Gerald R Chrapko v. Minister of National Revenue, [1981] CTC 2767, 81 DTC 635

M J Bonner:—The appellant appeals from an assessment of income tax for the 1977 taxation year. The appeal raises two issues:

(a) Did the sum of $771 withheld from the appellant’s salary form part of the appellant’s income for the year?

(b) Was the Minister correct in denying the appellant a deduction under paragraph 8(1 )(h) of the Income Tax Act in respect of expenses incurred in travelling from the appellant’s home in Niagara Falls to racetracks in Metropolitan Toronto where the appellant worked during the year?

During 1977 the appellant was employed by the Ontario Jockey Club as a cashier. The Jockey Club operated racetracks at Woodbine and Greenwood in Metropolitan Toronto and, as well at Fort Erie, Ontario. The appellant worked at all three tracks. His duty was to pay appropriate amounts to winning bettors upon presentation of their tickets. His wages were calculated on the basis of a daily rate fixed by a collective agreement.

The collective agreement provided for the deduction by the employer of the amounts of cash shortages. Each day the Club balanced against the amounts of cash given to each cashier, the cash and winning tickets which he turned in at the end of the day. In 1977 the amount payable to winners had to be calculated by the cashiers. Those calculations are now done by computer. Cash shortages occurred frequently. They resulted apparently from miscalculations of amounts paid out. There was no suggestion in the evidence that the cash shortages resulted from anything other than miscalculations of the type just described. No attempt was made to show that such shortages resulted from the appellant having pocketed money advanced for the purpose of paying winners.

The Club posted each day a list of names of cashiers who were short and the amounts of their respective shortages. Each week the employee’s total shortages were deducted from his wages. The total of such deductions in the case of the appellant was $771.

The appellant’s position was that the “salary, wages and other remuneration . .. received by him in the year” within the meaning of subsection 5(1) of the Income Tax Act was the total of the amounts received by him from the Jockey Club and not the total of what those amounts would have been had the employer not deducted the shortages. That position, in my view, is plainly correct. Any other conclusion would involve a finding, wholly unsupported by the evidence, that moneys advanced by the Jockey Club to the appellant for the purpose of paying winners were, at least to the extent that the appellant did not return that same amount less amounts of winning tickets surrendered, advances of salary.

The respondent argued that the appellant’s salary was his daily rate times the number of days worked. That was the appellant’s salary but it was not the salary received by the apapellant. It is salary received which is relevant for purposes of section 5.

The respondent argued that there was a credit to the appellant’s account of total salary and that the amounts withheld for shortages represented a deduction from such salary of amounts payable pursuant to a separate obligation in the collective agreement, which separate obligation required the appellant to reimburse the Jockey Club for shortages. While I have not had the benefit of seeing the collective agreement, I regard this argument as wholly unrealistic. It is plain from the evidence as to the manner in which the paycheques were calculated that in practice both the Jockey Club on the one hand and the employees on the other treated the collective agreement as imposing on the employer an obligation to pay only an amount equal to calculated salary less shortages.

Finally, out of deference to the exhaustive submissions advanced by the respondent’s counsel, I will note that subsection 56(2) can have no bearing here. Because the appellant was entitled only to salary at the calculated rate less cash shortages, the amounts of such shortages cannot be regarded as payments or transfers of property made with the concurrence of the appellant to his employer. They were neverhistopayortransferinthe first place.

The expenses which the appellant seeks to deduct are those incurred in travelling from his home in Niagara Falls to the two racetracks in Metropolitan Toronto at which he worked during the year. The appellant relies on paragraph 8(1 )(h) of the Act. It was common ground that the appellant met the requirements of subparagraphs (i), (ii) and (iii) thereof. Thus the question to be determined is whether the appellant’s travel from home to the track at which he was required to work was . . in the course of his employment”. In considering this question, it must be remembered that the appellant was not on duty while travelling from his home to the tracks. He performed the duties of his employment at the tracks and nowhere else.

In this case, subsection 8(4) of the Income Tax Act has no bearing. Meal expenses are not in issue.

The proposition advanced on behalf of the appellant was that paragraph 8(1 )(h) is designed to permit an employee who is ordinarily required to work for the same employer in more than one place to deduct the expenses of travelling to those different places. I do not agree with the proposition as stated. There is, in my view, ample authority for the proposition that daily travel from the employee’s home to his place of employment is not travel

. . in the course of. .such employment. In Herman Luks v MNR, [1958], CTC 345; 58 DTC 1194, Thurlow, J stated at 350, 1197:

In the present case, travelling between the appellant’s home and the several places where he was employed was not part of the duties of his employment, nor was it any part of the duties of his employment to take his tools from the place of employment to his home each day, nor to carry them each day from his home to the place of employment. This may well have been the practical thing for him to do in the circumstances, but the fact that it was a practical thing to do does not make it part of the duties of his employment. Both travelling from his home to the place of employment and carrying his tools from his home to the place of employment were things done before entering upon such duties, and both travelling home and carrying his tools home at the close of the day were things done after the duties of the employment for the day had been performed. The journeys were not made for the employer’s benefit, nor were they made on the employer’s behalf or at his direction, nor had the employer any control over the appellant when he was making them. The utmost that can be said of them is that they were made in consequence of the appellant’s employment. That is not sufficient for the present purpose. In my opinion, neither the appellant’s travelling nor the carrying of his tools was ‘travelling in the course of his employment” within the meaning of section 11(9).

Other authorities making similar distinctions between travelling to work and travelling in the course of work are The Queen v Ervin E Deimert, [1976] CTC 301; 76 DTC 6187 and The Queen v Gerald B Wright, [1981] CTC 14; 81 DTC 5004.

Counsel argued that the decision of the Federal Court of Appeal in Thomas Healy v The Queen, [1979] CTC 44; 79 DTC 5060, is authority for the proposition that where an employee is ordinarily required to carry on the duties of his employment in different places he is entitled to reasonable and proper deductions for his expenses in travelling to those different places. Again, I do not agree at least in so far as travel from home to work is concerned. Neither in the Trial Division nor in the Federal Court of Appeal was it contended that the deduction sought was not one permitted by paragraph 8(1 )(h) of the Act. The Crown in the Healy case relied exclusively on subsection 8(4). This is apparent from the following excerpts:

(a) from the reasons for judgment of Urie, J at 46, [5062],

I agree with the learned trial judge and, of course, the respondent does not disagree, that the appellant falls squarely within the provisions of paragraph 8(1 )(h) and was thus entitled to deduct his travelling expenses. However, with great deference, I disagree with his conclusion that subsection 8(4) precludes the appellant from deducting the cost of his meals while at Fort Erie in the course of his duties.

and

(b) in the Trial Division from the reasons for judgment of Thurlow, A C J, The Queen v T Healy [1978] CTC 355 at 356; 78 DTC 6239 at 6240

His claim for a deduction under paragraph 8(1 )(h) in respect of his transportation and motel expenses was not challenged but the amount claimed for expenses for meals totalling $504 was disallowed under subsection 8(4).

I do not propose to review the British authorities relied upon by the appellant. I am not at all persuaded that they support a construction of the words

. travelling in the course of his employment” different from that placed on those words by the Canadian authorities to which I have referred. In any event, it is necessary only to observe that I am bound to follow the Canadian authorities. This branch of the appeal therefore fails.

In the result the appeal will be allowed and the assessment referred back to the respondent for variation to delete from the appellant’s income the sum of $771. The appellant is entitled to no other relief.

Appeal allowed in part.