Andre Vezina v. Minister of National Revenue, [1979] CTC 3089

Guy Tremblay [TRANSLATION]:—This case was heard at Montreal, Quebec on May 16, 1979.

1. Point at Issue

The question is whether the appellant is right in claiming for the 1976 taxation year an expense of $6,415.53, either as commission expenses for the Sale of his residence, or as moving expenses on account of a change of employment in accordance with section 62 of the new Income Tax Act.

2. Burden of Proof

The burden is on the appellant to show that the respondent’s assessments are incorrect. This burden of proof derives not from one particular section of the Income Tax Act, but from a number of judicial decisions, including the judgment delivered by the Supreme Court of Canada in R W S Johnston v MNR, [1948] CTC 195; 3 DTC 1182.

3. Facts

3.01 In his 1975 taxation year the appellant worked in Montreal and Drum- mondville and lived at 1700 Avenue du Parc, St-Bruno, Quebec.

3.02 On August 4, 1975, the appellant accepted the position of marketing vice president with Timmins Mfg, in Timmins, Ontario.

3.03 The appellant began working with Timmins Mfg, in Timmins, Ontario, on August 11, 1975. His employer paid all his accommodation expenses at the Belair Motel, in Timmins, Ontario, while appellant was looking for a residence, the whole as provided in the contract of employment.

3.04 During this period the appellant’s family lived in the latter’s residence on Avenue du Parc, St-Bruno. His wife made several trips to Timmins to get settled and try to find a residence.

3.05 At the end of September 1975, when his position with Timmins Mfg was a certainty, the appellant put his property on Avenue du Parc in St- Bruno up for sale through the Montreal Trust brokerage company.

3.06 By agreement between the appellant and Timmins Mfg, it was agreed that the latter would reimburse the appellant for his expenses of selling his property and moving.

3.07 On October 4, 1975 the appellant accepted a purchase offer on his property. The agreement between the appellant and the purchaser provided that the latter would not take possession of the premises until February 1976.

3.08 The appellant subsequently made three purchase offers for properties located in Timmins, Ontario. These offers were not accepted, however.

3.09 On November 10, 1975 the appellant was dismissed from his position of marketing vice-president by Timmins Mfg, which was undergoing serious financial difficulties.

3.10 Timmins Mfg refused to reimburse the appellant, as agreed, for his property sale expenses. The appellant then instituted legal proceedings for such reimbursement against Timmins Mfg, which shortly afterwards went into bankruptcy.

3.11 By agreement between the appellant and the purchaser of the property at 1700 Avenue du Parc, St-Bruno, it was agreed that the appellant and his family could occupy the premises until February 1976, the time when the purchaser took possession.

3.12 On December 9, 1975 the appellant purchased a property located at 1874 De Boucherville, St-Bruno, Quebec. He in fact moved into this residence with his family during February 1976, and accordingly the appellant, during the taxation year in question, that is 1976, moved from a residence located in St-Bruno, Quebec to another residence located in the same town. The distance from his old residence to his new one was half a mile.

3.13 Timmins, Ontario is located some 800 miles from the old residence.

3.14 In January 1976 the appellant began a new job with A R Williams Machinery, located at 5723 Ferries Street, Montreal, Quebec, that is about twenty-three miles from his old residence.

3.15 A few months later he left this job for another. This was to manage Fairmont Granite, which is located at Beebe on the American border near Stanstead, or 120 miles from his old residence.

3.16 Expenses totalled $6,415.53, that is $5,040 for sales commission expenses on the old residence, and $1,375.53 for moving expenses from the old residence to the new residence.

4. Act—Case Law—Comments

4.1 Act

The principal sections involved in the case at bar are paragraph 18(1 )(a) and subsection 62(1) of the new Act, which read as follows:

18. General limitations.

(1) In computing the income of a taxpayer from a business or property no deductions shall be made in respect of

(a) an outlay or expense except to the extent that it was made or incurred for

the purpose of gaining or producing income from the business or property.

