Bonner, T.C.J.:
1 This is an appeal from an assessment of income tax for the Appellant's 1994 taxation year. At issue is the extent of the deduction under subsection 118.2(1) and, in particular, the amount of the medical expense paid by the Appellant within the meaning of paragraph 118.2(2)(g) of the Income Tax Act. The Appellant used his car to drive from Outlook, Saskatchewan to Calgary for medical treatment, a trip which he had to make very frequently. Driving was the only practical choice. The total distance driven for that purpose during the year was 33,399 kilometers. The Appellant calculated his cost at the rate of 25 cents per kilometer. The Assessor allowed a deduction at the rate of five cents a kilometer times a somewhat shorter distance which the Appellant had claimed as a result of an error in addition. The National Revenue Department applied an administrative policy which limited claims unsupported by vouchers or receipts to five cents a kilometer. The “B” figure in the subsection 118.2(1) formula is the “total of the individual's medical expenses that are proven by filing receipts therefor...”.
2 The Appellant's claim rests on paragraph 2(g) and subsection 4 because the expenses in question were not paid to a person engaged in the business of providing transportation services. It appears to have been common ground that such a person was not readily available and that the Appellant did make use of his vehicle for a purpose described in paragraph 2(g). The Appellant is therefore deemed by subsection 4 to have paid to such a person in respect of the operation of the Appellant's vehicle “such amount as is reasonable in the circumstances.”
3 It was argued by the Respondent that the Appellant was not entitled to more than the five cents a kilometer which the Minister allowed because of his failure to produce receipts. That argument is ludicrous. A deemed payment is one which the law considers to have been made even though it has not in fact been made. A taxpayer can hardly be expected to produce a receipt for a payment which has not in fact been made. I can imagine what would happen to a taxpayer who was foolish enough to cook up a receipt for a deemed payment. But we will leave that little bit of speculation to one side. Clearly, the specific provision in subsection 4 overrides the general requirement in subsection 1 of proof by the filing of receipts.
4 In my view, the lower limit of an amount, reasonable in the circumstances, which is deemed to have been paid to a person engaged in the business of providing transportation services is the cost of the operation of the vehicle. On the basis of the Appellant's general description of his actual costs, I am satisfied that the cost was not less than 25 cents a kilometer. I observe that the testimony of Mrs. Tangedal, the Appeals Assessor, indicated that during the period in question, the Department of National Revenue paid its employees about 30 cents a kilometer for the use of their automobiles in the discharged of their duties. Although not in any way determinative of reasonableness, the rate paid by the Revenue Department to its own employees can usefully be contrasted with the five cents a kilometer which the Assessor selected as the maximum reasonable amount to be allowed in respect of the use by the Appellant of his vehicle.
5 The appeal will be allowed and the assessment referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the paragraph 118.2(2(g) figure is 25 cents per kilometer times 33,399 kilometers.
6 The Appellant shall have his costs to be taxed, but I direct that in lieu of the portion of the taxed costs allowed for preparing for hearing and for the conduct of the hearing, the fees shall be $400 and $600, that is to say, two times the amounts laid down in paragraphs “b” and “c” of section 11 if the Rules. This direction is intended to provide additional compensation to the Appellant who was forced to proceed with a hearing in order to defeat an assessment which should never have been made in the first place, particularly in light of the earlier decisions of this court on the point.
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