Date: 20020823
Docket: 2002-71-IT-I
BETWEEN:
ARTHUR HISCOE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bowie J.
[1] Mr. Hiscoe appeals from reassessments for income tax for the 1998 and 1999 taxation years. The appeals were conducted under the Court's informal procedure.
[2] Mr. Hiscoe is a long distance transport truck driver. At the relevant time, he and his wife worked together driving a transport between California and Ontario. They were each limited by law to 10 hours driving per 24-hour day, and so they each drove five-hour shifts; after five hours driving they stopped and changed drivers, usually taking a meal at the same time. There were two bunk beds behind the seats in the cab, so that when not driving, they could sleep in the truck. However, they did also sleep in motels from time to time. Mr. Hiscoe's contract with his employer required him to pay for his own meals while away from home. When he slept in motels he was required to pay for the first night on each trip; the employer reimbursed him for the second and subsequent nights.
[3] The only issues in the appeals before me are as to the amounts that Mr. Hiscoe is entitled to deduct as expenses under paragraph 8(1)(g) of the Income Tax Act. That paragraph read:
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:
...
(g) where the taxpayer was an employee of a person whose principal business was passenger, goods, or passenger and goods transport and the duties of the employment required the taxpayer, regularly,
(i) to travel, away from the municipality where the employer's establishment to which the taxpayer reported for work was located and away from the metropolitan area, if there is one, where it was located, on vehicles used by the employer to transport the goods or passengers, and
(ii) while so away from that municipality and metropolitan area, to make disbursements for meals and lodging,
amounts so disbursed by the taxpayer in the year to the extent that the taxpayer has not been reimbursed and is not entitled to be reimbursed in respect thereof;
Whatever amount is established for meals under paragraph 8(1)(g) must be further limited by subsection 67.1(1).
67.1(1) For the purposes of this Act, other than sections 62, 63 and 118.2, an amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment shall be deemed to be 50% of the lesser of
(a) the amount actually paid or payable in respect thereof, and
(b) an amount in respect thereof that would be reasonable in the circumstances.
[4] Mr. Hiscoe claims the following:
Lodging: At the hearing of the appeals, he limited his claim to that for which he could produce receipts. He had no receipts at all for 1999, and so makes no claim. His receipts for 1998 total US$652.07. The Respondent's counsel challenged two of these on the basis that they were for consecutive nights, raising the inference that the Appellant was not working but on vacation for at least two of the nights in question. The Appellant's log books would have settled this issue, but he did not have them available at the hearing, and he was, understandably, unable to remember the specific occasions.
Meals: The Appellant's claim for meals is based on US$40 per day for 320 days in 1998 and for 250 days in 1999. In assessing him, the Respondent made the assumption that he worked away from home for only 196 days in 1999. This assumption was based on an examination of the Appellant's log books for 1999. Again, this dispute is capable of resolution through an examination of the Appellant's log books, which he did not bring to the hearing. The Respondent also disputes the Appellant's claim that he spent, on average, US$40 daily for meals while travelling in 1998 and 1999. The Respondent, through an Information Circular,[1] has taken the position that taxpayers must either keep a written record of the cost of each meal that they claim, or else be content with a deduction based on $11 per meal, which totals C$33 per day. This is only slightly more than one-half of the Appellant's claimed amount at the then prevailing exchange rate of C$1.50 = US$1.00.
[5] Additional Amount: The Appellant claims $6.00 per day for incidental expense while travelling. In evidence, he said that the reason for this claim is that on the days when he did not sleep in a motel, but in the cab, he paid US$5.00 per day to shower at truck stops. This, he says, amounts to C$7.50 per day. Under this head, he claimed $1,920 in 1998, but he made no claim in 1999. The Respondent's position is that the Act permits deductions only for meals and lodging, and so no additional amount for showers, or any other type of expense, can be deducted. The Appellant was not able to support this claim with receipts.
[6] Before I deal with the Appellant's specific claims, it will be appropriate to say a few words about the principles to be applied. First, it is for the Appellant to prove his claim. The Minister of National Revenue, in assessing, has allowed him deductions of $5,280 in 1998 and of $3,234 in 1999 for meals. He has allowed nothing for lodging. The Appellant is only entitled to deduct more than that if he can establish that he spent more than that. I agree with the following statement made by Garon J., as he then was, in Marcoux (D.) v. M.N.R., 91 DTC 485 at page 488:
With respect to meal expenses, no supporting documents were submitted, as I said earlier. I do not believe that the Income Tax Act requires that supporting documents be provided in respect of each expense item, particularly in cases where taxpayers spend most, if not practically all their time travelling on behalf of their employer. In the absence of a legislative provision requiring a receipt as a condition for deduction of an expense, we must rely on the general rules of evidence. I do not believe that the best evidence rule necessarily applies, in view of subsection 14(2) of the Tax Court of Canada Act. Nonetheless, the evidence must be strong enough for the Court to be firmly convinced.
