Jean-Paul Leger v. Minister of National Revenue, [1976] CTC 2115, 76 DTC 1092

The Chairman:—This is the appeal of Jean-Paul Leger from a tax assessment concerning the 1971 taxation year.

The question in this case is as to whether the appellant could legaily deduct from his income for 1971 an amount of $5,928.46 which he claimed as employment expenses.

In his income tax return for 1971 the appellant had deducted the following amounts from his tax:

By notice of assessment dated November 14, 1972 the Minister allowed the deduction of $442.71 as office expenses, but did not allow the deduction of the balance of expenses claimed, an amount of $5,485.75.

During the year pertinent to this appeal, the appellant was living in Ste-Foy, Quebec and was employed as district manager for the F W Woolworth Company.

The appellant was paid on a commission basis and, during 1971, he received the sum of $27,449.18 as salary. During that year, his duties as supervisor of several Woolworth stores obliged him to travel to Sydney, Nova Scotia; St John’s, Newfoundland; Saint John, New Brunswick; Giffard, Quebec; Lévis, Quebec; Halifax, Nova Scotia; Trois-Rivières, Quebec; and Cap-de-la-Madeleine, Quebec. Although the appellant visited some of these places by airplane, he used his own automobile for most of his business trips and received an allowance of 10 cents a mile on inter-city trips and $2 a day for trips within the city (Exhibits A-3 and A-4).

In his testimony, the appellant stated that his hotel and. meal expenses were refunded by the employer.

According to a letter from the F W Woolworth Company, dated February 29, 1972, it seems that the appellant had not been allocated an office and that, in order to prepare his reports and receive his business correspondence, he had to use the facilities of his own residence (Exhibit A-2). Furthermore, the Minister allowed the appellant a deduction of $442.71 in that regard.

The appellant claimed to be dissatisfied with his assessment and maintained that he had been misled by the Department of National Revenue officials. After having talked it over with the officials of the Department, the appellant had agreed to sign a document (Exhibit A-1), by which he accepted changes made to his income tax return which, among other things, rejected expenses claimed as entertainment costs in the amount of $2,360.71 for the year 1971.

The appellant interpreted this document to be much more complicated than it was, and he believed that, in disallowing him entertainment expenses, the Department had thereby agreed to deduct the balance of expenses claimed. The appellant could not understand why, in the assessment notice of November 14, 1972, the Minister also disallowed the other expenses claimed by the appellant, except for the amount of $442.71 deducted as office expenses.

In my opinion, the document signed by the appellant (Exhibit A-1), by which his entertainment expenses were disallowed under subsection 5(1) of the Income Tax Act because his income came from his employment, did not prevent. the Minister from considering the deductibility of the other expenses under other sections of the Act. Furthrmore, this is what the Minister legally did.

With respect to the appellant’s travelling expenses, the Minister had to consider subsection 11(9) of the Income Tax Act, which reads as follows:

11. (9) Where an officer or employee, in a taxation year,

(a) was Ordinarily required to carry on the duties of his employment away from his employer’s place of business or in different places,

(b) under the contract of employment was required to pay the travelling expenses incurred by him in the performance of his duties of his office or employment, and

(c) was not in receipt of an allowance for travelling expenses that was, by virtue of subparagraph (v), (vi) or (vii) of paragraph (b) of subsection

(1) of section 5, not included in computing his income and did not claim any deduction for the year under subsection (5), (6) or (7),

there may be deducted, in computing his income from the office or employment for the year, notwithstanding paragraphs (a) and (h) of subsection (1) of section 12, amounts expended by him in the year for travelling in the course of his employment.

In orde rto be able to deduct travelling expenses, the appellant would have had to meet all conditions specified in subsection 11(9).

The evidence shows that the appellant was not required to pay his travelling expenses personally, that his hotel and meals were paid for by the employer and that the appellant received an allowance of ten cents a mile and two dollars a day for automobile expenses. None of these expenses were included in the appellant’s income for 1971.

The appellant, therefore, does not meet the conditions of subsection 11(9), which the Board must interpret strictly, and under the circumstances, the expenses claimed by the appellant are not deductible.

The Board must therefore dismiss the appeal.

Appeal dismissed.