Brulé,
TCJ
[ORALLY]:—This
appeal
involves
the
deductibility
of
certain
expenses
incurred
by
the
appellant.
While
the
facts
are
not
in
dispute,
the
interpretation
of
the
facts
become
important.
Briefly,
Mr
Gilling
who
was
manager
of
Manitoba
Pool
Elevators
and
a
full-
time
employee
on
salary,
also
earned
money
by
way
of
commissions.
The
employer
not
only
offered
this
opportunity
to
its
managers
to
earn
additional
funds
but
encouraged
them
to
sell
certain
products.
In
order
to
do
this
it
was
frequently
necessary
to
go
into
the
field,
not
only
to
sell
but
to
service
and
promote.
As
a
result
of
these
endeavours
to
sell,
which
were
successful,
the
appellant
incurred
certain
expenses.
The
Minister
disallowed
these
by
notice
of
reassessment
of
May
26,
1983,
citing
that
the
moneys
were
not
“expended
by
the
taxpayer
for
the
purpose
of
earning
his
income
from
employment
within
the
meaning
of
paragraphs
8(1
)(f)
and
8(1)(h)
of
the
Act’’.
The
basis
of
the
Minister’s
argument
was
that
the
appellant
was
not
entitled
to
deduct
the
expenses
as
they
did
not
qualify
under
section
8
of
the
Act.
Various
cases
were
cited
and
the
Court
does
not
dispute
that
this
would
be
the
result
if
section
8
were
the
only
section
of
the
Income
Tax
Act
to
be
applied.
Upon
examination
of
the
conduct
of
the
appellant,
it
would
seem
to
me
that
he
was
in
a
separate
business
with
respect
to
his
commission
earnings
and
therefore
entitled
to
deduct
his
expenses
under
paragraph
18(l)(a).
To
arrive
at
this
conclusion,
the
modus
operandi
of
Mr
Gilling
must
be
examined
more
carefully.
He
was
a
member
of
the
Grain
Services
Union,
and
this
organization
in
a
Memorandum
of
Agreement
with
Manitoba
Pool
Elevators,
recognized
that
managers,
of
which
Mr
Gilling
was
one,
were
entitled
to
earn
commissions
and
certain
rates
of
these
commissions
are
set
out
in
the
agreement.
In
addition
there
is
a
Schedule
of
Employee
Expenses
but
this
is
silent
with
respect
to
expenses
incurred
to
earn
commission
income.
The
appellant,
in
his
notice
of
objection,
after
consultation
with
the
District
Taxation
Office,
attempted
to
fit
himself
into
the
words
“ordinarily
required”
to
travel
(definition
of
section
8
of
the
Act).
Being
unsophisticated
in
the
tax
law,
he
did
not
quote
any
section
but
this
accounts
for
counsel
for
the
Minister
believing
that
the
appellant
was
basing
his
appeal
on
this
section
and
in
a
well-
prepared
manner
counsel
defended
the
reassessment
on
this
basis.
In
this
Court
the
taxpayer,
often
without
legal
counsel
of
his
own,
comes
believing
that
in
his
actions
he
has
acted
properly
and
deserving
of
consideration.
Mr
Gilling
in
his
evidence,
which
was
not
challenged,
stated
that
selling
the
products
to
earn
commissions
was
not
obligatory.
It
was
encouraged
by
the
employer
but
selling
was
not
one
of
his
employee
duties.
The
employees
earning
these
commissions
were
often
counselled
to
have
their
own
equipment
and
indeed
Mr
Gilling
had
a
small
trailer
to
transport
products
he
was
selling.
If
any
products
were
lost
or
damaged
Mr
Gilling
was
personally
liable
—
not
a
normal
employer-employee
relationship.
The
company
presented
the
opportunity
for
these
managers
to
be
in
a
small
business
of
their
own,
that
of
selling
their
products
as
commission
salesmen.
Because
this
was
voluntary,
and
not
part
of
regular
employee
duties,
I
believe
the
conduct
of
these
managers
had
all
the
earmarks
of
being
in
a
separate
small
business.
If
this
is
the
case,
then
the
appellant
is
entitled
to
deduct
his
expenses
to
earn
this
income
under
the
provisions
of
paragraph
18(1
)(a)
of
the
Act.
It
is
not
necessary
that
a
business
be
defined
as
such,
only
that
it
can
be
interpreted
as
such.
It
seems
rather
difficult
to
imagine
a
person
working
over
and
above
his
regular
duties
to
increase
his
earnings
by
spending
his
own
funds
and
then
having
the
gross
amount
of
these
earnings
taxed.
By
my
rough
calculations,
considering
the
rate
of
commission,
the
amount
of
commission
earned,
the
expenses
incurred,
and
the
tax
levied
on
the
gross
earnings,
Mr
Gilling
would
have
personally
realized
something
under
one
per
cent
of
the
gross
sales
for
his
personal
use,
hardly
consistent
with
normal
business
expectations.
I
can
only
conclude
that
the
appellant,
acting
as
he
has
since
1969,
conducted
this
commission
undertaking
in
a
proper
manner,
and
while
my
understanding
of
his
actions
may
have
surprised
counsel
for
the
Minister,
nevertheless
this
Court
must
interpret
an
appellant’s
conduct
in
relation
to
the
law
generally
and
not
necessarily
specifically
to
the
section
originally
pleaded.
Having
done
this,
I
conclude
that
this
appeal
should
be
allowed
and
this
matter
will
be
referred
back
to
the
Minister
for
reconsideration
and
reassessment.
Appeal
allowed.
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