Citation: 2006TCC561
Date: 20061114
Docket: 2006-912(IT)I
BETWEEN:
YVON THÉBERGE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1] This is an appeal under
the Informal Procedure of an assessment made on June 13, 2005, for the 2004
taxation year whereby the Minster of Revenue of Canada (the “Minister”)
disallowed, in calculating the Appellant’s income, the deduction of $11,915
claimed as “other employment expenses.”
[2] To assess the tax
and confirm the assessment dated June 13, 2005, the Minister relied on the
following facts, stated in paragraph 5 of the Reply to Notice of Appeal, which
have all been admitted by the Appellant:
[TRANSLATION]
(a)
during the 2004 taxation year, the Appellant was
hired as a full-time teacher by the Conseil des Atikamekw d’Opitciwam;
(b)
under the employment contract between the
Appellant and the Conseil des Atikamekw d’Opitciwam, for the period from
August 16, 2004, to August 12, 2005, the salary included, inter alia, a
cost-of-living bonus of $4,000.00 and a travel bonus of $5,000.00.
(c)
during the taxation year at issue, the Appellant
worked at the Mikisiw school of Opitciwam;
(d)
the Appellant was remunerated exclusively in
salary;
(e)
the Appellant, when filing his income tax return
for the 2004 taxation year, reported $72,737.52 in employment income from the
Conseil des Atikamekw d’Opitciwam, and claimed a deduction of $11,915 in “other
employment expenses”;
(f)
the claim of the deduction for “other employment
expenses” for the 2004 taxation year breaks down as follows:
2004
(i) 31 excursions of 700 kilometres (21 700km x
0.35) $7,295
(ii) telephone and cable
$840
(iii) cost of lodging in Opitciwam
$2,820
(iv)
high cost of living, with regard to food
($4,800 x 20%)
$960
$11,915
(g)
the Appellant claimed, in his income tax return
for the year at issue, the deduction for expenses that are related to a choice
of life or a career plan rather than conditions of employment:
(i)
the Atikamekw reserve of Opitciwam is located
near the Gouin reserve, 350 kilometres from the town of Normandin,
(ii)
rental of an additional dwelling and need to go
on excursions to not suffer from culture shock,
(iii)
higher cost of living.
[3] Only the Appellant
witnessed in support of his position. The Appellant also filed his employment
contract as evidence (Exhibit A-1).
Appellant’s testimony
[4] The Appellant
described the very difficult living conditions existing on the reserve in 2004
and to this day. He explained that these conditions explain in large part the
very high turnover rate for non-Aboriginal teachers seen at the time, and still
today, on the reserve, which is located approximately 300 km from the closest
town.
[5] The Appellant
rented a dwelling on the reserve that was barely fit for habitation. The
monthly rent was approximately $235. He had not chosen this dwelling; it was
chosen for him by the band council. He explained that a non-Aboriginal could
not settle on a reserve. He explained that the band council had temporarily
rented him this dwelling because he taught on the reserve, which was far from
any town. The Appellant also testified that he had kept a residence in the town
of Normandin, 300 km from the reserve, during the relevant period.
[6] The Appellant
testified that, had it not been for his excursions away from the reserve every
two weekends, his mental health would have been affected to the point that he
would have had to quit his job after a few months on the reserve like most of
the teachers who had tried the experience on this reserve.
Appellant’s position
[7] At the hearing, the
Appellant was unable to cite any provision of the Income Tax Act (the
Act) allowing the deduction, in the calculation of his income for the 2004
taxation year, of these expenses that he deducted in that year. However, he did
submit that the $5,000 bonus (travel bonus) and the $4,000 bonus
(cost-of-living bonus) that he had received under his contract constituted
non-taxable allowances within the meaning of subsection 6(6) of the Act.
Analysis and
conclusion
[8] I am of the opinion
that section 8 of the Act does not entitle the Appellant to deduct such
expenses from his employment income for the 2004 taxation year.
[9] Could the bonuses
received by the Appellant constitute a non-taxable allowance? In general, all
benefits that an employee receives or enjoys in the context of a job or an
office are taxable. Subsection 6(6) of the Act sets out an exception to this
general rule by allowing certain benefits related to employment in a remote
location to be excluded from the employee’s income. When an employee meets the
conditions set out in subsection 6(6) of the Act, the employee is entitled to
exclude the following items from his or her income:
(i)
the value of the board
or the lodging paid by the employer or an allowance received for board or
lodging in the context of employment at a remote location;
(ii) the value of
transportation paid for by the employer or an allowance received for
transportation.
[10] The cost-of-living
bonus of $4,000 received by the Appellant as part of his employment conditions
did not constitute, in this case, a non-taxable benefit under subsection 6(6)
of the Act, considering that it was not an allowance related to the expenses
paid by the Appellant for his board and lodging in 2004 or an allowance related
to the transportation costs that he had paid for that year.
[11] The transportation
bonus of $5,000 received by the Appellant as part of his employment conditions
did not constitute, in my opinion, a non-taxable allowance under paragraph
6(6)(a) of the Act, which provides that the allowance must be related to
costs paid by the Appellant for his board or lodging, while paragraph 6(6)(b)
requires the taxpayer to have received an allowance for costs paid for board
and lodging for the transportation allowance to be tax exempt. However, the
Appellant, in this case, had not received an allowance for expenses paid for
his board and lodging during the 2004 taxation year.
[12] For these reasons,
the appeal is dismissed.
Signed at Ottawa, Canada, this 14th day of November
2006.
“Paul Bédard”
on this 2nd day of
May 2007.
Gibson Boyd, Translator
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