[OFFICIAL ENGLISH TRANSLATION]
97-3669(IT)I
BETWEEN:
JACQUES SIMONEAU,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on October 9, 1998, at Sherbrooke, Quebec, by
the Honourable Deputy Judge D. R. Watson
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: S. Morin
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1994 taxation year is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 16th day of October 1998.
|
"D. R. Watson" |
D.J.T.C.C.
Translation certified true
on this 9thday of July 2003.
Sophie Debbané, Revisor
[OFFICIAL ENGLISH TRANSLATION]
Date: 19981016
Docket: 97-3669(IT)I
BETWEEN:
JACQUES SIMONEAU,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Watson, D.J.T.C.C.
[1] This appeal was heard under the informal procedure at Sherbrooke, Quebec, on October 9, 1998.
[2] For the 1994 taxation year, the appellant claimed $770 in moving expenses. Then, on September 18, 1996, he asked the Minister of National Revenue (''the Minister'') to adjust his moving expenses deduction from $770 to $34,595 following the sale of his old residence. The appellant has appealed from the Minister's decision; in a July 28, 1997, Notice of Reassessment, the Minister informed the appellant of his decision that expenses totalling $22,395 for maintenance of his old residence in the 1994 taxation year were not allowable.
[3] In making this reassessment, the Minister relied on the following assumptions of fact, inter alia:
[translation]
(a) on September 9, 1994, the appellant moved from Kingston, Ontario, to Waterloo, Ontario, to hold new employment;
(b) the distance between these two locations is 350 kilometres;
(c) in his income tax return for the 1994 taxation year, the appellant claimed $770 in moving expenses;
(d) in a September 18, 1996, letter, the appellant asked the Minister to adjust his moving expenses deduction from $770 to $34,595 following the sale of his old residence;
(e) these expenses were broken down as follows:
Maintenance Expenses for Residence
Municipal taxes $2,507
Water taxes $125
Electricity $777
Natural gas $749
Mortgage $9,788
Mortgage insurance $268
Mortgage administration costs $125
Alarm system $244
Travel for maintenance $7,812
Other expenses
Commission on sale of residence $10,700
Sale costs $622
Temporary accommodation $438
Meals $223
Travel costs $217
Total expenses $34,595
(f) expenses totalling $22,395 for maintenance of the appellant's old residence were not allowable as moving expenses.
[4] At the hearing, the appellant admitted the truth of all the assumptions of fact except the one set out in paragraph (f).
[5] At issue is whether the expenses claimed were direct consequences of the relocation and whether they were selling costs in respect of the June 1995 sale of the appellant's old residence.
[6] The appellant based his arguments on this Court's decisions in McLay v. Minister of National Revenue (M.R.N.), 92 D.T.C. 2260, and Graham v. Her Majesty the Queen, [1997] T.C.J. No. 176 (Q.L.); the respondent, on the other hand, relied on the Federal Court of Appeal decision in Séguin v. Canada, [1997] 97 D.T.C. 5457.
[7] Paragraph 62(3)(e) of the Income Tax Act (''the Act'') reads as follows:
Definition of "moving expenses"
62(3) In subsection (1), "moving expenses" includes any expense incurred as or on account of
...
(e) the taxpayer's selling costs in respect of the sale of the old residence,
[8] In its decision in Graham, supra, this Court specified that the purpose of paragraph 62(3)(e) of the Act was to relieve taxpayers' tax burden where there is duplication of expenses following a move, and it accepted claimed expenses relating to the sale of the old residence for insurance, taxes, mortgage interest, and electricity over a six-month period. The Court points out that in Séguin, supra, Desjardins J. A. of the Federal Court of Appeal disposed of this issue as follows, at pages 5458 and 5459 (French text):
Although the purpose of the provision is no doubt to encourage mobility of employment, and the enumeration in subsection 62(3) of the Act is not exhaustive, as is indicated by the use of the verb "includes" ("comprend") in that section, since its purpose is not to cover all possible moving expenses, we do not think section 62 as a whole can be read as it was by the tax court judge.
What section 62 allows, within its first subsection, is a deduction by the taxpayer of the amounts
62(1) ... paid by him as or on account of moving expenses incurred in the course of moving from his old residence to his new residence
According to the ordinary meaning of the words used, the provision includes those expenses incurred for physically moving, changing one's residence, and certain other expenses directly related to the actual move and resettlement, and not some amount intended to compensate for accessory damages that are unrelated to the actual move to and resettlement in the new residence.2 Thus, it excludes the interest expenses on the old residence that do not pertain directly to the physical move of the taxpayer and his family, but instead pertain to the bank loan he took out on his old residence.
[9] The burden of proof was on the appellant to establish that the July 28, 1997, reassessment was unfounded in fact and in law.
[10] I am convinced that the expenses claimed by the appellant for maintenance of the old residence for the period from the moving date in September 1994 to the selling date of the old residence in June 1995 are not ''selling costs in respect of the sale of the old residence''.
[11] Therefore, the appeal is dismissed.
Signed at Ottawa, Canada, this 16th day of October 1998.
|
"D. R. Watson" |
D.J.T.C.C.
Translation certified true
on this 9thday of July 2003.
Sophie Debbané, Revisor