Taylor T.C.J.:
1 This is an appeal heard in Hamilton, Ontario, on May 12, 1997, against an assessment in which the Respondent disallowed expenses in the amounts of $3,260.11 and $2,785.70 for the years 1993 and 1994 respectively, claimed under the Income Tax Act (the “Act”) from income earned as an employee on commission with Leon's Furniture Ltd. (Leon's) totalling $54,984 and $48,650 in those same years.
2 The details of the claims are as follows:
| 1993 | 1994 | |
|---|
| Accounting and legal fees | $ 85.60 | $ 85.60 |
| Motor Vehicle expenses (Auto) | 1,869.00 | 1,486.10 |
| Meals | 780.00 | |
| Office Supplies | 525.51 | 74.00 |
| Dry Cleaning | | 780.00 |
| Uniforms | | 360.00 |
| $3,260.11 | $2,785.70 |
3 Mr. Bober was represented by his wife and by his accountant Mr. Pichelli. The testimony and evidence from the Appellant, and not contradicted by any evidence from the Respondent, other than that which might be gleaned from cross-examination, was to the effect that he was required presumably to pay for specified uniforms, dry cleaning associated with those uniforms, and for his own business cards (other than an initial supply provided by the employer). In addition, which was the main item of contention he claimed he was required to attend seminars, conferences, furniture shows, price comparison, shopping trips, etc., in addition to looking after minor complaints from his customers such as a broken part, late delivery, etc. The Appellant agreed there was no written directive from the employer which mandated the attendance at conferences, etc. nor his attention to minor complaints or needs of his customers — many of whom were repeat customers. But he contended it was “simply understood” and that without these activities he could not possibly have earned the reported commission income, and indeed he probably would have been without a sale's position with Leon's altogether. He did not criticize Leon's for this, just stated it was common and accepted in the industry. It was during these out of the store activities that he had accumulated the expenses shown as automobile travelling expenses, which did include some items of his own lunches or dinners when necessary. In support of the Appellant's claims Leon's had completed Form T-2200 for Revenue Canada, showing for each of the years on one part:(Question)
(3) Did you normally require this employee to work away from your place of business or in different places?
(Answer)
“Yes, when necessary”, followed by an “X” in the “No” box.
4 In addition, Leon's enclosed the following letter for each year:
3167 North Service Road
Burlington, Ontario
L7N 3G2
Phone: (416) 335-1811
To Whom It May Concern:
During the course of employment with Leon's Furniture our Salestaff have occasion to visit customer's homes, service depots and other related businesses.
Our Salestaff work strictly on commission and obviously anything they do in excess of their normal efforts within the store to “create” and “nourish” additional business is strongly encouraged by myself.
Thanking you for taking the above into consideration.Yours truly,
Allan E. Shute
General Manager
5 Mr. Bober indicated that the “No” above in answer to the question was based on Leon's rejection of an obligation to reimburse the employee for such expenses, but that the requirements to travel “when necessary” was the real basis of his employment contract with Leon's. Essentially, the Appellant explained that while his specified hours for selling “on the floor” were fixed by Leon's — rotated on different days with the other commission sales personnel to accommodate shopping hours of customers, and to cover the hours the store was opened. This accounted for either 41/2or 5 days per week depending on his shifts. But, it was his testimony he regularly used his “off time” 2 or 21/2days per week to keep right up to date with all the developments in the business, and to service his customers. Such travel covered a wide area — from Toronto, to Kitchener and the Niagara Penninsula, from his home base in the Hamilton region. It was during this period (2 or 21/2days of “off time” each week) he was expected to do the out of store work for which he claimed the expenses. Mr. Bober also gave explanations for the items of expense which were not connected with travel - accounting, office supplies, uniforms, and dry cleaning, and supplied some documentation from the employer detailing the standards expected for the appearance and upkeep of the uniform.
6 Mr. Pichelli argued that the earnings of a commission employee should be looked at differently than those of a straight salaried employee - Mr. Bober could not retain his position without the outside efforts he expended. In effect, it was Mr. Pichelli's position that Mr. Bober was employed as a commission salesperson virtually seven days a week — certain days and times prescribed for the on the floor selling, and the balance of the week when necessary to maintain his contacts and his expertise both on behalf of the employer and for his own benefit - financially. This differed dramatically from the position of a straight employee whose hours and income were fixed by the employer, and who could not benefit financially from “out of store” efforts, even if such efforts were expected directly or indirectly by the employer.
7 It was the position of Counsel for the Respondent that Mr. Bober was not “ordinarily required to carry on the duties of his employment away from his employer's place of business” (Section 8(1)(f)(ii) of the Act). Counsel provided the Court with case law in support of that contention as follows:Goodman v. Minister of National Revenue (1953), 8 Tax A.B.C. 320, 53 D.T.C. 225 (Can. Tax App. Bd.)
Martyn v. Minister of National Revenue (1964), 64 D.T.C. 461 (Can. Tax App. Bd.)
Brownlee v. Minister of National Revenue, [1978] C.T.C. 2780, 78 D.T.C. 1571 (T.R.B.)
Neufeld v. Minister of National Revenue, [1981] C.T.C. 2010, 81 D.T.C. 18 (T.R.B.)
Jalbert v. Minister of National Revenue (1986), 86 D.T.C. 1766 (T.C.C.)
Verrier v. Minister of National Revenue, [1990] 3 F.C. 3 (Fed. C.A.)
Analysis
8 I will refer only to the case of Verrier (supra) since in my opinion the learned Justices therein have thoroughly and clearly covered the main point at issue here. In the circumstances of this case, I find that this Appellant's requirement for travel expenses and the cost associated therewith are even more in line with the terms and conditions of Section 8(1)(f) of the Act than was the case with Mr. Verrier, for a commission salesperson. There was sufficient information provided at this trial for me to conclude that the quantum of the amounts charged for travel was not unreasonable, and it will be allowed — that is 1993, $1,869.00 and 1994, $1,486.10. As for the other expenses claimed, I am not persuaded, (perhaps I should say no longer persuaded in light of the earlier decision I gave in Neufeld (supra), that items of clothing - required uniform attire and cleaning for these to maintain acceptable condition remain outside the bounds of the term “cost of supplies that were consumed directly in the performance of his duties--”. To continue to treat stipulated items of dress for the place of business, and the upkeep of these items as not consumed — but somehow capital items, in light of the general thrust of the judgment in Verrier (supra) does not appear to me to be supportable. That view from Verrier (supra) should be extended from dealing with Section 8(1)(f) of the Act to an interpretation of Section 8(1)(i) of the Act for “supplies” where precise circumstances warrant. While it might be argued that the “uniform” he was required to wear could last more than one year, I do not find that small possibility to make the item “capital” as opposed to “consumed”. Mr. Bober has not claimed for a “uniform” each year, but only the initial cost which apparently was appropriately maintained by regular cleaning. The amounts of $360.00 for “uniform” and $780.00 for cleaning should be allowed. On this point, it is of interest to note that Mr. Bober no longer is employed at Leon's and at his current place of employment, another furniture store, he is not required to wear a “uniform” and is accorded great leeway in the choice of personal dress. As for the other items claimed-accounting $85.60 (1993), $85.60 (1994) they are not deductible, these are personal; office supplies $525.51 (1993), $74.00 (1994); and meals $780.00 (1993) have not been documented adequately in my view to come within the terms of either Section 8(1)(f) or 8(1)(i) of the Act, even under the flexible view that I am applying to this case.
Decision
9 The appeal is allowed in order to permit the deduction of the following amounts:1993 -$1,869.00
1994 -$2,626.10
10 In all other respects, the appeal is dismissed.
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