James K Middleton v. Minister of National Revenue, [1979] CTC 2711, 79 DTC 597

Roland St-Onge:—The appeal of Mr James K Middleton came before me on May 28, 1979, at the City of Kelowna, British Columbia, and the issue is whether a $15 per day living-out allowance received by the appellant was taxable allowance for personal or living expenses within the meaning of paragraph 6(1 )(b) of the Income Tax Act or whether it was not taxable within the meaning of subsection 6(7) of the Act.

The appellant gave evidence and argued his own appeal. He swore that everything he wrote in his Notice of Appeal was true, and subsequently, I quote:

After appealing to District Taxation Office in (Penticton, BC) and Regional appeals Office in (Vancouver, BC) I am not satisfied with there (sic) decision.

This is the reason I am appealing to the Tax Review Board.

I will try to be brief with my facts and reasons of objection.

My objection is based under the subsection 6(6) and 6(7) of the Income Tax Act. That my duties while being employed by Columbia Hydro Constructors Ltd were of a ‘Temporary Nature’ (3 years) and is classified as a ‘Special Work Site’.

As I have lived and maintained a domestic establishment (house) in Kelowna for the past 25 years I consider this to be my home and will continue to be such.

During the full years of 1973-74-75 I supported my wife (Olga) and son (Jeffery John) who was going to school in Kelowna, BC. I did fully contribute to the cost of supporting such persons during the years 1973-74-75.

As I was working for Columbia Hydro Constructors Ltd at the Kootenay Powerplant (South Slocan, BC) it was not reasonable for me to commute daily to work. Driving one way was 200 miles. I was then allowed a ‘Living-Out-Allowance’ paid by Columbia Hydro Contractors Ltd in return I did incurred board and lodging expenses to be closer to my place of work.

As I was the principle contributor for maintaining both places, I feel the assessment on Living-Out-Allowance in my case is very unjust and is the reason for my objection.

I still believe we live in a democracy that people have the equality of rights, opportunity and treatment; that a person should be able to live and work in this country where he so chooses.

To sum up this objection, at the time of employment. I did fill out a TD4 Forms exempting me from tax on the Living-Out-Allowance, Columbia Hydro Contractors (sic). Still have it on file. I did conform in accordance to all the Income Tax Rules and Act and still I was taxed on my Living-Out-Allowance Rectoactive (sic) for three years (I couldn’t find that one in the Income Tax Act).

If you still object in returning my assessment on Living-Out-Allowance during the years 1973-74-75, then it leaves me with the impression in my mind that you are telling me I should sell my house and property every time a ‘Special Work Site’ is completed or another one is started, ‘Contrary to our Democracy’.

I am not the type of person who sits around his home town and waits for the work to come to him or draws Unemployment Insurance. I go where the work is and pay excessive Taxes while I’m at it.

If you need anymore information to clear this matter, I am now working at Hudson Hope, BC and can be reached by calling (604) 783-5423 or writing Box 718, Hudson Hope, BC.

If your final decision is against me please let me know the next higher step I can take as I feel I am right in my objection.

The appellant also testified that during the 1973, 1974 and 1975 taxation years, he was a superintendent paid on an hourly basis and could be fired by the company with a week’s notice; that he has lived in Kelowna for 30 years and worked therein for the first 20 years; that for the last 10 years, he has worked on seven different work sites at a distance of 50 to 700 miles from Kelowna; that on weekends, during the 1973, 1974 and 1975 taxation years, he had to drive 400 miles to visit his family, and that the $15 per day living-out allowance was not sufficient to cover the board, lodging and travelling expenses.

Counsel for respondent argued that the Board, to arrive at a finding in this particular case, must examine all the facts to find out if the duties performed by the appellant at the dam site were of a temporary nature, and whether the location of the Kootenay Canal work site, being situated eight miles from Nelson, BC, was such that the appellant could reasonably have been expected to establish and maintain a self-contained domestic establishment for his wife and his son, at or near the site.

Counsel for respondent admitted that there was no useful jurisprudence to which he could refer the Board, and alluded to some American cases to distinguish between duties performed on a temporary nature and those of an indefinite nature. He also said that it was difficult to discover what was reasonable in the circumstances, and that the decision must be given based more on a question of fact than a question of law.

According to the evidence adduced, the Board believes that it is more reasonable for a taxpayer who has lived and worked twenty years ina a city, but who is called to work in the future at different work sites, to keep his house and commute on weekends, than to sell it and buy a new one at different work sites.

Had he bought and sold several houses in a span of ten years, the Minister would have taxed him as being in the business of buying and selling houses.

As to the nature of the duties performed by the appellant, the evidence shows that the latter was hired for the duration of the erection of the dam and was not to remain as a superintendent or otherwise thereafter.

Consequently, it shows that the nature of his duties was temporary and were to be terminated at the completion of the dam. Ordinarily, in cases of construction in remote locations, the workers on such projects are hired on a temporary basis, and such projects could last for as short a time as one month or up to two to four years but very seldom for the duration of 20 years.

The best yardstick in the circumstances to determine the temporary nature of the duties performed would be to consider the length of the project. The Board considers paragraph 8(1)(g) of the Act as an incentive for the hourly workers to work outside their own town, without having to move everytime they have to work on different work sites.

For these reasons, the appeal is allowed and the matter is referred back to the respondent for reassessment.

Appeal allowed.