62. Moving expenses.

(1) Where a taxpayer

(a) has, at any time,

(i) ceased to carry on business or to be employed at the location or locations, as the case may be, in Canada at which he ordinarily so carried on business or was so employed, or

(ii) ceased to be a student in full-time attendance at an educational institution in Canada that is a university, college or other educational institution providing courses at a post-secondary school level,

and commenced to carry on a business or to be employed at another location in Canada (hereinafter referred to as his “new work location”), or

(b) has, at any time, commenced to be a student in full-time attendance at an educational institution (hereinafter referred to as his “new work location’’) that iS a university, college or other educational institution providing courses at a post-secondary school level,

and by reason thereof has moved from the residence in Canada at which, before the move, he ordinarily resided on ordinary working days (hereinafter referred to as his “new residence”) to a residence in Canada at which, after the move, he ordinarily so resided (hereinafter referred to as his “new residence”), so that the distance between his old residence and his new work location is not less than 25 miles greater than the distance between his new residence and his new work location, in computing his income for the taxation year in which he moved from his old residence to his new residence or for the immediately following taxation year, there may be deducted amounts paid by him as or on account of moving expenses incurred in the course of moving from his old residence to his new residence, to the extent that

(c) they were not paid on his behalf by his employer,

(d) they were not deductible by virtue of this section in computing the taxpayer’s income for the preceding taxation year,

(e) they would not, but for this section, be deductible in computing the taxpayer’s income,

(f) the aggregate of such amounts does not exceed

(i) in any case described in paragraph (a), the taxpayer’s income for the year from his employment at his new work location or from carrying on the new business at his new work location, as the case may be, or

(ii) in any case described in paragraph (b), the aggregate of amounts required to be included in computing his income for the year by virtue of paragraphs 96(1)(n) and (o), and

(g) any reimbursement received by him for such expenses has been included in computing his income for the year.

4.2 Case Law and Theory

The respondent referred the Board to the following case law and theory:

1. Craies, on Statue Law, London, Sweet and Maxwell, 1971, pp 65-66;

2. Ibid, pp 113, 114;

3. W G Lumbers v MNR, [1943] CTC 281; 2 DTC 652; [1944] CTC 67; 2 DTC 652;

4. W A Sheaffer Pen Company of Canada Ltd v MNR, [1953] CTC 345; 53 DTC 1223;

5. West Hill Redevelopment Co Ltd v MNR, [1969] CTC 581; 69 DTC 5385;

6. O J Rath v MNR, [1979] CTC 183; 79 DTC 5140.

4.3 Comments

The evidence clearly showed that the appellant did not purchase a new residence in Timmins, Ontario, but because of different circumstances purchased a new residence in the same town where he had his old residence, namely St-Bruno. This new residence is located half a mile from his old one.

Section 62 provides that to be entitled to claim moving expenses the distance between the old and the new residence must, for all practical purposes, be more than 25 miles.

It is therefore clear that strict application of this section cannot assist the appellant and that his appeal must be dismissed.

However, the appellant maintained that a wider interpretation should be given to the Act, not according to the letter of the law but according to the legislator’s intent. Unfortunately for the appellant, the Board (like the Federal and Supreme Courts) is required to interpret the Income Tax Act Strictly, as it is a public law statute. Strict interpretation of this Act sometimes works in favour of the taxpayer, when it is necessary to interpret a taxing section which is ambiguous. Where an exempting section like section 62 is in question, however, the ambiguity works not in favour of the appellant but of the federal treasury. Nonetheless, no such ambiguity exists in section 62. It is clear.

Its application to the facts of the case at bar indicates that the appellant cannot benefit from the said section. Unfortunately for the appellant, the appeal must be dismissed.

5. Conclusion

The appeal is dismissed in accordance with the foregoing reasons for judgment.

Appeal dismissed.