
TAKEN BEFORE:
The Honourable Mr. Justice Rip
--------------------------------------
Richard Drake Appeared On His Own
Behalf
Darcie E. Charlton, Esq. Appeared for the
Respondent
--------------------------------------
James Brunton Court Registrar
Jenn vanRootselaar, CSR(A) Court Reporter
* * * * * * * * * * * * * * *
0003
TABLE OF CONTENTS
PAGE
APPEARANCES
2
RULING
4
CLOSING REMARKS
8
* * * * * * * * * * * * * * *
0004
04 JUSTICE
RIP: Okay. It's your turn.
05 MR.
DRAKE: I guess when you go on
06 these jobs,
you're always expecting for a
07 long-term
employment --
08 JUSTICE
RIP: Beg your pardon?
09 MR.
DRAKE: You're always expected
10 to have a
long-term employment, good terms with
11 the
company, and maybe work for that company.
12 So whenever
I go to these jobs, sometimes they
13 only end up
being --
14 JUSTICE
RIP: When have you had a
15 long-term
employment for about a couple of
16 years?
17 MR.
DRAKE: Like, recently? Yeah,
18 just --
19 JUSTICE
RIP: In 2001, 2000.
20 MR.
DRAKE: The long-term is --
21 JUSTICE
RIP: No. 2001, 2002, did you
22 have any
long-term employment.
23 MR.
DRAKE: 2001 I started the
24 Boston long-term employment.
25 JUSTICE
RIP: Beg your pardon?
0005
01 MR.
DRAKE: The Boston, that was
02 my --
03 JUSTICE RIP:
What was it? How long
04 was it?
05 MR.
DRAKE: Ten months, but it could
06 have been
longer, but the visas couldn't be
07 issued.
08 JUSTICE
RIP: Now, Boston. And where
09 were you
going, from Boston to where?
10 MR.
DRAKE: Well, I got laid off,
11 and that's
when I went to Bechtel.
12 JUSTICE
RIP: That's where -- the
13
government's consenting to the Boston.
14 MR.
DRAKE: Yeah.
15 JUSTICE
RIP: They're consenting to
16 that.
17 MR.
DRAKE: Oh, yeah. I'm just
18 saying that
-- she's saying that I've never
19 permanently
had a --
20 JUSTICE
RIP: Well, you need a
21 residency;
you've got to acquire a residence.
22 MR.
DRAKE: Yeah.
23 JUSTICE
RIP: When I say "acquire,"
24 you don't
have to buy, but you have to live --
25 you have to
set up a residence.
0006
01 MR.
DRAKE: Yeah, well, that would
02 be the next
step, but then when you get laid
03 off, you
don't have a choice.
04 JUSTICE
RIP: That's the problem.
05 MR.
DRAKE: That's the problem. But
06 what do you
do, right? You know, I'm just
07 saying that
if I -- you know, I'm claiming --
08 for me, if
I'm claiming 35 cents a kilometre,
09 you know,
gas is taxed probably at 35 cents a
10 kilometre,
you're not losing out; I'm bringing
11 in new
income into the country, and I'm being
12 penalized.
13 JUSTICE
RIP: What does the act --
14 find me
somewhere in the Income Tax Act that I
15 can allow
it to you.
16 MR.
DRAKE: The moving expense?
17 JUSTICE
RIP: Anything.
18 MR.
DRAKE: Just I know moving
19 expenses,
I'm allowed to move from -- like she
20 said, it
says in there you can't go from Canada
21 to the US, but I can do moving expenses
22 within -- a
move within one country, like, in
23 the same --
a move from, like, say, Boston and
24 New York would be considered allowable.
25 Anything
going -- if I was going to Fluor --
0007
01 when I was
laid off at Ohio and I worked for a
02 Canadian
company, well, I should be allowed
03 that move.
04 JUSTICE
RIP: You should be, but
05 you're
not.
06 MR.
DRAKE: Yeah.
07 JUSTICE
RIP: The act doesn't permit
08 you to.
You have to show me that the act
09 permits
it. Not what should be --
10 MR.
DRAKE: Yeah.
11 JUSTICE
RIP: -- but what actually is.
12 I've got to
follow the laws, not -- what the
13 law is is
not necessarily fair --
14 MR.
DRAKE: Yeah. Yeah.
15 JUSTICE
RIP: -- or not necessarily in
16 common
sense.
17 MR.
DRAKE: Well, when I phoned the
18 revenue
agencies, they're like, As long as
19 it's --
that's what I do, right? I do what
20 they say,
right?
21 JUSTICE
RIP: Well, maybe you
22 shouldn't
be doing that.
23 MR.
DRAKE: Yeah, well, they
24 shouldn't
be doing that, but . . .
