Date: 19990407
Docket: 97-2815-IT-G
BETWEEN:
SHEILA D. MULLIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for judgment
Sarchuk J.T.C.C.
[1] This is an appeal by Sheila D. Mullin from an assessment
of tax with respect to her 1995 taxation year. In that year
relying on the provisions of paragraph 118.2(2)(g) and
subsection 118.2(4) of the Act, she claimed the amount of
$4,907.35 as medical expenses of which the sum of $1,361.25
represented vehicle expenses. In assessing, the Minister of
National Revenue (the Minister), reduced this claim to
$411.40.
[2] At the commencement of the trial the parties filed an
Agreed Statement as to Facts which reads as follows:[1]
The Appellant and the Respondent do hereby agree with each
other in connection with the truth and accuracy of the following
facts and statements:
1. The Appellant, Sheila D. Mullin (having Social Insurance
Number xxx-xxx-xxx) is an individual resident of Swan River,
Manitoba.
2. The Appellant has submitted a claim to the Respondent on
account of medical expenses with respect to her 1995 taxation
year (for medical expenses in connection with the period January
1, 1995 to December 31, 1995) in the amount of $4,907.35.
3. The Respondent has allowed medical expenses for the
Appellant in the amount of $4,288.74.
4. The difference between the position of the Appellant and
the position of the Respondent in connection with the medical
expense claim relates solely to the item respecting
"travel-use of personal vehicle":
(a) The Appellant has made a medical expense claim of
$1,361.25 in connection with this item ($0.30 per kilometre);
(b) The Respondent has allowed only $604.67 in connection with
this item ($0.16 per kilometre).
5. The amount per kilometre that the Respondent has suggested
as being reasonable is $0.16 per kilometre, being the amount that
the Respondent is prepared to allow in connection with
"travel-use of personal vehicle".
6. The Appellant and Respondent agree that the travel in
question related to transportation of the Appellant and/or the
children of the Appellant from the locality where the Appellant
dwells to visit medical persons in circumstances where:
(a) The amount of travel required was at least 40
kilometres;
(b) Substantially equivalent medical services were unavailable
within the Appellant's locality;
(c) The Appellant was taking a reasonably direct travel route
and travelled the kilometres claimed along that route; and
(d) It was reasonable for the Appellant to travel to that
place for medical services.
These are the requirements of paragraph 118.2(2)(g) of
the Income Tax Act (the "Act"). The
Appellant and Respondent agree that these requirements have been
satisfied.
7. The Appellant's claim for the use of the vehicle is
made pursuant to subsection 118.2(4) of the Act.
[3] Evidence was also adduced from Norma Marr, an appeals
officer with Revenue Canada. The Appellant's file was
assigned to her in the normal course and as a result of her
review, the Appellant's claim for vehicle expenses was
reduced to $0.14 per kilometre and two oil changes. Her decision
was based primarily on a study conducted by Runsheimer of Canada,
an organization which performs analyses of vehicle operating
costs in 12 cities in Canada for, inter alia, the Canadian
Automobile Association. According to this study, $.11½ per
kilometre was the appropriate operational costs, however, Ms.
Marr allowed $.03 per kilometre more than the study
suggested because the Appellant utilized a van rather than a car.
For the same reason, she also allowed the additional oil changes.
Ms. Marr conceded that the reference to operating costs in the
study reflected costs of fuel, oil, tires and maintenance but did
not take into account depreciation, replacement of parts and wear
and tear.
[4] The Court also had before it a Treasury Board of Canada
Travel Directive; the Manitoba Government Employees' Master
Agreement and a copy of The Town of Swan River By-law.[2] The Treasury Board
Travel Directive sets out the federal government rates which
currently are $.34½ per kilometre for the first 6,500
kilometres. The MGEU rates found in Exhibit A-3 allows, for
employees travelling south of the 53rd parallel, $.30.4 per
kilometre for the first 10,000 kilometres. Last, The Town of Swan
River By-law provides that its officers and employees are to be
reimbursed at the rate of $.30 per kilometre. The Appellant is a
resident of Swan River.
[5] The relevant sections are 118.2(2)(g) and 118.2(4)
of the Act, as follows:[3]
118.2(2) For the purposes of subsection (1), a medical expense
of an individual is an amount paid
...
(g) to a person engaged in the business of providing
transportation services, to the extent that the payment is made
for the transportation of
(i) the patient, and
(ii) one individual who accompanied the patient, where the
patient was, and has been certified by a medical practitioner to
be, incapable of travelling without the assistance of an
attendant
from the locality where the patient dwells to a place, not
less than 40 kilometres from that locality, where medical
services are normally provided, or from that place to that
locality, if
(iii) substantially equivalent medical services are not
available in that locality,
(iv) the route travelled by the patient is, having regard to
the circumstances, a reasonably direct route, and
(v) the patient travels to that place to obtain medical
services for himself or herself and it is reasonable, having
regard to the circumstances, for the patient to travel to that
place to obtain those services;
...
118.2(4) Where, in circumstances in which a person engaged in
the business of providing transportation services is not readily
available, an individual makes use of a vehicle for a purpose
described in paragraph (2)(g), the individual or his legal
representative shall be deemed to have paid to a person engaged
in the business of providing transportation services, in respect
of the operation of the vehicle, such amount as is reasonable in
the circumstances.
Delivered orally from the Bench at
Winnipeg, Manitoba, on January 14, 1999
[6] I think in the course of our discourse, Mr. Bouvier, I
expressed fairly clearly my perception of how the section should
be interpreted. It is basically that in the case of a taxpayer
who uses his or her own vehicle because transportation services
are unavailable, the relevant subsection, 118.2(4), deems that
the taxpayer has paid a reasonable amount to a person providing
those services. That is the only way I can see to read that
section if it is to make any sense.
[7] The question then becomes what is a reasonable amount. In
this particular case, we have the evidence of the appeals officer
who utilized a particular study to determine that $.11 per
kilometre properly reflected the running expenses or operating
expenses of a vehicle and, then because in this case the
Appellant drove a van rather than a car, added a further $.03
cents per kilometre together with a subsidiary amount for two oil
changes. In my view, that amount is not a reasonable amount which
the taxpayer would have paid to a person providing the services
referred to in paragraph 118.2(2)(g).
[8] The next question to be answered (and there is a bit of a
shortage of evidence as to what the costs of the provision of
such transportation might be) is whether the amount asserted by
the Appellant is reasonable or not. I see no basis upon which I
can distinguish the deemed payment provided for by subsection
118.2(4) from a payment to a federal servant employed by Revenue
Canada or by any other department, or to a judge travelling on
business. In this context, I note that $.34½ per kilometre
is considered to be a reasonable expense incurred by such person
when required to use his vehicle for government business.
[9] I do not dispute that this takes into account the use of
the vehicle in its full context, that is not just operating
expenses, but the cost of insurance, the cost of maintenance, the
cost of repairs and so forth, but these are an appropriate
charge.
[10] I note, for example, that in northern communities, it is
accepted (and I am speaking on the basis of previous cases I have
heard) that the rates are increased because of the additional
wear and tear which occurs given their particular weather
conditions and so forth. That makes sense. It is consistent with
what I believe to be an appropriate assessment of the reasonable
costs.
[11] For these reasons, abbreviated though they are, I have
concluded that the Appellant is entitled to her claim of $.30 per
kilometre as being a reasonable amount in the circumstances. The
appeal is allowed, with costs.
Signed at Ottawa, Canada, this 7th day of April, 1999.
"A.A. Sarchuk"
J.T.C.C.
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