Leclair v. R., [1998] 1 CTC 2705

St-Onge T.C.J.:

The appeals of Willard Leclair was heard on the 30th of September, 1997 in the City of Fredericton, New Brunswick, and the issue is whether the Appellant is allowed to exclude the full amounts of the room, board, and travelling allowances received from his employer during 1991 and 1992 from his taxable income for the said years.

In reassessing the Appellant, the Minister alleged the following:

1. With respect to the allegations in the second item of the itemized reasons in the Notice of Appeal, he denies that the collective agreement to which the Appellant refers relates to an exemption from taxes for allowances provided by an employer and states that provisions of a collective agreement which provide for the payment of travelling and living expenses by an employer in certain circumstances have no relevance in determining the deductibility of those expenses from income.

2. He denies the allegations in the third item of the itemized reasons which state that the department does not want to recognize the Appellant’s work location in Belledune. New Brunswick as a special work site and submits that employment at a special work site is not the sole criterion in determining whether an expense allowance is to be included in income.

3. He can find no further allegations in the Notice of Appeal to either admit or deny and says that the remainder of the statements therein have been advanced principally by way of argument.

4. By Notice of Reassessment dated April 25, 1994 the Minister of National Revenue (the “Minister”) advised the Appellant that his 1991 tax liability had been reassessed to include a room, board and travelling allowance from his employer of $7,516.00 as a taxable benefit.

5. By Notice of Reassessment dated August 18, 1994, the Minister also advised the Appellant that his 1992 tax liability had been reassessed to include a travelling, room and board allowance of $8,327.00 from his employer.

6. The Appellant filed valid Notices of Objection for both the 1991 and 1992 taxation years and, by Notice of Confirmation dated November 13, 1996, the Minister confirmed the reassessment for the 1992 taxation year.

7. By a further Notice of Reassessment dated November 25, 1996, the previous reassessment for the 1991 taxation year was varied to exclude the amount of the allowance received by the Appellant while he resided in Campbellton, New Brunswick, thereby reducing the taxable benefit by 50 per cent to $3,758.00. 8. In so reassessing the Appellant, the Minister made the following assumptions of fact:

(a) the Appellant worked for Dycon Construction Ltd. in Belledune. New Brunswick from April 15, 1991 to November 23, 1991 and was granted a room, board and travelling allowance of $7,516.00 by his employer;

(b) from April 20, 1992 to November 21, 1992 the Appellant worked for Atco Construction Ltd. in Belledune, New Brunswick and received a room, board and travelling allowance of $8,327.00;

(c) the amounts of the allowances were not included by the employers in the Appellant’s taxable income;

(d) the Appellant was not ordinarily required to travel outside Belledune to perform the duties of his employment;

(e) during both work periods, the Appellant rented a room in Jacket River, approximately 15 miles from Belledune, which he claimed as an expense;

(f) from January to June, 1991, the Appellant and his spouse maintained a principal residence in Campbellton. New Brunswick, approximately 80 kilometres from the Belledune work site;

(g) subsequent to June 30, 1991, and during the remainder of the periods which are the subject of this appeal, the Appellant’s principal residence was determined to be Eel River Crossing on the basis of the following facts:

i. the Appellant and/or his spouse have owned property in Eel River Crossing since 1983;

ii. the Appellant’s mailing address during the latter part of 1991 and during 1992 was Eel River Crossing;

iii. the Appellant was unable to substantiate his claim that he remained

in Campbellton after June, 1991 or his subsequent claim that he purchased property in Dundee after June 1991;

iv. there is no evidence that the Appellant occupied a domestic establishment

anywhere other than Eel River Crossing during the later half of 1991 and 1992;

(h) Eel River Crossing is located approximately 50 kilometres from Belledune;

(i) the Appellant could reasonably be expected to return home daily from the work site in Belledune to his residence in Eel River Crossing.

10. He relies on subsections 6(6), 8(4), and 248(1), and paragraphs 6(1)(b) and 8(1 )(h) of the Income Tax Act, R.S.C. 1985, (5th supp.), c. 1, (the “Act”), as amended for the 1991 and 1992 taxation years.

11. He submits that the Minister properly reassessed the Appellant to include 50 per cent of the travelling, room and board allowance received from Dycon Con- struction Ltd. in 1991, and 100 per cent of the room, board and travelling allowance received from Dycon Construction Ltd. in 1992 on the basis that the Appellant’s principal residence was not at a location to which, by reason of distance, the taxpayer could not reasonably be expected to have returned daily from the special work site as required by clause 6(6)(a)(i)(B) of the Act. 12. He submits that the Appellant was not entitled to the deduction of room, board and travelling expenses permitted by section 8(1 )(h) or of meal expenses permitted by subsection 8(4) in that he was not ordinarily required to travel outside the employer’s place of business.

13. He respectfully submits that the room, board and travelling expenses incurred by the Appellant from July to November, 1991 and from April to November 1992 were personal and living expenses as described in subsection 6(1 )(b) and subsection 48(1) of the Act.

At the hearing, the Appellant admits subparagraphs 8(a) to 8(c), 8(e) and 8(f); in Roman figures numbers 111) and iv); subparagraph 8(h); and denied all the other subparagraphs and Roman figures numbers.

Then he testified that his employer’s place of business was in Newcastle and for the years in litigation he was working in Belledune, New Brunswick, and was living in Dundee. Mrs. Danielle Charbonneau, Appeals Officer, testified that when she received the file of the Appellant she realized that he had received benefits that were taxable for 1991 and 1992 because he had declared in his income tax returns, for both years, that his residence was in Eel River Crossing.

After investigation, she found out that the Appellant’s mailing address was still in Eel River Crossing during the latter part of 1991 and during 1992; that he was unable to substantiate his claim to the effect that he remained in Campbellton after June 1991; or his subsequent claim that he purchased property in Dundee after June 1991.

Counsel for the Respondent argued that the Appellant was never able to show that he had lived elsewhere than Eel River Crossing after June 1991 and during 1992; that he did not show any lease or other document to prove his claim; and that he admits that Eel River Crossing is located approximately 50 kilometres from Belledune.

The Appellant had the onus to prove that his place of residence after June 30th, 1991, and during 1992, was not Eel River Crossing, and failed to do so; and also was not able to show that the Respondent’s allegations, that he denied, were not well-founded in fact and in law.

Decision:

HIS HONOUR: Consequently the appeals are dismissed.

Appeal dismissed.