25
Also for my expenses, if
0008
01 I work for
Fluor Canada and I get a job test
02 there and I
worked for -- in Edmonton, like
03 Boilermakers
is in Edmonton, I reported there,
04 I just had
a T2200. As a company they filled
05 it out.
06 JUSTICE
RIP: The thing is, we're not
07 concerned
with that.
08 MR.
DRAKE: Yeah. I just pretty
09 much just
gave you the information what I feel
10 like --
11 JUSTICE
RIP: Beg your pardon?
12 MR.
DRAKE: Just the information
13 that I
provided with my moving expenses and
14 employment
expenses, it's your decision.
15 JUSTICE
RIP: The problem is, sir, is
16 they're not
eligible expenses. An employee --
17 first of
all, to deduct an employee expense,
18 you have to
be an employee. And you did not
19 become an
employee of these companies until you
20 are on the
site. Is that not true?
21 MR.
DRAKE: Yes, that's true.
22 JUSTICE
RIP: So the expenses getting
23 there,
they're lost. They're somewhere in
24 cyberspace,
so to speak. They're nothings.
25 MR.
DRAKE: Yeah.
0009
01 JUSTICE
RIP: So they're not deducted.
02 It's a
problem. I feel for you. I feel for
03 you because
if you -- if there was evidence
04 that, you
know, and there isn't any, and I
05 don't know
how you would prove this, if you are
06 an
independent contractor, a person carrying on
07 his own
business is entitled to expenses that
08 an employee
is not. Whether it's fair or not,
09 I'm not
here to rule. But if you carry on a
10 business on
your own, you're allowed certain
11 expenses
that an employee's not.
12 MR.
DRAKE: Yeah.
13 JUSTICE
RIP: But I can't help that.
14 MR.
DRAKE: I just think if you're
15 moving to
earn an income or start a new job --
16 JUSTICE
RIP: But that is not -- it's
17 a
difference. Employment income is not an
18 expense, is
not -- it's -- you're restricted.
19 The act
states specifically, living expense as
20 an
employee, no way. It's Section 6.
21 MR.
DRAKE: Mm-hmm. Just because I
22 didn't hold
the residence long enough --
23 JUSTICE
RIP: Never mind residence. I
24 didn't go
into -- I questioned you on it, Did
25 you set up
a residence? The answer is --
0010
01 except in Boston, the answer is no.
02 MR.
DRAKE: Yeah, well, it takes a
03 little bit
of time to set up a residence when
04 you're --
05 JUSTICE
RIP: But you have to do it.
06 That's what
the law says.
07 MR.
DRAKE: Well, people get their
08 mail sent to
hotels, people in Canada that live
09 in motels,
and that's their residency.
10 JUSTICE
RIP: They are living in
11 hotels when
they may have a residence somewhere
12 else.
13 MR.
DRAKE: They get their mail sent
14 there, and
you know, if someone's been living
15 in a motel
in Canada for the last five years,
16 where do
you consider them a resident? People
17 sitting in
camps up there, they've been up
18 there for
probably five or six years, or some
19 have been
up for 10, 15, 20 years, 30 years,
20 and that's
a residence. How do you tax the
21 person.
22 JUSTICE
RIP: That may be their
23 residence,
but when you are in a hotel on a
24 short-term
basis, that's not your residence.
25 MR.
DRAKE: But the 15 days for --
0011
01 JUSTICE
RIP: But that's if you set
02 up --
assuming you set up a residence when
03 you're
going to a residence. So if you don't
04 set up the
residence, you don't get this moving
05 expense.
06 MR.
DRAKE: So if you set up the
07 residence,
just -- you know, it's just after
08 the fact.
You know, whatever happens after the
09 15 days it
shouldn't matter if --
10 JUSTICE
RIP: It does matter. Quite
11 so. It's
very important.
12 MR.
DRAKE: Yeah, but how does that
13 benefit the
system?
14 JUSTICE RIP:
Because you are in the
15 hotel
because a residence may not be ready, may
16 not be
available.
17 MR.
DRAKE: Yeah.
18
Well, it's your
19 decision.
Whatever. If I . . .
20 (EXCERPT
ENDS)
0012
01 JUSTICE
RIP: Okay. What I'm going to
02 do, sir,
I'm going to give you what the Crown
03 consented
to. I'm going to give you an --
04 the -- I'm
going to have to -- as I say, I
05 don't want
to repeat myself again. But I think
06 you
understand we've gone through the appeal
07 during the
trial; we've gone through the --
08 the -- the
RRSP and the pension. I think you
09 understand
why you're not -- that's not
10 available
to you, because you had a contingent
11 right in
those years.
12 MR.
DRAKE: Yeah.
