Landry v. The Queen, docket 1999-15(IT)I (Informal Procedure)

[OFFICIAL ENGLISH TRANSLATION]

1999-15(IT)I

BETWEEN:

MARIUS LANDRY,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on May 27, 1999, at New Carlisle, Quebec, on May 27, 1999, by

the Honourable Deputy Judge J.F. Somers

Appearances

Counsel for the Appellant:                    J. Grenier

Counsel for the Respondent:                A.-M. Desgens

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 1995 taxation year is allowed, without costs, and the matter is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 25th day of June 1999.

"J.F. Somers"

D.J.T.C.C.

Translation certified true

on this 10^th day of July 2003.

Sophie Debbané, Revisor

[OFFICIAL ENGLISH TRANSLATION]

Date: 19990625

Docket: 1999-15(IT)I

BETWEEN:

MARIUS LANDRY,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Somers, D.J.T.C.C.

[1]      This appeal was heard at New Carlisle, Quebec, on May 27, 1999. It is an appeal under the informal procedure from an income tax assessment for the 1995 taxation year.

[2]      In his tax return for the 1995 taxation year, the appellant claimed a total of $2,194.50 as expenses incurred to earn home office income. The Minister of National Revenue ("the Minister") denied the appellant that amount on the ground that the appellant had been unable to show that the part of his self-contained domestic establishment-that is, his work space-for which he was claiming home office expenses was used on a regular and continuous basis for meeting his customers in the ordinary course of performing the duties of his office or employment. He had also been unable to show that his work space was the place where he principally performed the duties of his office or employment.

[3]      During the taxation year at issue, the appellant was employed, and has been since 1997, by Télévision de la Baie des Chaleurs Inc. ("the employer"), which hired him as an advertising representative. The territory assigned to the appellant for the performance of his duties is as follows: from Nouvelle to Paspébiac inclusive as well as certain regional customers in Québec, Montréal, eastern Quebec and northern New Brunswick.

[4]      The employer's head office is at the top of Mont St-Joseph in Carleton, Quebec, at an altitude of 2,000 feet, and the road to get there is steep and winding. Because the trip is so difficult, the company uses a jeep to transport employees and customers to the top. Employees and all other persons are advised not to take the road on their own.

[5]      According to the contract of employment filed in evidence (Exhibit A-1), the employee must maintain a home office. Paragraph 22 of the contract reads as follows:

[TRANSLATION]

Because of the exceptional location of Télévision de la Baie des Chaleurs inc. at the top of Mont St-Joseph, the Employee shall maintain a home office to avoid climbing the mountain on a daily basis.

[6]      Since the employee has a home office, the employer provides the employee with office equipment, that is, furniture, a desk, a filing cabinet, a fax machine and a monitor. The only equipment provided by the appellant is his chair and the computer table. The appellant filed photographs of that impressive collection of equipment in evidence (Exhibit A-2).

[7]      The appellant's office measures 16 feet by 16 feet, which is an eighth of the square footage of his house. In the territory assigned to him, he has about 162 customers to visit; he is on the road Monday, Tuesday and Wednesday each week and spends the rest of the time at his office preparing a marketing plan. The appellant is at his office from 7:30 a.m. to 9:30 p.m. When he is on the road, his schedule is 10:00 a.m. to 3:30 p.m., and he then returns to the office until 9:30 p.m. to review his files, return telephone calls, and take care of his correspondence since he does not have a secretary.

[8]      The appellant has to fax reports to the head office. He also has to make presentations to his customers concerning the type of advertising desired, and he must make changes thereto, if necessary, to satisfy the customers and management. The appellant co-ordinates those objectives from his home office.

[9]      Most sales to customers are estimated at between $2,000 and $5,000. He must contact his customers by telephone to make appointments or encourage them to purchase advertising. According to the appellant, 60 percent of his work is done at his office. The appellant struck the Court as a credible witness who clearly demonstrated his interest in his job and the efficiency with which he performs his duties.

[10]     The appellant was able to honestly show that he principally performed his work at his home office on a regular and continuous basis. That work was his only employment and took up all of his time. Because the employer's head office was difficult to access, the employer provided him with all the equipment he needed to do his work. Given the nature of his work, the appellant had to meet his customers at his office to prepare an advertising plan that met their needs and expectations and sometimes had to look at the type of advertising agreed on with them.

[11]     The evidence showed that the appellant met the requirements of section 8(13) of the Income Tax Act. The appellant's work space is the place where he principally performs the duties of his employment on a regular and continuous basis.

[12]     Counsel for the appellant asked for the appellant's costs. It is recognized that appeal costs are not awarded in cases under the informal procedure; they are awarded exceptionally, and the evidence did not show that there were exceptional circumstances.

[13]     The appeal is allowed without costs.

Signed at Ottawa, Canada, this 25th day of June 1999.

"J.F. Somers"

D.J.T.C.C.

Translation certified true

on this 10^th day of July 2003.

Sophie Debbané, Revisor