Jean-Guy Robillard v. Minister of National Revenue, [1981] CTC 2404

Guy Tremblay [Translation]:—This case was heard at Montreal, Quebec on January 22, 1980. It was taken under advisement on January 30, 1980, after supporting documents were filed.

1. Point at Issue

The issue is whether the appellant, an officer of the Quebec Department of Revenue, who as a union representative received $680 from the Syndicat des professionels du gouvernement du Québec (the union of professional employees of the Quebec government), must include the entire amount in his income. The appellant maintains that he should only include $305 and that the remaining $375 should be considered payment of representation expenses in accordance with union regulations. The respondent assessed the entire amount. The appellant also claims $393.74, which he spent while he held union office and which was not reimbursed by the union.

2. Burden of Proof

The burden is on the appellant to show that the respondent’s assessment is incorrect. This burden of proof derives not from one particular section of the Income Tax Act, but from a number of judicial decisions, including the judgment delivered by the Supreme Court of Canada in Johnston v MNR, [1948] CTC 195, 3 DTC 1182.

3. Facts

3.01 The appellant is an officer of the Quebec Department of Revenue, which paid him $27,233.77 for the year.

3.02 In addition, the appellant holds the office of second vice-president in the union, the Syndicat des professionels du gouvernement du Quebec, which paid him $680.

3.03 The $680 is the total of eight monthly payments of $85.

3.04 Provision is made for the payment of representation expenses in section 3 of regulation No 2 concerning the payment of expenses of members of the SPGO. Section 3 reads as follows:

The members of the executive committee, the union council, the supervisory board, the SPGQ committees and the SPGQ delegations to organizations shall be compensated for expenses they actually incur in carrying out their union duties, in accordance with the following scale:

Meals:	Breakfast	$2.50
	Lunch	5.25
	Dinner	5.25
	Evening snack	3.75

This allowance for representation expenses shall be the only compensation (including overtime) paid for work in representing and administering the union. However, this allowance does not include the actual expenses covered by section 1 and section 2 or the release expenses reimbursed to the employer pursuant to the agreement.

President	$170 per month
1st Vice-President	85 per month
2nd Vice-President	85 per month
Secretary	125 per month
Assistant Secretary	65 per month
Treasurer	125 per month
Assistant Treasurer	65 per month
Member of union council	45 per month
Union delegate other than a
member of union council	25 per three-
	month period

3.05 The actual expenses covered by section 1 and section 2 of the said regulation No 2 are:

Section 1: travel expenses incurred in carrying out union duties, including

meals, accommodation, automobile expenses, tips, taxis and so forth;

section 2: travel expenses for meetings of union representatives, which include transportation, accommodation and meals.

3.06 According to the appellant, the Quebec Department of Revenue concluded a verbal agreement with the SPGQ at the end of the 1960s concerning tax provisions affecting representation allowances or expenses, under which 50% of such allowances would be taxable and 50% of a reasonable allowance for expenses incurred and non-reimbursable under section 1 and section 2 of the union regulations would not be taxable.

3.07 In 1976, during the period of negotiations between the union and the government, the government made an offer. The union wished to make a counter-offer. The appellant was opposed to the counter-offer because it “meant dropping the majority of the initial demands”. Accordingly, in order to make union members aware of his position, the appellant sent telegrams ($30.81) and letters (stamps: $80.95), made long-distance telephone calls ($216.26) and had to stay in a hotel ($65.74) while travelling in an attempt to win over a majority of union members; the total of these expenses was $393.76 (Exhibit A-2). According to the appellant, he was entitled to make these expenditures as a member of the executive. However, he was not reimbursed for his expenses.

4. Act — Case Law — Comments

4.1 Act

The sections of the Income Tax Act involved in the case at bar are 5, 6 and 8. They will be quoted in full if necessary.

4.2 Case Law

The appellant referred to the case of MNR v Wilbrod Bherer, [1967] CTC 272; 67 DTC 5186.

