Date: 20020314
Docket: 1999-4687-IT-I
BETWEEN:
DON J. WILKINSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
_______________________________________________
For the Appellant: The Appellant himself
Counsel for the Respondent: Lyle Bouvier
_________________________________________________
Reasonsfor Judgment
Sarchuk J.
[1] In computing income for the 1997 taxation year, the Appellant claimed expenses against employment income in the amount of $5,221.61. In reassessing the Appellant for that taxation year, the Minister of National Revenue (the Minister) reduced the Appellant's claim for employment expenses by $915.49 and assessed interest in the amount of $22.57. More specifically, the expenses disallowed were as follows:
|
Description |
Claimed |
Allowed |
Disallowed |
|
Meals |
$4,580.00 |
$3,778.50 |
$801.50 |
|
Power Inverter |
113.99 |
0.00 |
113.99 |
|
Other |
527.62 |
527.62 |
0.00 |
|
Total |
$5,221.61 |
$4,306.12 |
$915.49 |
[2] It is not disputed that during the 1997 taxation year, the Appellant was employed as a truck driver by Heyl Truck Line Inc. In performing his duties of employment, the Appellant was required to travel away from the municipality where the Employer's establishment was located for a period of 229 days during the 1997 taxation year. A portion of his travel was in the United States. The Appellant determined his claim for meals in the amount of $4,580 as follows:
229 days x $40.00 per day x 50% = $4,580
The Minister allowed the amount of $3,778.50 determined as follows:
229 days x $33.00 per day x 50% = $3,778.50
The only assumption pleaded by the Minister with respect to the foregoing was that "expenses claimed for meals in excess of the amount allowed were not reasonable in the circumstances".
[3] The amount of $113.99 claimed as an expense was in respect of the purchase of a power inverter which, according to the Minister was not deductible since it was an expenditure on account of capital.[1]
(Delivered orally from the Bench at
Winnipeg, Manitoba, on August 18, 2000)
HIS HONOUR: I want to ask counsel what the basis of the Minister's $33.00 per day is, other than it is so stated in an information guide?
MR. BOUVIER: There is no basis for the Minister's simplified method.
HIS HONOUR: But by pleading that it is an assumption that it is reasonable?
MR. BOUVIER: Correct.
HIS HONOUR: And the Minister now says, "I do not know that it is reasonable"?
MR. BOUVIER: No, Your Honour. Every year when they prepare the information for circulation to the general public, the Minister of National Revenue prepares guides to be circulated with your income tax returns.
HIS HONOUR: They obviously do not distribute them to the civil servants.
MR. BOUVIER: No.
HIS HONOUR: Now will you tell me why it is reasonable for the civil servants to be paid $48.00 a day for meals while somebody who has to go down to the States and buy meals there is limited to the amount of $33.00 (Canadian currency). Is that reasonable, Mr. Bouvier?
MR. BOUVIER: I cannot. I cannot come before this Court and say that one is reasonable and one is not.
All I can say is that the Minister's position in this case is that employment expenses are published in the employment expense guide and the amount determined in that year, by the Minister, to be reasonable was $11.00 a meal or $33.00 a day maximum.
I can't explain --
HIS HONOUR: And you do not disagree that I have the right to disagree with that?
MR. BOUVIER: No, I am not going to disagree with your right to disagree, of course.
HIS HONOUR: Quite frankly, it just boggles the mind that $33.00 would be considered to be sufficient when somebody has travelled (in this case, to the United States) and incurred costs, as was very aptly pointed out, you are paying a premium and it seems to me that that should be taken into account.
I mean $33.00 a day, I mean in the United States -- I do not think the Minister could eat on that.
MR. BOUVIER: No, and I can't say much. All I can state is the employment guide is published, for some reason they picked $33.00 for that taxation year and that's what truckers across the country have been claiming, the $33.00 a day.
HIS HONOUR: Well, they may start claiming more after this.
MR. BOUVIER: Well, they may start claiming more after this one.
They haven't, the government or the Minister of National Revenue hasn't put a regulation in the back of the Income Tax Act that would say, you know, "$33.00 a day is a prescribed rate", they haven't done that.
They have just included it in an employment expense guide.
Now there is no way that I can argue that --
HIS HONOUR: In all fairness, considering that the vast proportion of this appellant's travel is in the United States, I just do not see $33.00 per day as being nearly what I would call reasonable in the circumstances.
