Pazaratz v. R., [1999] 4 CTC 2640

Brulé T.C.JA

This appeal, pursuant to the informal procedure respecting the Appellant’s claim that he was not liable to be taxed on car expenses during the 1995 taxation year, was heard at Toronto, Ontario, on November 25, 1998. The Appellant was the only witness.

Facts

The Appellant, a government employee, used his personal vehicle in his work. He received an allowance of $7,729.00 from his employer while he claimed $10,590.27 as expenses and GST rebate of $842.22. The Appellant maintained that he received guidance from his employer and his accountant that his method of calculating income tax was correct. He furnished receipts for the car expenses. Revenue Canada told the Appellant that the $7,729.00 given to the Appellant must not be claimed by him and the GST rebate and the other income is disallowed; hence the appeal.

Issues

The issues are whether:

(a) the Appellant is entitled to deduct the motor vehicle expenses pursuant to the Income Tax Act (the “Act’); and

(b) the Appellant is entitled to claim a GST rebate.

Appellant’s position

The Appellant relies on the information he received from his employer and accountant. He furnished receipts, admitted that the $7,729.00 was wrongfully claimed but that the rest of his claim should be honoured.

Respondent’s position

The Respondent’s position is quite straightforward. It is not sufficient to have receipts for expenses paid but such must be identified with the expense undertaken. The Minister of National Revenue, in his Notice of Confirmation, reiterated that the Act forbids the deduction of an amount paid to the Appellant by his employer under paragraph 8(1 )(h. 1 ) and also subsection 8(2) does not allow a deduction for this amount in calculating the Appellant’s income from his employment.

Analysis

Simply stated, the Act under section 230 requires a person to keep an exact record (including a log for an automobile) to prove receipts in hand. This was not done and so Revenue Canada had no choice but to disallow the amounts between the allowance of $7,278.73 and the claimed deduction of $10,590.27. Also the Appellant did not incur eligible employment expenses on which he could claim a GST rebate.

The net result is that the appeal is dismissed.

Appeal dismissed.