William Franklin Wymark Neville v. Minister of National Revenue, [1979] CTC 2288, 79 DTC 344

M J Bonner:—The appellant appeals from an assessment for his 1975 taxation year. The Minister, in assessing, disallowed the deduction claimed by the appellant of the sum of $3,549.87 as moving expenses.

The sequence of events is as follows:

(a) Before July 1, 1973, the appellant was employed as an assistant professor of political science at Trent University in Peterborough, Ontario.

(b) On July 1, 1973, the appellant commenced a sabbatical leave of one year’s duration. He was to be paid full salary during that year.

(c) In August of 1973 the appellant was asked to act as executive assistant to the leader of the opposition in the Manitoba legislature. He agreed and commenced to act as a self-employed consultant.

(d) From August of 1973 to December of 1973 the appellant lived in an apartment in Winnipeg as a tenant on a month-to-month basis.

(e) In November of 1973 it was decided that the appellant’s wife would join him in Winnipeg. Consequently the home owned by the appellant in Peterborough was leased for a six month period in December of 1973. The appellant’s wife and children joined him then in Winnipeg. Upon the arrival in Winnipeg of the appellant’s wife and children, the family stayed initially at the appellant’s apartment. In January of 1974 they moved to a house in Winnipeg which they rented for six months. Thus, in January of 1974 the appellant, his wife and children lived together for the first time in about four months. They could not be described as permanently settled in Winnipeg at this point. Much of the household furnishings, books, clothing and other personal effects of the family remained behind in Peterborough. The family still owned the home in Peterborough.

(f) From June 1,1974, to December of 1975 the appellant was employed by the Manitoba Progressive Conservative Association doing work which he described as that of a “Deputy Minister in Opposition”.

(g) In July of 1974 Trent University and the appellant agreed that the latter be granted a one-year leave of absence without pay.

(h) Early in the summer of 1974 the appellant leased a home in Winnipeg for a term commencing in September of 1974 and ending in June of 1975.

(i) In the summer of 1974 the appellant and his family returned to Peterborough for a few months during part of which period they lived in a motel. Subsequently they lived in their house after it was vacated by the tenants. They leased out their Peterborough home for a term commencing in September of 1974 and ending in June of 1975.

(j) At the end of March of 1975 the appellant resigned his position with Trent University and he commenced to look for a new home in Winnipeg.

(k) In April of 1975 the appellant sold his home in Peterborough.

(l) In May of 1975 the appellant bought a home in Winnipeg.

As a result of this flurry of activity in the spring of 1975 the appellant incurred not only legal fees in respect of the disposition of the Peterborough home, but also air fare for a trip made by himself and his wife from Winnipeg to Peterborough to supervise the packing of their household goods and the cost of transporting those goods from Peterborough to Winnipeg. Those are the expenses in issue.

The assessment was made on the basis that the appellant did not, in 1975, make a move in the circumstances described in paragraph 62(1)(a) of the Act because:

(a) Winnipeg was the only location in which the appellant was ordinarily employed in 1974 and 1975, and

(b) the appellant, his wife and children ordinarily resided in 1974 and 1975 in Winnipeg and not elsewhere, and that the twenty-five mile rule therefore applied.

The respondent’s counsel contended that the factual basis of the assessment was shown to be correct by the evidence at trial. That evidence is summarized above. There was further evidence that in his 1973 return of income the appellant claimed moving expenses in respect of a move from his former residence in Peterborough to a new residence in Winnipeg and, further, that in his 1974 return the appellant reported that Manitoba was his province of residence at the end of the year. In that return the appellant claimed the Manitoba property tax credit on a form in which he certified that his principal residences during the 1974 taxation year were in Winnipeg.

The appellant contended that the component elements of a move of the type contemplated by section 62 of the Act are, in effect, defined by subsection 62(3) as those actions required to bring together in the new location the taxpayer, the members of his household and the household effects. It was not until June of 1975 that the taxpayer, his family and all their household effects came together in one place. He pointed out that the word “immediately” is not used before the word “before” in that part of paragraph 62(1)(a) which reads:

... and by reason thereof has moved from the residence in Canada at which, before the move, he ordinarily resided . . .

He contended that moving from one residence to another can, and in this case did, involve a continuum, the elements of which may straddle a taxation year end. Parliament did not intend, in circumstances where such a straddle occurred, to limit the deduction. The appellant suggested that subsection 26(7) of the Interpretation Act, 1967-68, c 7, s 1, permitted the words “for the taxation year in which he moved” to be read as “for the taxation years in which he moved”.

The issue for decision in this case is whether the expenses claimed by the appellant in 1975 are, by virtue of section 62, deductible. It is not necessary to a conclusion on that issue to determine whether the words “the taxation year in which he moved” may be read in the manner asserted by the appellant. The position on the facts, as I see them, is simply that at all times before the appellant resigned his position at Trent University in March of 1975 his presence in Winnipeg, and that of his family as well, was not referable to a cessation of employment at Trent University in Peterborough (being the location in Canada at which he was, until March of 1975, ordinarily employed) and the commencement of employment in Winnipeg. There was, before March of 1975, no move from the appellant’s “old residence” in Peterborough to a “new residence” in Winnipeg as those terms are used in paragraph 62(1)(a).

As to employment, it should be remembered that initially the appellant went to Winnipeg while on sabbatical leave and he took employment consistent with the appropriate utilization of such leave. The position did not change during the one year leave of absence. It seems to me that until the appellant resigned he ordinarily was employed by Trent. Paragraph 62(1)(a) of the Act does not require that the commencement of employment at the new work location follow the cessation of employment at the location at which the taxpayer was ordinarily employed.

All the appellant’s domestic arrangements during the period prior to tendering his resignation were of a temporary nature. Leases taken of premises in Winnipeg were short term. The leases of the house in Peterborough were also of short term. Many of the appellant’s domestic effects remained in Peterborough.

The appellant’s actions prior to his resignation can usefully be contrasted with his subsequent actions. Immediately after resigning the appellant sold his Peterborough home, bought a new home in Winnipeg and moved a substantial quantity of his domestic effects to Winnipeg. The facts seem consistent only with the conclusion that the appellant’s “old residence’’, as the term is used jn section 62, continued to be in Peterborough until the spring of 1975.

The appellant’s work in Winnipeg following his resignation from Trent University took on a new aspect in that it was transformed from work of a temporary nature, secondary to his occupation as a University professor, to his only work. The actions taken by the appellant in the spring of 1975 can, I think, by themselves properly be regarded as a move from an “old residence’’ to a “new residence’’ as those terms are used in section 62; and as a move, the reason for which is one described in paragraph 62(1)(a).

The appeal is therefore allowed and the assessment for the 1975 taxation year is referred back to the respondent for reconsideration and reassessment on the basis that the moving expenses in issue are deductible as claimed.

Appeal allowed.