Merle a W Smith v. Minister of National Revenue, [1980] CTC 2001, 80 DTC 1003

M J Bonner:—The appellant appeals from an assessment of income tax for the 1975 taxation year.

On assessment the respondent included $3,528.83, paid to the appellant by his employer under an arrangement which had its origin in clause 26 of a collective agreement governing the employment. That clause provided that on any job beyond a ten mile radius from the employer’s shop or place of business the employee shall receive 45¢ for every mile travelled between the radius and the jobsite. The 45¢ was, by clause 26.04 of the collective agreement, to, and I am quoting, “constitute payment of normal travel time and travel expenses.’’

During 1975 the appellant was employed by United Metal Fabricators Ltd, a company whose shop or place of business was in Vancouver. The appellant, during that year, resided in Langley. He was required, during a period of approximately nine months, to work at a construction site at Clearbrook.

During that nine month period the appellant commuted almost daily from his home directly to the Clearbrook jobsite. Only infrequently did he travel from his home to the employer’s ship and thence to Clearbrook.

The union and the employer arrived at an arrangement for payment to each employee of $22.95 per day worked at Clearbrook. That sum was apparently calculated on the basis of what the employer would have had to pay to the employee as a living out allowance for room and board, had the employee chosen to live temporarily at Clearbrook. The amount was paid in lieu of payment on the basis of the clause 26 formula.

It seems quite clear to me that the amount in question was not a living out allowance. The quantum of living out allowance simply served to fix the maximum payable under clause 26.

The inclusion by the respondent in the appellant’s income was calculated as follows:

The appellant argued first that subparagraph 6(1)(b)(vii) served to except the amount in question from the opening words of paragraph 6(1)(b). He argued that, if it did not, he was entitled to a deduction of his travelling expenses under paragraph 8(1)(h).

The appellant testified that he calculated that his travelling expenses came to $1,167.04. That calculation was approximate, but was not challenged by the respondent either as to the figures or as to the nature of the component elements. I therefore accept the figure as the amount expended by the appellant in the year for travelling.

As I have noted previously, the genesis of the payment in issue was clause 26 of the collective agreement. Plainly, that payment was in part compensation for time spent in travelling to jobs situated beyond the ten mile radius. That part of the payment cannot be regarded as an allowance for travelling expenses within the meaning of subparagraph 6(1 )(b)(vii). It was, to use the words of clause 26.05 of the collective agreement, “travel time wages”. The remainder probably was an allowance for travelling expenses, but it was not computed by reference to time as required by the opening portion of subparagraph (vil). Time spent in travelling may, in some circumstances, vary with distance, but that does not satisfy the words of the provision. The amount in question was therefore not excluded from income by subparagraph 6(1 )(b)(vii).

I turn next to the question of whether paragraph 8(1)(h) entitled the appellant to deduct the sum of $1,167.04, mentioned previously. Plainly, on the evidence, the appellant was ordinarily required to carry on the duties of his employment in different places.

However, it cannot, in my view, be said that the appellant was required, under the contract of employment, to pay the travelling expenses incurred by him in the performance of the duties of his employment. I reach that conclusion on two grounds: In the first place, the point is made factually clear by clause 25 of the collective agreement. Secondly, the clause 26 allowance was Clearly intended to cover not only travel time, but also travel expense. Thus, the deduction sought is not one which is authorized by paragraph 8(1 )(h) of the Act. The appeal must therefore be dismissed.

Appeal dismissed.