Marion Semaniuk v. Minister of National Revenue, [1986] 2 CTC 2032, 86 DTC 1502

Taylor, T.C.J.:—This is an appeal heard in Edmonton, Alberta, on May 13, 1986, against income tax assessments for the years 1981, 1982 and 1983, in which the Minister of National Revenue disallowed certain amounts claimed under paragraphs 8(1 )(f), 8(1)(h), and/or 18(1 )(a) of the Income Tax Act, S.C. 1970-71-72, c. 63, as amended. The maximum out of his total income, which Mr. Semaniuk could possibly claim to be commission income would have been $1,733.12, $467.49 and $794.03 respectively. On assessment, expenses of $158.00, $103.08 and $394.24* had been allowed by the Minister as “advertising expenses”, out of the tot als claimed as indicated

below:

Mr. Semaniuk was the manager of a grain elevator and his s traight salary from that position was $21,033.08, $27,100.66 and $27,963.14 during the years in question. It was his contention that it was his attention to clients’ requirements, assistance to them on special occasions, together with his advertising etc. that was responsible for the increases in his salary. As I see it he was probably a good diligent manager, and perhaps went beyond the strict call of duty in some areas of his responsibility, but there is no basis under the Income Tax Act for deduction of the nature he has claimed against salary — so that disposes of his claim under paragraph 8(1 )(h) of the Act. There was certainly no requirement on the part of his employer, that Mr. Semaniuk incur the expenses he now claims in order to earn his salary income. However in addition to his base salary during the years in question Mr. Semaniuk did earn commissions as an “over-ride” on grain handling. These amounted to $1,329.88 in 1981 and $44.92 in 1982. The company policy changed early in the year 1982 and a larger part of his income then became salary. In addition he received commissions from insurance companies for collection of crop insurance premiums for them of $364.19, $201.53 and $381.42 respectively, also in connection with his position as the manager of the grain elevator. Further he earned commissions of $39.05, $221 and $412.61 from selling of hail insurance for an insurance company, a function he conducted separately, although coordinated with, his position of manager. These amounts add up to the “total commissions” indicated earlier. It was from the “crop insurance commissions” that the Minister allowed the “advertising expenses” noted above. I am satisfied that there was no basis for Mr. Semaniuk’s contention that selling of hail insurance on a commission basis constituted a “business” for purposes of the Income Tax Act — so that disposes of his claim under paragraph 18(1)(a) of the Act.

From the testimony of Mr. Semaniuk it can be determined that some part of the “automobile expenses”, the “pool caps”, and “pool pens” claimed was in connection with earning his “over-ride” commission from the grain elevator, as well as from his commission for selling hail insurance (he had the elevator name, the hail insurance carrier, and his own name on the pens). The testimony of the appellant would support the view that he prob- ably expended more in the earning of his commission than he received for the work. I am not persuaded that any of these efforts could add to the commissions he received from the collection of “crop insurance”.

Since Mr. Semaniuk can only claim deductions under paragraph 8(1)(f) of the Act, and there is no provision therein for “accruing” expenses against future income, his total deductions must be limited in any event to the maximum of his “over-ride” commissions and his hail insurance commissions — $1,368.93, $265.92 and $412.61 respectively. These amounts are accorded to him.

The appeal is therefore allowed in part in order that the appellant may claim amounts for expenses against commission income of $1,210.93, $162.84 and $18.37 for the years 1981, 1982 and 1983, in addition to the amounts of expenses already accorded by the Minister of National Revenue. No costs are to be awarded.

Appeal allowed in part.