Date: 20020523
Docket: 1999-2399-IT-I
BETWEEN:
PATRICK J. FARDEAU,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Bowman, A.C.J.
[1] These appeals are from assessments for 1995, 1996 and 1997. They involve the disallowance of moving expenses and employee expenses. For 1995 no evidence was adduced and so the appeal for that year must be dismissed. For 1997 no notice of objection was filed and therefore the appeal for the year will be quashed.
[2] This leaves 1996. The appellant is an RCMP officer who was moved from British Columbia to the province of Quebec in 1996. He was reimbursed for most of his expenses but there were some amounts claimed for which he did not receive payment. Also, he claims $873.31 under subparagraph 8(1)(i)(iii) of the Income Tax Act.
[3] I shall deal first with the claim for moving expenses under section 62 of the Act. Exhibit A-3 sets these amounts out as follows:
MOVE
fridge 682.59
Van lines 2450.00
Unpacking 600.00
Rcmp misc 1880.12
Total2 5588.71
[4] The expression "moving expenses" in section 62 means amounts actually spent or incurred. It does not include the cost of goods damaged or lost by the moving company. The fridge was either damaged or lost and the $682.59 appears to be the cost of purchasing a new fridge. The $2,450 under Van lines represents the difference between the $3,500 claimed by the appellant from the RCMP for damage to various items that was sustained in the move and the amount of $1,050 paid to him by the RCMP. I do not think either of these items are "moving expenses" within the meaning of section 62.
[5] Under the item RCMP misc. the sum of $1,880.12 represents the difference between $2,128.80 shown on Exhibit A-2 as amounts refused by the RCMP and the amount of $248.68 (repas pour 5 personnes). A portion of these amounts appears to have been reimbursed as "montants forfaitaires". They include cablevision, Bell Canada, the cost of a course in karate, house plants that had to be left in British Columbia and a variety of other items. Whether the RCMP ought to have paid these amounts is not something I can or should decide, but they are not moving expenses.
[6] The final item of $600 for unpacking is simply for the appellant's own time which he estimates at 36 hours. This is not an expense at all and in any event the appellant received an additional 1/12 of his salary to compensate him for this according to the evidence of Ms. Isabelle Guilbault.
[7] The other part of the appellant's claim for a deduction is certain expenses which he says fall under subparagraph 8(1)(i)(iii). They are:
RCMP WORK
Shirts 92.18
Socks 15.16
Gloves 27.42
Ties 11.80
Tie tacks 06.97
Cell 474.80
Pager 244.98
Total 1 873.31
[8] Subparagraph 8(1)(i)(iii) permits the deduction of amounts paid by the taxpayer in the year as
(iii) the cost of supplies that were consumed directly in the performance of the duties of the office or employment and that the officer or employee was required by the contract of employment to supply and pay for.
In French the provision reads
(iii) du coût des fournitures qui ont été consommés directement dans l'accomplissement des fonctions de la charge ou de l'emploi et que le contrat d'emploi du cadre ou de l'employé obligeait à fournir et à payer.
[9] Some of the conditions are obviously met. The appellant paid the amounts in question and he was required to supply and pay for them under his contract of employment. Two questions remain: are the items listed above "supplies" and are they "consumed directly in the performance of the duties of the office or employment" of the appellant? If they were "consumed" within the meaning of the subparagraph they obviously were consumed directly in the execution of his duties.
(a) Are they supplies?
[10] The matter was considered in the Exchequer Court in the context of paragraph 11(10)(c) of the former Income Tax Act in Luks [No. 2] v. M.N.R., 58 DTC 1194 at 1198-1199, where Thurlow, J. (as he then was) said
"Supplies" is a term the connotation of which may vary rather widely, according to the context in which it is used. In s. 11(10)(c) it is used in a context which is concerned with things which are consumed in the performance of the duties of employment. Many things may be consumed in the sense that they may be worn out or used up in the performance of duties of employment. The employer's plant or machinery may be worn out. The employee's clothing may be worn out. His tools may be worn out. And materials that go into the work, by whomsoever they may be provided, may be used up. "Supplies" is a word of narrower meaning than "things", and in this context does not embrace all things that may be consumed in performing the duties of employment, either in the sense of being worn out or used up. The line which separates what is included in it from what is not included may be difficult to define precisely but, in general, I think its natural meaning in this context is limited to materials that are used up in the performance of the duties of the employment. It obviously includes such items as gasoline for a blow torch but, in my opinion, it does not include the blow torch itself. The latter, as well as tools in general, falls within the category of equipment.
...
