The Chairman:
1 This is an appeal by Raymond Scott, a member of the Canadian Armed Forces, presently stationed in Washington, DC in the United States of America, for the year 1973.
2 The appeal concerns the question of deductibility of moving expenses incurred by the appellant when moved, under orders, from Kingston, Ontario to Washington, DC.
3 At the request of the appellant, because it was impractical for him to attend at Ottawa or Kingston for a hearing of the appeal, it was suggested that the case be dealt with by the submission of a written argument. The Board agreed with the appellant's request provided the respondent would agree to have the appeal determined in this manner.
4 The consent of the respondent was obtained and written submissions have been made, both on behalf of the appellant and the respondent. This case is very similar to a case decided by me, being Webb v Minister of National Revenue, [1974] C.T.C. 2320, 74 D.T.C. 1237, except that in that case the appellant was a member of the Armed Forces, returning from Europe and claiming moving expenses in addition to those for which he was reimbursed, and this is a situation where the appellant is residing in Canada and is posted to a foreign jurisdiction. In both cases the appellant pleaded, in effect, that by subsection 250(1) of the Income Tax Act, members of the Canadian Armed Forces are deemed to be resident in Canada for the taxation year. This falls under the heading of “Extended Meaning of Resident”, and is found at paragraph 250(1)(b).
5 The appellant further argues that since he is deemed to be a resident of Canada for the purposes of taxation, then he must be deemed to be a resident of Canada for all other purposes of the Income Tax Act, and in particular he refers to section 62 which provides for moving expenses. He has had the opportunity to read a copy of my reasons for judgment in the Webb case and feels and so argues that there is a distinction in his case since he was physically resident in Canada and moved to a foreign jurisdiction, and for the purposes of taxation was deemed to be a resident of this country. He has also, in his argument, taken the position that the ratio of the Webb case was that the appeal was disallowed because the appellant Webb was not in a location in Canada at the time that he made his move.
6 With great respect to the interpretation by the appellant of the reasons for judgment in the Webb case, I think that he has overlooked the comments made by me on page 2321 [1239]:
There is no doubt whatsoever in my mind that section 62 was meant to include, and does include, only those persons who are physically resident within the confines of Canada at the time the move was made and at a time when the section was in effect, as it refers to moving from one residence in Canada to another residence in Canada.
7 What the appellant in this case has failed to recognize is that the section allowing a deduction to a taxpayer, namely section 62, for costs incurred in the moving of his residence which were not reimbursed by his employer, clearly indicates that the move must be from a location in Canada to another location in Canada.
8 He argues that the unfairness of the law, as propounded in the Webb case, is that it is unfair to members of the Armed Forces and that this has been recognized by the Department of National Defence from and after April 1, 1974 in an amendment to the Queen's Regulations and Orders for the Canadian Forces, chapter 209.96, para 2(c) which reads as follows:
(c) on one occasion only during his service in the Canadian Forces,(i) for real estate and legal fees necessarily paid for the sale of a residence in Canada, that is sold as a result of his being moved from a place of duty in Canada to a place of duty outside Canada, and
(ii) for legal fees necessarily paid for the purchase of a residence at a place of duty in Canada to which he has moved from a place of duty outside Canada.
9 Of course, since this appellant's move took place prior to this amendment and prior to its effective date, there is no relief for him in this amendment.
10 Since my decision in the Webb case there have been numerous amendments to the Income Tax Act, but none have dealt with the situation affecting servicemen who move from one location in Canada to a location outside of Canada or, from a location outside of Canada to one in Canada. This, therefore, reinforces my belief, along with the change in the Queen's Regulations and Orders for the Canadian Forces, that the wording of the Income Tax Act, in section 62, carries with it its simple and ordinary meaning and that, so far as a member of the Armed Services is concerned, he has no entitlement to a deduction unless his move is physically within the confines of Canada.
11 As I stated in the Webb case, the taxing section, paragraph 250(1)(b), and section 62, are mutually exclusive and the provision of paragraph 250(1)(b) is to ensure that members of the Armed Forces who are paid out of the Treasury of Canada shall be taxable as Canadians and no more. Further, since the appellant is not able to bring himself squarely within the deducting section, he cannot claim the expense of moving from Kingston to Washington, and the appeal must, therefore, be dismissed.
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