Date: 20001114
Docket: 1999-3974-IT-I
BETWEEN:
DEREK HOGG,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Campbell, J.
[1] The Appellant was appointed to Ontario Provincial Court, Criminal Division in 1984. For the last 4½ years, he has been the Administrative Judge in The East Mall Provincial Court, Etobicoke. This court is the "base" location. Exhibit A-1 was a letter dated February 9, 1999 from the Associate Chief Judge of the Court which confirmed that the Appellant was assigned to the base court location at The East Mall and such other locations as may be determined necessary for carrying out his judicial duties.
[2] He was in receipt of a non-taxable vehicle allowance and was paid when using his vehicle on a per kilometre basis for travel in excess of 15 kilometres when his duties required him to be away from the base court.
[3] The Appellant gave two reasons for the requirement of a vehicle to travel to and from his residence to his base court:
1. impossibility of public transit, i.e. the need for a vehicle during the day to travel to meetings, other courts, etc.
2. security issues.
[4] A number of exhibits were then introduced during the Appellant's evidence to support the security problems which the Appellant stated he encountered on a regular basis. These exhibits included newspaper commentaries and interviews on security problems, inter-office memos on break and enter problems and other security issues, occurrence report or synopsis of a bomb scare at the courthouse and transcript of evidence containing threats to the Appellant. The exhibits presented and the Appellant's evidence suggest that he is contending with safety issues on a daily basis. It would appear from the evidence that improvements have been made, many due to the continued flogging of the issue by the Appellant, but legitimate concerns still exist.
[5] These security problems according to the Appellant's evidence prevented the Appellant from using the public transit system in travelling from his residence to his base court location and return trip home again at the end of his work day. In addition, his evidence was that he required the car during his workday. The Appellant deducted $12,330.01 and $14,668.15 as other employment expenses respectively in the 1996 and 1997 taxation years. These expenses were comprised of accounting, legal and motor vehicle expenses, the deduction of which was disallowed. The Appellant and Respondent agreed during the hearing that the items of accounting and legal expenses being $422.65 and $5,371.40 respectively for the 1996 and 1997 taxation years were to be abandoned by the Appellant as part of his appeal.
[6] At issue then were the motor vehicle expenses claimed of $11,907.36 in the 1996 taxation year and $9,296.75 in the 1997 taxation year. These amounts were not specifically addressed by either the Appellant or Respondent except in clarification of the issues before me. Both counsel agreed that the issue of quantum and the issue of short distances driven between work locations (under 15 kilometres but not reimbursed by the employer) were not before the Court and that the only issue addressed in the pleadings was deductibility of motor vehicle expenses for travel from home to base court and return again at the end of a work day.
[7] I turn now to the statutory framework within which this issue is governed. Paragraph 3(1)(a) of the Income Tax Act, which provides the basic rules for computation of a taxpayer's income for a taxation year, includes income from an office or employment. The term "office" is defined in subsection 248(1) of the Act as:
"office" means the position of an individual entitling the individual to a fixed or ascertainable stipend or remuneration and includes judicial office, ... (emphasis added).
This section also defines the term "employment" as:
"employment" means the position of an individual in the service of some other person (including Her Majesty or a foreign state or sovereign) and "servant" or "employee" means a person holding such a position;
[8] Section 8 deals with amounts which may be applied in computing a taxpayer's income from an office or employment. The general prohibition against deducting amounts is contained in subsection 8(2) and states:
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. (emphasis added)
[9] The exceptions referred to in subsection 8(2) are contained in subsection 8(1). The applicable provisions under subsection 8(1) in respect to the present case are 8(1)(h), i.e. travel expenses and 8(1)(h.1), i.e. motor vehicle travel expenses. Paragraph 8(1)(h) states:
8. (1) In computing a taxpayer's income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:
...
(h) travel expenses – where the taxpayer, in the year,
(i) was ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places, and
(ii) was required under the contract of employment to pay the travel expenses incurred by the taxpayer in the performance of the duties of the office or employment,
amounts expended by the taxpayer in the year (other than motor vehicle expenses) for travelling in the course of the office or employment, except where the taxpayer
(iii) received an allowance for travel expenses that was, because of subparagraph 6(1)(b)(v), (vi) or (vii), not included in computing the taxpayer's income for the year, or
(iv) claims a deduction for the year under paragraph (e), (f) or (g);
(emphasis added)
[10] Paragraph 8(1)(h.1) states:
(h.1) motor vehicle travel expenses – where the taxpayer, in the year,
(i) was ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places, and
(ii) was required under the contract of employment to pay motor vehicle expenses incurred in the performance of the duties of the office or employment,
amounts expended by the taxpayer in the year in respect of motor vehicle expenses incurred for travelling in the course of the office or employment, except where the taxpayer
(iii) received an allowance for motor vehicle expenses that was, because of paragraph 6(1)(b), not included in computing the taxpayer's income for the year, or
(iv) claims a deduction for the year under paragraph (f);
[11] The leading case in this area is Ricketts v. Colquhoun, [1926] AC 1, which establishes the general rule that the expenses incurred by an employee in travelling to and from work are not deductible.
[12] Argument was presented by both the Appellant and the Respondent as to whether the Appellant was or was not employed pursuant to a contract of employment and consequently whether the travel expenses were required as a condition of employment. I find that the Appellant held an office - a judicial office, distinct from a contract of employment whether written or otherwise. Subsection 248(1) defines the term "office" separate and apart from the definition of "employment". The Appellant was not an employee whether pursuant to a contract, an arrangement or otherwise. He holds an office to which he has been appointed. I do not find anything in the Act that would treat an office any differently from a business in determining the issue before me.
[13] The law in this area has been well established since Ricketts. Travel expenses incurred in travelling between home and work are not deductible. They are personal expenses.
[14] The courts have consistently disallowed the deduction of such commuting expenses in the computation of income. They have been treated by the courts as expenses that enable a taxpayer to be available for employment but not as expenses incurred in the course of conducting one's work related duties. Arriving at one's work place, wherever its location, is necessary for every taxpayer in earning income but is not a deductible expense. The Appellant here has argued that security concerns dictate that he use a vehicle, not public transit, and that security concerns place him in an entirely different category from other employees.
[15] Although I agree with the Appellant's evidence and his counsel's submissions that it may be safer to commute to work in his own vehicle, I see no statutory basis for permitting the Appellant the deductions under appeal. The courts have distinguished between travel expenses incurred in the course of employment and commuting expenses to and from the work place. Commuting expenses have been consistently treated as personal or living expenses unless there is a requirement that the employee incur such costs and failure to do so would result in disciplinary action and potential loss of employment.
[16] R. v. E.E. Deimert, [1976] C.T.C. 301 (F.C.T.D.) reviewed this area and at page 306, Cattanach J. stated:
... it is well settled law that the expenses of travelling to work cannot be deducted from the remuneration received for performing the work for the purpose of computing taxable income. The distinction is between travelling on the taxpayer's work ... and travelling to his work.
And at page 311, Cattanach J. went on to state:
Here the defendant's journeys in his private automobile were not made for the employer's benefit, on its behalf, at its direction nor did the employer have any control over the defendant when he was making these journeys. The only interest that the employer had in the matter was that the defendant should be present at the appropriate time and place to begin the performance of his duties.
[17] During examination-in-chief of the Appellant, there was argument presented that security issues would be different in a city like London, Ontario versus a large centre like Toronto, Ontario. The Appellant stated that there were superior security measures at the Court House in London, Ontario for example from those in Toronto, Ontario. Whether superior security measures at a court house lessens the security risk in a judge's commuting travel or whether one city can be characterized as posing less of a security risk to a judge on size alone are not issues which this court has to decide or deal with.
[18] The decision to use his vehicle to get to his workplace, although guided by security concerns, was personal and therefore does not fall within the statutory framework of section 8. Subsection 8(10) requires T2200 forms to be completed by a taxpayer's employer and filed, otherwise amounts under section 8 are not to be deducted. Argument was presented by both Appellant and Respondent on the validity of these certificates. I agree with counsel for the Respondent that the correctness or incorrectness of this form is irrelevant but not based on her reasoning, which was that the form did not certify that the expenses were required. Rather, I base my conclusion on the fact that subsection 8(10) has no application to this case as I have determined the amounts claimed were not otherwise deductible under section 8.
[19] The appeal must be dismissed as the expenses, associated with travel from home to work and return at the end of the workday, are not deductible expenses in respect to his judicial "office" but are purely personal and do not fall within the ambit of the legislation. In dismissing this appeal, I am not in any way minimizing the security risks inherent in the Appellant's employment. It may well be that the responsibility for such reimbursement, however, lies with his employer.
[20] On a final note, although not relevant to my decision, I feel I must address several statements made by the Appellant in respect of reimbursement to other judges for such travel expenses. The Appellant stated that most judges were being allowed deductions for such travel expenses and therefore receiving differential treatment by Revenue Canada. Other than those vague references by the Appellant together with a letter dated February 21, 1997 (Exhibit A-1) and a letter in draft form and unsigned from "The Regional Senior Justice" to apparently each judge of the court (Exhibit A-13), there was no other evidence adduced on this point. The latter correspondence merely confirms that judges may be required to preside at other locations within the Province as are necessary to carry out judicial duties, and if so required, would be reimbursed at a certain rate for use of a personal vehicle, none of which would be included as a taxable benefit. This letter goes on to talk about travel from the base court, not the home. It is difficult for me to believe that on the basis of such a letter, some taxpayers are given preferential treatment. I am not required to make any conclusions on this point and I would be most surprised if such differential treatment was an existing practice. Moreover, even if it had been established that other taxpayers were treated differently from the Appellant, this is not a factor that is germane to the decision that this Court must make.
Signed at Ottawa, Canada, this 14th day of November 2000.
"Diane Campbell"
J.T.C.C.