Isaac Avitan v. Minister of National Revenue, [1987] 1 CTC 2434, 87 DTC 336

Brulé, T.C.J.: —The present appeal, dealt with by written submissions, is from the Minister's assesment for the 1982 taxation year by which he disallowed the appellant's claim for moving expenses in the amount of $6,780.97.

Facts

The parties submitted an agreed statement of facts which reads in part as follows:

In 1982, the Appellant resigned from his job at Ontario Hydro and moved with his family to British Columbia to accept employment with Avitan Mechanical Installations Ltd. ("Mechanical").

In moving to his new work location, the Appellant incurred moving expenses in the amount of $6,780.97.

Mechanical was forced into receivership in September 1982.

The Appellant received no income for the year from his employment at his new work location.

The agreed statement of facts also mentioned an unemployment insurance benefit repayment to be made by the appellant in the amount of $882. The benefit repayment under the Unemployment Insurance Act and the deduction thereof pursuant to paragraph 110(1)(i) of the Income Tax Act were not disputed by the appellant.

By assessment, notice of which is dated July 15, 1983, the Minister disallowed the deduction, claimed by the appellant, regarding the moving expenses.

Analysis

The pertinent section of the Act in the present case is section 62 which states:

Sec. 62(1) Where a taxpayer

(a) has, at any time,

commenced to carry on a business or to be employed at another location in Canada (hereinafter referred to as his "new work location”), or

and by reason thereof has moved from the residence in Canada at which, before the move, he ordinarily resided on ordinary working days (hereinafter referred to as his "old residence") to a residence in Canada at which, after the move, he ordinarily so resided (hereinafter referred to as his "new residence"), so that the distance between his old residence and his new work location is not less than 40 kilometres greater than the distance between his new residence and his new work location, in computing his income for the taxation year in which he moved from his old residence to his new residence or for the immediately following taxation year, there may be deducted amounts paid by him as or on account of moving expenses incurred in the course of moving from his old residence to his new residence, to the extent that

(c) they were not paid on his behalf by his employer,

(d) they were not deductible by virtue of this section in computing the taxpayer's income for the preceding taxation year,

(e) they would not, but for this section, be deductible in computing the taxpayer's income,

(f) the aggregate of such amounts does not exceed

(i) in any case described in paragraph (a), the taxpayer's income for the year from his employment at his new work location or from carrying on the new business at his new work location, as the case may be, or

(ii) in any case described in paragraph (b), the aggregate of amounts required to be included in computing his income for the year by virtue of paragraphs 56(1)(n) and (o), and

(g) any reimbursement received by him for such expenses has been included in computing his income for the year.

The moving expenses incurred by the taxpayer constitute personal expenses and would, therefore, normally not be deductible in computing the taxpayer's income. Section 62 of the Act, however, permits the deduction of moving expenses that come within its scope. It is clear that the appellant, having received no income from employment at his new location, does not fall within the limits of section 62 of the Act.

The reasons for which no income was received, no matter how unfortunate or unforeseeable, cannot change the nature of the expenses incurred or the rules governing their deductibility.

I would cite the words of Chief Justice Fauteux of the Supreme Court of Canada in the case of Ville de Montreal v. ILGWU Center Inc. et al. [1974] S.C.R. 59 at 66:

The legislator is presumed to mean what he says; and there is no need to resort to interpretation when the wording is clear, as it is in this case.

In expressing that principle the Court was reiterating a well-established rule of construction. In 1844 Lord Chief Justice Tindal stated in The Sussex Peerage case, XI Clark & Finnelly, at page 144:

. . . the only rule for the construction of Acts of Parliament is, that they should be construed according to the intent of the Parliament which passed the Act. If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense.

The Court cannot be guided by considerations of equity in the application of a clearly worded unambiguous tax statute. To use the words of Estey, J. of the Supreme Court of Canada in the case of The Queen v. Malloney's Studio Limited, [1979] C.T.C. 206 at 212; 79 D.T.C. 5124 at 5129;

Indeed, "fairness and realism" have never been the governing criteria for the interpretation of taxing statutes. Lord Cairns in Partington v. Attorney-General (1869), L.R. 4 H.L. 100 at 122 put it this way:

I am not at all sure that, in a case of this kind — a fiscal case — form is not amply sufficient; because, as I understand the principle of all fiscal legislation, it is this: if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute, what is called equitable construction, certainly such a construction is not admissible in a taxing statute where you simply adhere to the words of the statute.

We find a more recent application of this principle in the case of The Queen v. Cecilia Dianne Taylor, Executrix of the Estate of Irving A. Taylor, [1984] C.T.C. 244, 84 D.T.C. 6234 (F.C.T.D.) where Cattanach, J. stated at page 252 (D.T.C.6240):

I cannot refrain from expressing concurrence in the submission made by counsel for the defendant that there is an apparent inequity when he paid interim alimony to Janet Anderson which he was obligated to do by a valid court order to which failure to comply would render him liable to contempt and yet he is precluded from claiming that amount so paid as a deduction for income tax purposes.

The complete answer is in the stock expression that there is no equity in a taxing statute. A taxing statute shall receive the same interpretation as any other statute.

The principle expressed in Partington v. Atty.-Gen. (1869), L.R. 4 H.L. 100, is that if the person sought to be taxed comes within the letter of the law then he must be taxed no matter how great the hardship or the inequity may appear to be to the judicial mind. There must be adherence to the word of the statute.

I would conclude by quoting the following remark from the Tax Review Board case of John Mitchell v. M.N.R., [1979] C.T.C. 2011 at 2013; 79 D.T.C. 38 at 40:

The Board understands that, according to equity, it would be reasonable that the appellant deduct the amount claimed. Unfortunately, the Income Tax Act is not a law of equity.

For these reasons, this appeal must fail.

The appeal is dismissed.

Appeal dismissed.