I am going to allow the appeal, as you may have gathered from my comments.
MR. BOUVIER: Yes. Well, I think enough is said.
HIS HONOUR: This is the same type of issue that I dealt with in a recent appeal when the Minister allowed 8 cents per kilometre[2] while paying the Department's own employees 35 cents, or whatever it is, per kilometre, to make the same trip, for the same purpose.
It just boggles the mind that these kinds of aberrations can occur.
MR. BOUVIER: Unfortunately, I had to argue that case in front of you.
HIS HONOUR: Yes, you did.
All right, the appeal is allowed.
MR. BOUVIER: With respect to the power inverter.
HIS HONOUR: Oh, yes, I need to hear you on the power inverter.
MR. BOUVIER: There is a power inverter expense of $113.00.
HIS HONOUR: Where is that deductible?
MR. BOUVIER: It's not a deductible expense under section 8(1).
HIS HONOUR: I want to hear from you or your wife on where in the Income Tax Act you can find a section that permits an employee to deduct a power inverter.
MR. WILKINSON: It states in the letter from the Minister, if it's in the Act I'm not sure, that an employee going to work will not be required to pay out of pocket expense for things that cost him to go to work.
HIS HONOUR: What section?
Show it to counsel.
MRS. WILKINSON: He's got a copy of it.
MR. WILKINSON: He has a copy already, Your Honour.
HIS HONOUR: What is the reference to, Mr. Bouvier?
MR. BOUVIER: It's actually a letter from The Honourable Paul Martin to Mr. Don Wilkinson, setting out why he shouldn't be allowed more than $33.00 a day.
MR. WILKINSON: Mr. Martin, in his letter, states that --
HIS HONOUR: Let me see it, rather than you paraphrasing it.
I do not see anything here so far. What is it that you are specifically referring to?
MR. WILKINSON: "In the private sector travelling and other business expenses incurred in the course of carrying out their ..."
MRS. WILKINSON: It's page 2.
HIS HONOUR: One at a time, please. What are you reading now?
MR. WILKINSON: I'm reading out of the letter from Paul Martin.
HIS HONOUR: This one?
MR. WILKINSON: Yes.
MRS. WILKINSON: Page 2.
MR. WILKINSON: Page 2.
HIS HONOUR: Paragraph?
MR. WILKINSON: Paragraph 5.
HIS HONOUR: Yes?
MR. WILKINSON: "In the private sector travelling and other business expenses incurred in the course of carrying out their duties are not expected to be paid with taxable personal income. The pay and benefits arranged for members reflect ..."
HIS HONOUR: My only comment to Mr. Martin is where in the Income Tax Act does he find that power inverters are deductible?
This is just a -- I hate to put it bluntly, but I will, this is a politician's letter, it has nothing to do with the Income Tax Act. It will get the --
MR. WILKINSON: It seems that --
HIS HONOUR: I will give it the weight it deserves.
MR. WILKINSON: That's where we have a problem when we're filling out our income tax, because they have all these policies and they have this and they have that and --
HIS HONOUR: Counsel, what is your position on the power inverter again?
MR. BOUVIER: There is no section in the Income Tax Act that would allow an employee to deduct the expense of a power inverter, quite simply put.
HIS HONOUR: Employee deductions, you find them in section what, 8?
MR. BOUVIER: Section 8.
HIS HONOUR: And section 6 and they are all listed there in detail and if they are not in that section they are not deductible, it is as simple as that.
That may be a hard and cold statement, but as you heard me say to the previous witness, unless there is a specific section that provides for a deduction for a class of items or whatever it might be, you are not entitled to deduct it from income, it is just as simple as that.
You win your case on the meals, you lose it on the power inverter.
Signed at Ottawa, Canada, this 14th day of March, 2002.
"A.A. Sarchuk"
J.T.C.C.
COURT FILE NO.: 1999-4687(IT)I
STYLE OF CAUSE: Don J. Wilkinson and
Her Majesty the Queen
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: August 18, 2000
REASONS FOR JUDGMENT BY: The Honourable Judge A.A. Sarchuk
DATE OF JUDGMENT: August 24, 2000
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Lyle Bouvier
COUNSEL OF RECORD:
For the Appellant:
Name: N/A
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada