Lamarre Proulx T.C.J.:
1 These two appeals were heard on common evidence. The point at issue for 1993 is whether automobile expenses were incurred for the purpose of transporting maintenance and repair materials to a rental property and, for 1994, whether the documents filed as evidence of maintenance and repair expenses for that same property are acceptable as vouchers for those expenses.
2 The appellant Liliane Gener's appeal is correlative with that of the appellant Jacques Gener for the two years in issue. The appellant Liliane Gener holds 20 per cent of the shares in a partnership by the name of Société immobilière Lija which allegedly owns the rental property the expenses in respect of which are in issue in the instant case. The appellant Jacques Gener holds 80 per cent of the shares in that same partnership.
3 The appellant Jacques Gener is a certified general accountant (C.G.A.) and has worked as an auditor at Revenue Canada for a number of years.
4 For 1993, the appellant Jacques Gener filed as Exhibit A-3 a list of expenses in respect of the use of his car. The list covers the period starting January 6 and ending December 31, 1993, and the expenses amount to $1,613.18. In computing his income, the appellant deducted 70 per cent of this amount, that is $1,129, as the business portion. This amount was denied him on the ground that a taxpayer cannot deduct travelling expenses between his home and his place of business because they are personal expenses. However, the evidence revealed that this was not how the appellant's car was used, but rather that it was used to pick up materials or parts necessary in maintaining the rental property. On this point, he filed Exhibit A-4, which shows that the appellant regularly had to travel to purchase items necessary in maintaining the property. He referred to the Rental Income guide which states the following respecting motor vehicle expenses at page 9:
You can deduct motor vehicle expenses in the following circumstances:
• One rental property:
You can deduct reasonable motor vehicle expenses if:you receive income from only one rental property that is in the general area where you live;
you personally do part, or all, of the necessary repairs and maintenance on the property; and
you incur the motor vehicle expenses to transport tools and materials to the rental property.
5 At the appeal division level, a certain portion of the automobile expenses had been allowed to the appellant on the basis that the real estate partnership no longer employed a caretaker as of July 1993.
6 It is my view that the appellant Jacques Gener was entitled to deduct motor vehicle expenses for the purpose of transporting tools and materials. It is true that the appellant's accounting is hard to follow. On the one hand, he states that Société immobilière Lija's fiscal year was from July 1 to June 30 of each year, which the officers of the Minister of National Revenue (the “Minister”) accepted. On the other hand, the list of automobile expenses was made based on the calendar year and, furthermore, the appellant Jacques Gener for some reason did not want the appellant Liliane Gener to claim her share of the automobile expenses, whereas she held a 20 per cent interest in the aforementioned Société immobilière Lija. Since the appellant Jacques Gener proved at the hearing that the motor vehicle expenses were incurred for maintenance and repair activities in respect of Société immobilière Lija's rental property, the appellant Jacques Gener is entitled to deduct 80 per cent of those automobile expenses and the appellant Liliane Gener 20 per cent, if she so wishes. The Minister shall subtract the amounts he has previously allowed the appellant Jacques Gener in respect of automobile expenses from the product of .80 (80 per cent) × $1,129.
7 The issue for 1994 concerns maintenance and repair expenses, the claimed amount of which was $12,247.20.
8 The amount allowed was $9,567.20. An amount of $2,360 was not allowed because the Minister's officers were unable to determine from the vouchers the recipient of the amounts paid or the place and nature of the work. This information is necessary for the purpose of determining the taxpayers' taxes and because it makes it possible to determine whether the work was performed on the property and whether the repairs are of a current or capital nature.
9 An amount of $320 in salary to the caretaker was also disallowed because the receipt did not indicate the caretaker's address or social insurance number (“SIN”). On this last point, as the receipt was part of a list of receipts concerning the caretaker that were accepted for 1993, as the appellant Jacques Gener had provided the caretaker's SIN and as there was a failure to treat that last payment in the same way for 1994, the appellant Jacques Gener is entitled to claim this amount.
10 With respect to the vouchers in the amount of $2,360 which were filed with the Minister and which the Minister's officer filed together in Court as Exhibit I-2, it is my view that they did not provide the Minister with the necessary information in accordance with section 230 of the Income Tax Act (the “Act”).
11 Section 230 of the Act reads as follows:
230. (1) Every person carrying on business and every person who is required, by or pursuant to this Act, to pay or collect taxes or other amounts shall keep records and books of account (including an annual inventory kept in prescribed manner) at the person's place of business or residence in Canada or at such other place as may be designated by the Minister, in such form and containing such information as will enable the taxes payable under this Act or the taxes or other amounts that should have been deducted, withheld or collected to be determined.
12 On various occasions, in meetings they held with the appellant Jacques Gener, the Minister's officers asked him for additional information which they had to obtain, but without success. At the time of the hearing, the appellant Jacques Gener filed that same list with more details as Exhibit A-1, but some addresses were still missing, as were certain places and the description of the work. Whatever the case may be, it is my view that the filing of these details at this stage is not in compliance with the Act because the details are still incomplete and were filed too late to enable the Minister to generally determine the taxes payable under the Act.
13 The receipts presented to the Minister by the appellant and filed together as Exhibit I-2 did not enable the Minister to determine the taxes payable under the Act. The amounts recorded on those receipts therefore cannot be included in maintenance and repair costs.
14 The appeals are allowed without costs for 1993 and 1994 on the following basis:- for 1993, the appellant Jacques Gener is entitled to deduct 80 per cent of $1,129.00 and the appellant Liliane Gener 20 per cent of that same amount if she so wishes; the Minister shall subtract the amounts he has already allowed the appellant in respect of these automobile expenses from the product of .80 (80 per cent) × $1,129;
- for 1994, the appellant Jacques Gener is entitled to deduct 80 per cent of the caretaker's monthly salary of $320 and the appellant Liliane Gener 20 per cent of that same amount.
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