The tools which the $44.34 was spent to replace included a blow torch, screw drivers, pliers, and a chalk line, all of which were items which the appellant was bound by the contract to provide, and on the evidence it may also have included some small items which the employer was bound by the contract to provide. There was evidence that a blow torch can be expected to last more than a year, that screw drivers and pliers are of uncertain duration, sometimes requiring replacement in the course of a year and sometimes more often, and that a chalk line is a type of thing that is used up completely in the course of a year. There was no evidence, however, as to when any of these items, or for that matter any other tools which the appellant was required by the contract to provide and which were included in the $44.34, in fact ceased to be useful.
In this situation, the appellant's claim to deduct the $44.34 fails on two grounds.
The first is that, regardless of how long they may last while in use or how often may be necessary to replace them, the articles mentioned as having been included in the $44.34, as well as the other articles which, under the contract, the appellant was required to provide were all tools falling within the general category of equipment, and in my opinion none of them can properly be regarded as "supplies" within the meaning of that term as used in s. 11(10)(c).
Secondly, even assuming that the tools purchased with the $44.34 were supplies of the kind contemplated by s. 11(10)(c) it has not been established that they were consumed or worn out in the performance of the duties of any of three employments in which the appellant was engaged in 1954. Nor was it established that they were consumed or worn out by the end of 1954. For aught that appears, they may not yet be worn out or consumed.
The language of s. 11(10)(c) is definite in limiting the deduction to the cost of supplies "that were consumed" in performing the duties of the employment. In the French text, it is perhaps even more definite, for the expression there used is "qui ont été consommées." In order to succeed in obtaining the deduction, the taxpayer must show that the amount sought to be deducted meets the requirement. It is not difficult to see how readily it can be met when supplies such as gasoline for a blow torch are involved, for if a record is kept the taxpayer will know how much of the commodity was consumed in the year, but difficulty will inevitably be experienced in attempting to apply this limitation in the case of tools, and this confirms me in the opinion already expressed that tools are not supplies at all within the meaning of the subsection. For the present purpose, however, it is sufficient to say that the claim for the deduction is defeated by the failure to show that the tools purchased with the $44.34 were consumed in performing the duties of the employment.
[11] A number of the cases in this court were reviewed by Bell, J. in Cuddie v. R., [1998] 3 C.T.C. 2232. His very useful summary of the cases is reproduced in part below:
8 In Thibault v. Minister of National Revenue (1986), 86 D.T.C. 1542 (Eng.) (T.C.C.), this Court determined that clothing could be considered to be "supplies" but could not be "consumed". In Komarniski v. Minister of National Revenue (1980), 80 D.T.C. 1134 (T.R.B.) this Court determined that tools were not "supplies" but were equipment, the cost of which was not deductible. Judge Tremblay referred to the case of Luks v. Minister of National Revenue (1958), 58 D.T.C. 1194 (Can. Ex. Ct.) in which Thurlow, J., then a Judge of the former Exchequer Court of Canada, in discussing the distinction between "supplies" and "equipment" said,
[... reproduced above]
9 In Brownlee v. Minister of National Revenue (1978), 78 D.T.C. 1571 (T.R.B.), this Court determined that the word "supplies" did not include items of individual dress such as a police officer's uniforms. It determined that the uniforms were not "consumed" in the normal comprehension of that term. It went further and said that even if the uniforms were "supplies that were consumed", they were not "consumed" directly in the performance of the duties of the office or employment. The foregoing positions are confirmed in McLeavy v. Minister of National Revenue (1954), 54 D.T.C. 136 (Can. Tax App. Bd.) and Drobot v. Minister of National Revenue (1987), 87 D.T.C. 371 (T.C.C.).
10 The submissions made by the Appellant Cuddie were logical, and in the circumstances described by him, well based. I have no doubt, from my appraisal of him, about his sincerity and about his credibility. However, the statutory test that must be met is strict. The legislature, in using the words "supplies that were consumed" posed a firm requirement for deduction. The New Shorter Oxford English Dictionary defines "consume" as,
That has been consumed.
and defines consumed, inter alia, as
Destroyed by or like fire or (formerly) disease; cause to vanish (away), as by evaporation.... Use, so as to destroy; take up and exhaust; use up.... Eat up, drink down; devour.
11 The expenses incurred by the Appellants simply did not result in supplies being consumed. Accordingly, the appeals are dismissed.
[12] There is no unanimity in this court on the question whether such things as shirts, socks and other similar items are supplies. We are not talking about tools here. We are talking about shirts and socks that wear out. With respect I think it is time to reconsider the approach of Thurlow, J. in Luks. While it might be right for tools it may be unrealistically narrow for shirts, socks and boots in the context of modern employment practices. Such things as clothing are certainly supplies. In Thibault v. M.N.R., 86 DTC 1542, Tremblay, J. after referring to the dictionary definitions held that clothing fell within the term "supplies". I agree. He was, however, of the view that clothing was not "consumed". I shall deal with this second point below.
