Anthony Mifsud v. Minister of National Revenue, [1978] CTC 2537, [1978] DTC 1408

The Chairman:—This is the appeal of Anthony Mifsud from an income tax assessment in respect of the 1973 and 1974 taxation years whereby the respondent disallowed amounts of $1,050 and $600 claimed by the appellant as travelling expenses in the pertinent taxation years.

The facts of this appeal, which are not in dispute, are summarized in paragraph 5 of the respondent’s reply to the notice of appeal as follows:

(a) in the 1973 and 1974 taxation years, the Appellant was a member of the International Brotherhood of Electrical Workers, Local Union No 120, a trade union which allocated his services from time to time among various employers;

(b) during the 1973 and 1974 taxation years, the appellant was employed as a construction worker by various employers at several work locations;

(c) the travelling expenses claimed by the appellant were incurred in commuting daily between his place of residence and his employer’s places of business;

The Evidence:

The appellant is a member of the International Brotherhood of Electrical Workers, Local Union No 120, residing in London, Ontario. The demand for electrical workers in London is sporadic and the appellant, at times, must leave his residence to obtain work in other cities situated between 50 and 75 miles away from London.

The appellant stated, confirmed by Mr Bev DuMaresq, the Business Manager of the IBEW local in London, that unemployed electrical workers would apply to the Business Manager of the London local for work. By agreement between various corporations in cities surrounding London and the various locals of the IBEW in these cities and by a further understanding between the London union local and the Unemployment Insurance Commission, unemployed electrical workers in London are referred to other union locals in various cities and then sent to the corporation where employment is available.

Such out-of-town employment has a duration of from two weeks to six months. It is alleged, that according to the agreement with UIC, an unemployed worker who refused to accept out-of-town employment could have his unemployment insurance benefits stopped.

The appellant submits that the temporary nature of out-of-town employments precludes him from moving to the temporary job sites and he must commute daily between his ordinary residence and his out-of-town job which could mean travelling between one-hundred and two-hundred miles a day.

It was stated by the appellant and confirmed by the union Business Manager, who represented the appellant, that no travelling allowances were paid by the union to its members for travelling to these out-of- town jobs and, of course, the corporations did not pay such expenses.

The amounts of $1,050 and $600 claimed by the appellant in 1973 and 1974 respectively are such travelling expenses. It was pointed out that unless these expenses were incurred to, get to, the job, the appellant would be out of work and should he refuse to accept out- of-town work he would lose his unemployment insurance benefits. It was evident that the appellant did not want to be unemployed but he could not understand why, in selling his services to various companies through his union local, he could not deduct travelling expenses which were allowed to salesmen and other workers.

several Interpretation Bulletins and some clauses of the collective agreement of the International Brotherhood of Electrical Workers were introduced as evidence. Reference was made to expenses paid by the Unemployment Insurance Commission to unemployed persons willing to work in distant cities where work was available and to the monies paid to unemployed persons in recycling them into trades where the labour market was better. The appellant concluded that in the absence of work in his trade in London, Ontario, his readiness to commute some 150 miles a day so as not to be unemployed justifies the deduction of his expenses travelling to out-of-town jobs to which he was assigned by his union local.

The problem raised by the appellant is readily understandable and no doubt experienced by many tradesmen, particularly in the construction industry. However, the Income Tax Act does not provide any relief for travelling expenses in the circumstances of this appeal.

Deductions of expenses is an exception to the principle of taxation of income and as such the sections of the Act permitting deductions must be interpreted restrictively.

paragraphs

The pertinent sections of the Income Tax Act are paragraphs 18(1)(a), 18(1 )(h), 8(1 )(h) and subsection 8(2).

Paragraph 18(1)(a) reads as follows:

(a) General limitation.—an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from the business or property;

The appellant does not meet the requirements of this subsection in that the expenses claimed were not incurred to produce income from a business or property.

Paragraph 18(1 )(h) reads as follows:

(h) Personal or living expenses—personal or living expenses of the taxpayer except travelling expenses (including the entire amount expended for meals and lodging) incurred by the taxpayer while away from home in the course of carrying on business;

Here again the subsection does not apply because it deals with expenses incurred in carrying on the taxpayer’s business.

Paragraph 8(1 )(h) reads as follows:

(h) Travelling expenses.—where the taxpayer, in the year,

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

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

(iii) was not in receipt of an allowance for travelling expenses that was, by virtue of subparagraphs 6(1)(b)(v), (vi) or (vil), not included in computing his income and did not claim any deduction for the year under paragraphs (e), (f) or (g).

amounts expended by him in the year for travelling in the course of his employment;

The Board cannot accept the appellant’s contention that the union local was his employer any more than it could consider that Unemployment Insurance Commission the employer of persons for whom employment is found. The appellant, albeit by referral from the union, applied for work at a given corporation and was hired and laid off by that employer. The appellant reported each working day at his employer’s place of business and was paid by the corporation. The appellant was not required to carry on his duties away from the employer’s place of business and therefore was not required to pay travelling expenses in the performance of his employment. Travelling to and from the employer’s place of business cannot be interpreted as having been done “in the performance of the duties of employment”. Expenses incurred for such travelling are personal expenses and are not deductible.

No section of the Income Tax Act permits the deductions for the travelling expenses claimed by the appellant and subsection 8(2) of the Income Tax Act prohibits any deductions not specifically permitted by the Act.

Subsection 8(2) reads as follows:

(2) General limitation. Except as permitted by this section, no deductions shall be made in computing a taxpayer’s income for a taxation year from an office or employment.

For these reasons the Board has no alternative but to dismiss the appeal.

Appeal dismissed.