4.3 Comments

The allowance of $375, considered under the regulations to be for representation expenses, appears to fit the description contained in the regulation itself: “the only compensation (including over-time) paid for work in representing and administering the union”.

It seems clear that this description falls within the definition contained in subsection 5(1) of the Income Tax Act:

Income from office or employment.

(1) Subject to this part, a taxpayer’s income for a taxation year from an office or employment is the salary, wages and other remuneration, including gratuities, received by him in the year.

The verbal agreement between the SPGQ and the Quebec Department of Revenue (paragraph 3.06 of the Facts), which does not bind the Board, is undoubtedly legally valid. However, the Board was not presented with any conclusive evidence that the allowance was anything other than wages or remuneration, since the expenses for travel, meals and so forth were paid for in another manner (paragraph 3.05 of the Facts). Moreover, the regulation does not state that representation allowances cover anything other than “compensation paid for work in representing and administrating the union”.

4.3.2 The appellant cited MNR v Wilbrod Bherer et al. In that case, Jackett, P of the former Exchequer Court authorized expenses incurred pursuant to the old subsection 11(9), which is paragraph 8(1 )(h) of the new Income Tax Act, which reads as follows:

Travelling expenses

(h) where the taxpayer, in the year,

(i) was ordinarily required to carry on the duties of his employment away from his employer’s place of business or in different places,

(ii) under the contract of employment was required to pay the travelling expenses incurred by him in the performance of the duties of his office or employment, and

(iii) was not in receipt of an allowance for travelling expenses that was, by virtue of subparagraph 6(1)(b)(v), (vi) or (vil), not included in computing his income and did not claim any deduction for the year under paragraph (e),

(f) or (g), amounts expended by him in the year for travelling in the course of his employment;

In the case at bar, travelling expenses (including meals, hotel accommodation and so forth) were reimbursed in another manner, as mentioned previously. The Board concludes therefore that the entire $840 must be included in the appellant’s income.

4.3.2 Expenses of $393 — With regard to the expenses of $393 proved by the respondent, the Board notes that these were not ordinary expenses, because the appellant had broken ranks with the executive on policy and because he had even handed in his resignation. Normally these expenses would have been paid by the union; however, after the appellant resigned, payment for these expenses was denied.

If the union had refused to pay the appellant’s expenses, must the Department of Revenue make up for this all the same, by accepting the deduction?

Yes, if the legislator has made provision for this in the Income Tax Act.

The appellant resigned “as a negotiator” on August 27, 1976. In all likelihood, this action led to his resignation as second vice-president of the SPGQ. At least this is what can be concluded from the telegrams sent on September 2, 1976 to various other members of the executive.

Thus, from September 2, 1976 onwards, the appellant no longer worked for the union and was no longer eligible to receive representation allowances for “work in representing and administering the union” or to be reimbursed for travel expenses.

In short, the union was no longer the appellant’s employer from September 2, 1976 onwards.

Of the expenses amounting to $393, the only ones which may be deducted under section 8 (the only section which provides for expense deductions against income from an office or employment) are the travel expenses mentioned in paragraph 8(1 )(h), which was quoted above. The travel expenses, which include the hotel and accommodation expenses (Exhibit A- 2), are dated September 1, and amount to $23.10, and the others, which were in the amount of $42.67, are dated September 11. The Board holds that paragraph 8(1 )(h) applies for the $23.10.

The other expenses, which were for such things as stamps and telephone calls, and some of which were incurred after September 2, 1976 (therefore at a time when the appellant was no longer employed by the union), cannot be accepted as deductions because no provision is made for them in the Income Tax Act. The Tax Review Board, like the Federal Court and the Supreme Court, must give a strict interpretation to the Income Tax Act. The Board can only interpret the Act as it is written, and not in the way people sometimes wish it had been written.

5. Conclusion

The appeal is allowed in part and the matter referred back to the respondent for reassessment in accordance with the foregoing reasons for judgment.

Appeal allowed in part.