[7] Second, I should make it clear that the Minister's counsel took the position not only that the Appellant had not proved the amount he spent for meals, but in the alternative, that any amount greater than C$33 per day does not pass the test of reasonableness imposed by subsection 67.1(1). Reasonableness, however, is not governed by the Minister's opinion, or even the Court's. The question to be asked is whether anyone in the Appellant's circumstances, acting reasonably, could pay the amount in question for meals.[2]
[8] Third, the Minister's counsel did not argue in the present case that the word "and" in subparagraph 8(1)(g)(ii) must be read conjunctively, so that no claim for meals can be made without a claim for lodging in respect of the same trip. For that reason, my recent decision in Crawford et al v. The Queen[3] has no application here.
[9] I turn now to the specific claims made by the Appellant. Mr. Hiscoe stated candidly that he had his log books for 1999 at home, but had not brought them with him to Court. Had he done so the matter of the number of days he worked away from his place of residence in 1999 would have been resolved. He has not discharged the onus of showing that he had more than 196 days away from home in 1999. There is no dispute that he is entitled to meals for 320 days in 1998.
[10] I accept the Appellant's evidence that he spent, on average, US$40 per day for meals in 1998 and 1999. While he could not recall every meal, nor be expected to, I believe his estimate to be reasonably accurate. Nor do I think it an unreasonable amount to have spent each day in 1998 and 1999. It is in line with US$40 allowed by Hamlyn J. in Dummitt v. The Queen, (unreported), and also with the decision of Sarchuk J. in Wilkinson v. The Queen, [2002] 2. C.T.C. 2662.
[11] The amounts to be allowed for meals therefore are:
For 1998: US$40 x 320 days x 50% = US$6,400 or C$9,600
For 1999: US$40 x 196 days x 50% = US$3,920 or C$5,880
[12] For lodging, the Appellant's receipts for 1998 total US$652.07 or C$978.10. This amount will be allowed. The fact that on two occasions the Appellant stayed for two consecutive nights in the same California municipality does not mean that he was not required to be away from home on any of those nights. There are several reasons why this could happen in the course of work. The Appellant suggested that he may have reached his limit of hours for that week. It does not surprise me that he was unable to recall, more than three years later, what were the specific reasons. Nor does the fact that one motel bill was paid by his wife's credit card lead me to believe that it was not an expense of the Appellant, and ultimately paid by him.
[13] Showers: The amount claimed is for 1998 only, and it is 320 x C$6 = C$1,920. This is less than the amount that the Appellant said that he paid for showers (320 x 5 x 1.5 = C$2,400). In my view, the word "lodging" must be taken to include within it all the constituent elements of what is commonly included in the meaning of that word. Those include not only the use of a room with a bed, but the bathing and toilet facilities that go with that room. The Appellant, when he was not staying in a motel, purchased the bathing and toilet component of lodging separately, and is entitled to a deduction for it. What is not known is the number of days during 1998 that he did not stay at a motel. His evidence was that on each trip he had to pay for the first night he stayed at a motel; thereafter his employer reimbursed him. As he made no attempt in his evidence to establish the number of nights that he was away from home and did not sleep in a motel, I have no evidentiary basis to support any estimate. As Garon J. put it, the evidence is not strong enough that I could be firmly convinced as to the correctness of any estimate of the number of nights.
[14] The Appellant is therefore entitled under paragraph 8(1)(g) to deduct, in total:
1998: Meals C$9,600.00
Lodging 978.10
Total C$10,578.10
1999: Meals C$5,880.00
Lodging Nil
Total C$5,880.00
The appeals are allowed, and the reassessments are referred back to the Minister for reconsideration and reassessment accordingly.
Signed at Ottawa, Canada, this 23rd day of August, 2002.
|
"E.A. Bowie" |
J.T.C.C.
COURT FILE NO.: 2002-71(IT)I
STYLE OF CAUSE: Arthur Hiscoe and Her Majesty the Queen
PLACE OF HEARING: Kitchener, Ontario
DATE OF HEARING: August 14, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge E.A. Bowie
DATE OF JUDGMENT: August 23, 2002
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Justine Malone
COUNSEL OF RECORD:
For the Appellant:
Name: N/A
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-71(IT)I
BETWEEN:
ARTHUR HISCOE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on August 14, 2002, at Kitchener, Ontario, by
the Honourable Judge E.A. Bowie
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Justine Malone
JUDGMENT
The appeals from reassessments of tax made under the Income Tax Act for the 1998 and 1999 taxation years are allowed and referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that in computing income, the Appellant is entitled to deduct for meals and lodging the amounts of $10,578.10 and $5,880, respectively, pursuant to paragraph 8(1)(g) of the Act.
Signed at Ottawa, Canada, this 23rd of August, 2002.
|
"E.A. Bowie" |
J.T.C.C.