Taylor,
T.C.J.:—This
is
an
appeal
against
an
income
tax
assessment,
for
the
year
1983,
heard
in
London,
Ontario,
on
March
3,
1987,
in
which
the
Minister
of
National
Revenue
disallowed
the
$500
employment
expense
deduction
claimed.
The
critical
facts
are
detailed
in
the
Minister's
reply
to
notice
of
appeal:
Statement
of
Facts
—
during
the
1983
taxation
year
the
Appellant
received
employment
income
from
the
following
sources:
|
United
Autoworkers
Local
1520
|
—
|
$20,918.84
|
|
County
of
Elgin
|
—
|
1,360.85
|
|
Village
of
Port
Stanley
|
—
|
1,894.93
|
|
$24,174.62
|
—
in
the
1983
taxation
year
the
Appellant
was
an
elected
municipal
officer
with
the
County
of
Elgin
and
the
Village
of
Port
Stanley,
and
received
non-
taxable
allowances
of
$1,627.79
therefrom,
which
amount
was
excluded
from
income
by
virtue
of
subsection
81(3)
of
the
Act.
—
The
Respondent
relied
upon
the
provisions
of
subsection
81(3)
and
paragraph
8(1)(a)
and
8(3)(c)
of
the
Act.
—
The
Respondent
respectfully
submits
that
as
the
Appellant
was
in
receipt
of
a
non-taxable
allowance
of
$1,627.79
which
was
exempt
from
income
for
the
1983
taxation
year
by
virtue
of
subsection
81(3)
of
the
Act,
the
Appellant
is
not
entitled
to
claim
an
employment
expense
deduction
pursuant
to
paragraph
8(1)(a)
of
the
Act,
by
virtue
of
paragraph
8(3)(c)
of
the
Act.
Accordingly,
the
Respondent
properly
reassessed
the
Appellant
to
disallow
the
$500.00
employment
expense
deduction
claimed
by
her
for
the
1983
taxation
year.
Essentially,
the
contention
of
the
appellant
was
that
the
treatment
accorded
her
by
the
Minister
was
inequitable
because
the
tax-free
allowance
of
$1,627.79
had
no
relationship
to
her
employment
other
than
as
a
Municipal
Counsellor,
and
that
therefore
she
was
denied
the
deductions
available
to
everyone
else
who
only
had
regular
employment.
It
was
the
position
of
the
Minister
that
since
the
amount
of
$1,627.79
had
been
excluded
from
income,
this
had
been
so
excluded
by
virtue
of
subsection
81(3)
of
the
Income
Tax
Act,
and
therefore
the
provisions
of
paragraph
8(3)(c)
applied
to
the
appellant.
Mrs.
Wakeling
indicated
in
testimony
that
there
were,
perhaps,
other
ways
in
which
her
expenses
could
have
been
paid
—
or
considered,
or
categorized
—
thereby
avoiding
the
implications
under
subsection
8(3),
and
indeed
that
may
be
true.
However,
according
to
the
facts
available
to
the
Court,
subsection
81(3)
must
be
considered
as
having
relevance
to
this
particular
matter.
Section
8(3)
reads:
(3)
Limitation
re
employment
expense
deduction.
In
computing
a
taxpayer's
income
for
the
taxation
year,
no
amount
is
deductible
under
paragraph
(1)(a)
(c)
in
the
case
of
a
taxpayer
to
whom
subsection
81(2)
or
(3)
applies,
except
to
the
extent
that
the
amount
otherwise
deductible
under
paragraph
(1)(a)
in
computing
his
income
for
the
year
exceeds
the
amounts
that,
but
for
subsection
81(2)
or
(3),
as
the
case
may
be,
would
be
included
in
computing
that
income.
Section
81(3):
(3)
Municipal
officers'
expense
allowance.
Where
(c)
a
member
of
a
public
or
separate
school
board
or
similar
body
governing
a
school
district,
has
been
paid
by
the
municipal
corporation
or
the
body
of
which
he
was
such
an
officer
or
member
(in
this
subsection
referred
to
as
his
“employer”)
an
amount
as
an
allowance
in
a
taxation
year
for
expenses
incident
to
the
discharge
of
his
duties
as
such
an
officer
or
member,
the
allowance
shall
not
be
included
in
computing
his
income
for
the
year
unless
it
exceeds
/2
of
the
amount
that
was
paid
to
him
in
the
year
by
his
employer
as
salary
or
other
remuneration
as
such
an
officer
or
member,
in
which
event
there
shall
be
included
in
computing
his
income
for
the
year
only
the
amount
by
which
the
allowance
exceeds
/2
of
the
amount
so
paid
to
him
by
way
of
salary
or
remuneration.
The
Court
can
sympathize
with
the
position
of
Mrs.
Wakeling.
And
there
could
be
some
merit
in
her
assertion
of
inequity.
Nevertheless
the
words
of
the
Act
are
clear.
When
an
allowance
arising
out
of
employment
income,
which
is
excluded
from
income
by
virtue
of
subsection
81(3)
of
the
Act,
exceeds
the
corresponding
employment
expenses
deduction
provided
for
in
paragraph
8(1)(a)
of
the
Act,
no
further
relief
is
available
from
paragraph
8(1)(a).
The
appeal
is
dismissed.
Appeal
dismissed.
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