[13] In Le Petit Robert 1 Dictionnaire alphabétique et analogique de la langue française "fourniture" is defined as follows:
◆1 ° Action de fournir. Être chargé de la fourniture des vivres, du fourrage. V. Approvisionnement, livraison. ◆2 ° Ce qu'on fournit, ce qu'on livre (généralement au plur.). V. Provision. On trouve dans cette librairie toutes les fournitures scolaires. ◊Spécialt. Ce que fournissent, en dehors de la matière principale, les artisans à façon tels que tailleurs, couturiers, tapissiers. Il m'a pris tant pour la façon et tant pour les fournitures. — Dr. comm. Livraisons faites par des commerçants à des non-commerçants, pour des besoins non commerciaux. ◆3 ° Cuis. Fines herbes que l'on mêle à la salade. V. Assaisonnement.
[14] In the Multi-Dictionnaire de la langue lrançaise (Québec Amérique) "fourniture" is defined as follows:
1. Approvisionnement. La fourniture de bois. SYN. livraison.
2. (GÉN. AU PLUR.) Petit materiel spécialisé. Des fournitures scolaires, des fournitures de bureau. SYN. accessoires.
(b) Are they "consumed"?
[15] I think, adopting a teleological approach to the interpretation of this provision, it seems obvious that items of clothing that have to be worn by a police officer as part of his or her job are supplies that are consumed. If one steps back and asks what sort of employment expenses is subparagraph 8(1)(i)(iii) aimed at it seems the items of clothing that RCMP officers have to supply and pay for out of their own pockets are precisely what the subparagraph is intended to cover. No purpose is served by adopting a narrow and technical interpretation where ordinary common sense requires a different conclusion. Consumed is a word of some elasticity. The Oxford English Dictionary ("OED") has three quarters of a page of definitions of consume. It is true that some of the definitions carry a connotation of destruction (as by fire) devouring (as by eating) or spending (as in the case of money). I do not however think there is any justification for requiring that there be instant annihilation. Consumption can be gradual. Perhaps one cannot consume a hammer but it does no violence to language to say that one consumes items of clothing by wearing them out. Indeed, one of the definitions of consume in the OED is:
d. To wear out by use.
1878 HOOKER & BALL Marocco 156 The thin slippers universally used by the people are very soon consumed.
[16] What of the monthly cost of the pager and cell phone? Certainly those services are "supplies". Just as obviously they are consumed.
[17] Interpretation Bulletin IT-352R2 draws a distinction between the cost of
(d) telegrams, long-distance telephone calls and cellular telephone airtime that reasonably relate to the earning of employment income.
which it says is deductible under subparagraph 8(1)(i)(iii) and the cost of
(a) the monthly basic service charge for a telephone line;
(b) amounts paid to connect or licence a cellular telephone;
which it says is not.
[18] I suppose that in dealing with income tax matters we should be used to drawing subtle distinctions but this distinction is a little too subtle for me. Indeed, it makes no sense whatever. If, as here, the officer has to supply his own cellular phone and use it in the course of his duties the monthly service charge is as much a cost of a service that is supplied as is the cellular telephone airtime.
[19] The appeal for 1995 is dismissed and the appeal for 1997 is quashed. The appeal for 1996 is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment to allow the deduction under subparagraph 8(1)(i)(iii) of $873.31.
Signed at Ottawa, Canada, this 23rd day of May 2002.
"D.G.H. Bowman"
A.C.J.
COURT FILE NO.: 1999-2399(IT)I
STYLE OF CAUSE: Between Patrick J. Fardeau and
Her Majesty The Queen
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: April 3, 2002
REASONS FOR JUDGMENT BY: The Honourable D.G.H. Bowman
Associate Chief Judge
DATE OF JUDGMENT: May 23, 2002
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Annick Provencher
COUNSEL OF RECORD:
For the Appellant:
Name: --
Firm: --
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
1999-2399(IT)I
BETWEEN:
PATRICK J. FARDEAU,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on April 3, 2002, at Montréal, Quebec, by
The Honourable D.G.H. Bowman, Associate Chief Judge
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Annick Provencher
JUDGMENT
It is ordered that the appeal from the assessment made under the Income Tax Act for the 1995 taxation year be dismissed
It is further ordered that the appeal from the assessment made under the Income Tax Act for the 1996 taxation year be allowed and the assessment be referred back to the Minister of National Revenue for reconsideration and reassessment to allow the deduction under subparagraph 8(1)(i)(iii) of $873.31
It is further ordered that the appeal from the assessment made under the Income Tax Act for the 1997 taxation year be quashed.
Signed at Ottawa, Canada, this 23rd day of May 2002.
|
"D.G.H. Bowman" |
A.C.J.