Date: 20020430
Docket: 2001-3676-IT-I
BETWEEN:
WAYNE BARCLAY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Beaubier, J.T.C.C.
[1] This appeal pursuant to the Informal Procedure was heard at Kelowna, British Columbia on April 12, 2002. The Appellant was the only witness.
[2] Paragraphs 2 to 9 inclusive of the Reply set out the matters at issue. The read:
2. The Minister of National Revenue (the "Minister") initially assessed the Appellant for the 1996 and 1997 years by Notices dated May 27, 1997 and May 4, 1998, respectively.
3. In computing income for the 1996 and 1997 taxation years, the Appellant reported net business income from Quik X Transportation Inc. ("Quik X"), of $24,857.00 and $23,709.00 respectively.
4. The Minister subsequently reassessed the Appellant to disallow expenses claimed against business income in the amounts of $23,410.00 and $9,508.00 for 1996 and 1997 respectively (the "Expenses"), on the basis that he was an employee of Quick X.
5. In so reassessing the Appellant, the Minister relied on the following assumptions:
a) the Appellant was an employee of Quik X in 1996 and 1997 and he had no business source of income relating to Quik X in these years;
b) the Appellant was employed in connection with the negotiating of contracts for Quik X and was remunerated in whole or in part by commissions or other similar amounts;
c) under his contract of employment with Quik X the Appellant was not required to pay his own expenses;
d) the Appellant was not ordinarily required to carry on the duties of his employment away from Quik X's place of business;
e) most of the Appellants' duties were performed at Quik X's place of business;
f) the Appellant's home was not a place where he principally performed his duties of employment with Quik X; and
g) the Appellant's home was not used on a regular and continuous basis for meeting customers or other persons in the ordinary course of performing his duties of the employment with Quik X.
B. ISSUES TO BE DECIDED
6. The issue is whether the Appellant is entitled to deduct the Expenses in 1996 and 1997.
C. STATUTORY PROVISIONS RELIED ON
7. He relies on sections 4, 9 and 18 and paragraphs 8(1)(f) and 8(13)(a) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), as amended (the "Act").
D. GROUNDS RELIED ON AND RELIEF SOUGHT
8. He submits that the Appellant was employed by Quik X as an employee in 1996 and 1997, and did not have a business source of income relating to Quik X in those years. Therefore, he is not entitled to deduct the Expenses as deductions from business income.
9. He further submits that the Appellant is not entitled to deduct the Expenses as deductions from his employment income from Quik X as his contract of employment did not meet the conditions necessary for deduction as required by subparagraphs 8(1)(f)(i) and (ii) and paragraph 8(13)(a).
[3] Assumptions 5 a), b) and e) are correct respecting Quik X. The Appellant was a brokerage salesman contacting shippers to ship loads and truckers to haul loads. He was not provided any expenses and was paid $500 per week plus a percentage of the business done by Quik X for 1996 and until March 31, 1997 when he left Quik X. All of the assumptions and the cross examination relate to Quik X. Respecting the remaining assumptions; in order: c) the Appellant needed his own car for contact purposes and bought gifts and meals for some customers; d) the Appellant was ordinarily required to carry on the duties of his employment away from his place of business, although not all of the time - most of the time he worked by phone out of Quik X's office; e) the Appellant did after hours work regularly and ordinarily throughout the week away from the office and was 24 hour duty every third weekend from his home; f) is true, but he ordinarily performed various duties of work at and from his home in the nature of the job; and g) is true insofar as meeting customers is concerned, however the great majority of customer contact was by phone or by the Appellant travelling in his car to meet customers.
[4] Thus for 1996 and until March 31, 1997, the Appellant was an employee of Quik X. The Appellant followed Quik X's instructions in filing his income tax return. When he was reassessed he filed a form T-2200 for all of 1996 and for January to March 31, 1997 duly signed by an authorized person of Quik X (Exhibit A-1). Based upon the evidence in Court, these T-2200's are correct and for those times, the Appellant is to be assessed in accordance with the contents of those T-2200's for those two periods.
[5] With respect to the period April 1 to December 31, 1997, the assumptions, which relate to Quik X, do not apply since the Appellant was no longer with Quik X. The Appellant testified that he was a contractor from April 1 to December 31, 1997 and his accountant filed an amended statement of business activity and expenses for that period (Exhibit R-4). The appeal is allowed for that period on the basis that the Appellant is entitled to deduct business expenses claimed pursuant to Exhibit R-4.
Signed at Saskatoon, Saskatchewan, this 30th day of April, 2002.
"D. W. Beaubier"
J.T.C.C.
COURT FILE NO.: 2001-3676(IT)I
STYLE OF CAUSE: Wayne Barclay v. The Queen
PLACE OF HEARING: Kelowna, British Columbia
DATE OF HEARING: April 12, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge D. W. Beaubier
DATE OF JUDGMENT: April 30, 2002
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Michael Taylor
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada