Clinton English v. Minister of National Revenue, [1984] CTC 2815, 84 DTC 1714

Bonner, TCJ:—The appellant appeals from assessments of income tax for the 1979 to 1982 taxation years. Broadly stated, the issue is whether the appellant is entitled, by virtue of subparagraph 8(l)(e)(i) of the Income Tax Act, to deduct amounts said to have been spent by him for lunches. Subparagraph 8(l)(e)(i) reads:

8(1) In computing a taxpayer’s income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:

(e) amounts disbursed by the taxpayer in the year for meals and lodging while employed by a railway company

(i) away from his ordinary place of residence as a relieving telegrapher or station agent or on maintenance and repair work,

to the extent that he has not been reimbursed and is not entitled to be reimbursed in respect thereof.

At all relevant times the appellant lived in Vancouver and worked for British Columbia Hydro and Power Authority (hereinafter called “Hydro”). Hydro carried on an electrical generation and distribution operation. As well it operated a railway. The appellant’s work involved the maintenance and construction of signalling equipment for railway crossings.

The evidence as to the exact locations where the appellant did his daily work was sparse. Exhibit A-l, Hydro’s Annual Report for the year ended March 31, 1981, states:

Hydro operates a local and terminal rail freight service in Greater Vancouver and the Fraser Valley.

The appellant testified that he was required to be away from Vancouver for seven and one-half hours a day. He said that he had a half-hour break for lunch and that he was always able to drive to a restaurant. He did not have any precise record of the amounts spent for lunches. He arrived at the amounts claimed by multiplying what he asserted was the average cost of his lunches by the number of days away from Vancouver as shown on logs or timesheets.

The two areas of dispute were whether:

— firstly, Hydro was a “railway company” within the meaning of the relevant statutory provision; and

— secondly, the appellant did in fact disburse the amounts in question for meals.

The Minister’s counsel did not suggest that the appellant, if employed by a railway company, was not so employed “. . . away from his ordinary place of residence . . .”. No argument was directed to the meaning of the words just quoted and I therefore do not intend to consider the question.

As to the first area of dispute, counsel for the respondent relied on evidence showing that from a financial standpoint Hydro’s railway operations were somewhat insignificant when compared with its overall operations. He referred to the following information in the Annual Report:

Furthermore, counsel pointed to the fact that Hydro’s railway assets represented approximately $50 million out of total assets ranging between $5.5 billion in 1979 and $6.8 billion in 1981.

This branch of counsel’s argument appears to have proceeded on the premise that the words “railway company” refer not to just any company that operates a railway, but rather only to those companies whose principal business is the oper- ation of a railway. That premise is, in my view, faulty. It involves the addition to a clearly drafted legislative provision of words restricting its ambit.* [1] It was not suggested that there was any basis in logic for the imposition of such a restriction. The general rule is that the cost of meals is a non-deductible personal expense. An exception to that rule is made by paragraph 8(l)(e) for certain classes of employees of railway companies. One would normally expect that tasks assigned to employees of a railway company doing work falling in the classes described in subparagraph 8(l)(e)(i) would frequently require those employees to remain away from home for periods of time of sufficient duration that disbursements for both meals and lodging would be required. Such disbursements are more closely tied to the earning of employment income than meal and lodging costs in the case of ordinary workers who commute from home to work each day. Thus, the Legislature has made an exception to the general rule. The reasons for that exception apply with equal force to employees of all companies which operate a railway, whether the railway operation is minor or major in relation to other operations of the employer. Finally, I will observe that if the Legislature had intended to impose a test based on the nature of the employer’s principal business it would have expressed that intention as plainly in paragraph 8(l)(e) as it did in paragraph 8(l)(g) of the Act. I therefore find that Hydro was a railway company within the meaning of paragraph 8(l)(e).

I turn next to the second area of dispute. The Minister assumed on assessment that the appellant did not incur the expenses claimed. Thus, the onus was on the appellant to prove the contrary. The only evidence at the hearing on this point was the testimony of the appellant. That testimony was not, in my view, sufficient to establish on the balance of probabilities that the appellant did in fact expend the amounts claimed. The appellant’s evidence seems to me to be highly improbable. It is quite unlikely that the appellant was able, on a one-half hour lunch break, to drive to a restaurant, eat a substantial meal and drive back to the worksite. The appellant did not produce one receipt or stub, even though he claims to have bought 795 lunches over the four-year period. There is no rule of law requiring the production of vouchers in every case where a claim is made under paragraph 8(l)(e) but, having regard to the improbability of the story told, some sort of corroborative evidence should have been produced. For the foregoing reasons the appeals will be dismissed.

Appeals dismissed.