13 JUSTICE
RIP: Okay. Then -- and I
14 told you --
and I told you to get in touch with
15 your
minister of finance, your member of
16 parliament
to try to get -- maybe they can give
17 you
permission regarding to this.
18 MR.
DRAKE: Yeah, I'll -- I'll --
19 JUSTICE
RIP: So do that. With
20 respect to
the moving expenses, you may even
21 want to try
that. Say, Look, in my situation,
22 I'm falling
through the cracks. And you may
23 want to
even discuss that with them at your --
24 that you're
going to various employment sites
25 across North America, and you can't deduct it
0013
01 even. You
may want to discuss that as well.
02 MR.
DRAKE: Yeah.
03 JUSTICE
RIP: Because as I said to
04 you, and I
just want to repeat to you, that's
05 wholly
discretionary to the Minister or to the
06 government,
and they may or may not allow you
07 or give you
the -- the remission. Okay?
08
So I'm going to allow
09 you a
deduction. And what year is that?
10 That's in
2001, I understand, is that correct,
11 the
deduction, the Boston to New York via
12 Newfoundland?
13 MS.
CHARLTON: I believe that's 2002.
14 JUSTICE RIP: 2002.
15
Now, the other thing I
16 want to
bring out, in paragraph 9 of the reply,
17 that --
that has been assessment establishing
18 the
increase in the union fees; is that
19 correct?
It's not something the Minister's
20 conceding
that hasn't been assessed?
21 MS.
CHARLTON: I apologize.
22 JUSTICE
RIP: Beg your pardon?
23 Because
it's not clear, to be quite honest with
24 you. It says
-- okay, it says the Minister
25 increased
the deduction. Okay.
0014
01 MS.
CHARLTON: The Minister allowed the
02 $3,787 that
he asked for.
03 JUSTICE
RIP: Okay. So I don't have
04 to worry
about that.
05
So for 2002 there'll be
06 a deduction
of 2,193.17 with respect to moving
07 expenses.
08
And I want you -- you
09 know,
what's important, Mr. Drake, is the
10 comments
here of Chief Justice Bowman. Are --
11 he's
usually very sympathetic to taxpayers, as
12 I hope to
be. And in Jenner, in which he
13 explained
at the end -- and this Jenner is not
14 all
together different than you, going into
15 various
areas.
16
And Justice Bowman says
17 (quoted as
read):
18
"Mr. Jenner seeks to import into
19
section 8 deductions that are
20
analogous to the allowances that are
21
specifically excluded by
22
subsection 6(6). While such arguments
23 by
analogy may be philosophically
24
attractive they do not fit within the
25
accepted rules of statutory
0015
01
interpretation employed in construing
02
the Income Tax Act. The taxation of
03
employment income as well as the
04
deduction of amounts spent in earning
05
that income is spelt out in the Income
06
Tax Act with great specificity. The
07
cost of travel from Mr. Jenner's home
08 in
Sturgeon Falls to the various
09
places where he was employed
10
by...different employers as well as
11
his living expenses when he was
12
working at those work sites is simply
13
not covered by section 8 of the Income
14
Tax Act, even though in the broad
15
sense one might say that the expenses
16
were related to his employment."
17
You've found the same
18 trap as he
has. I'm using a "trap" not in any
19 way, I'm
just saying that it's an unfortunate
20 situation
he found himself in and you found
21 yourself
in.
22 MR.
DRAKE: Yeah.
23 JUSTICE
RIP: And what I would like to
24 add to your
expenses, I don't think I can. So
25 I will
dismiss 2001, and I will allow 2002 to
0016
01 meet your
deduction of 2,193.17.
02 MR.
DRAKE: That was for the moving
03 expense.
04 JUSTICE
RIP: For the moving
05 expense.
06 MR.
DRAKE: And that was
07
two-thousand . . .
08 JUSTICE
RIP: 193.17.
09
Other than that, I have
10 a problem.
I don't think I can --
11 MR.
DRAKE: Yeah, well, that's --
12 that's --
that will be all right. That's the
13 first step,
and then my RRSPs, you know, if it
14 works out.
15 JUSTICE
RIP: There's no guarantee.
16 MR.
DRAKE: No, but it's the second
17 step,
right?
18 JUSTICE
RIP: Beg your pardon?
19 MR.
DRAKE: It's a second step.
20 JUSTICE
RIP: It's a kick at the can.
21 MR.
DRAKE: I found a few other
22 things to
-- I didn't bring up.
23 JUSTICE
RIP: Thank you very much.
24 Sorry if I
kept you.
25 THE
REGISTRAR: Order. All rise.
0017
01
The hearing is now
02 concluded.
The court is now closed for the day
03 and will
resume tomorrow at 9:30.
04
(PROCEEDINGS ADJOURNED AT 3:41 P.M.)
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