Date: 20000802
Docket: 1999-5132-IT-I
BETWEEN:
HALINA JURALOWICZ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bell, J.T.C.C.
ISSUE:
[1] The issue is whether the Appellant was entitled, in her 1994, 1995 and 1996 taxation years, to deduct motor vehicle expenses incurred in earning employment income. The amounts claimed are not in dispute. They are:
1994 $2,805
1995 $4,363
1996 $1,584
FACTS:
[2] The Appellant was, in those years, a social worker employed by the St. Leonard's Society. The round trip distance from her home to the Society's office was approximately 45 miles. She also worked for the Simon Fraser Society for Community Living.
She testified that she was involved in child care, providing special service to children in certain types of homes. She said that she dealt with five or six clients a day, driving from home to home, to courts, to social workers and to schools.
[3] She stated that she received no reimbursement of vehicle expenses unless she had a client in the car. She testified that she often simply went to a home to talk to a child and the family. She also said that she worked with "lots of clients" and did a "lot of driving" between clients' places.
[4] The Appellant testified that she wrote out, while in the car, the miles of travel and gave the notes to her husband who prepared the "Auto Log" summaries which were introduced as evidence. These showed the business mileage for which she was reimbursed, the business mileage for which she was not reimbursed and personal mileage.
[5] She also commented on the Respondent's assumptions found in the Reply to the Notice of Appeal. She said that the assumption that "the Appellant started work each day at the offices of the St. Leonard's Society ... in Burnaby" was incorrect. She stated that she started there only about three times each month. She said that if she was close to the office on a given day she might go in. She also said that she spoke to her superior by telephone from her home. She stated that the assumption that she "commuted an average total of 45 kilometres to and from work each day that she worked" was incorrect. She said that she only claimed mileage from one client to another one or one institution to another. She also said that the assumption that her "employer made her an allowance of 35 cents per kilometer" for vehicle use in the course of employment was incorrect, stating that she was only partially paid and did not claim for personal mileage. She did not include the allowance she received in her income.
[6] The salary received from St. Leonard's Society was as follows:
1994 $31,391
1995 $27,823
1996 $13,341
[7] On cross-examination the Appellant was asked about the following extract from her Notice of Objection:
"I begin my work at the offices of St. Leonard's Society in Burnaby, from that office I drive to my client's or to any other location where I am needed ... "
[8] She said that this was written by mistake. She explained that she had been in a car accident and couldn't write and that her daughter who wrote the Notice of Objection made the error. She also stated that in another letter to Revenue Canada she tried to explain that she did not start her daily work at the work place.
[9] A Revenue Canada appeals officer testified that her notes indicated the Appellant went to the office two or three times a week. The Appellant indicated that this information, apparently taken from a telephone conversation was inaccurate and that the visits were two or three per month.
[10] The Appellant also said, on cross-examination that she had two cars during the period under review.
[11] The Appellant was referred by Respondent's counsel to a DECLARATION OF CONDITIONS OF EMPLOYMENT attached to her 1994 income tax return. Question 7 asked whether she received "an allowance or a repayment of expenses paid to earn employment income". The response set out the amount of allowance per kilometer, the number of kilometers driven and the total amount. Question 9 asked whether the employee was "required to pay other expenses for which the employee did not receive any allowance or repayments". The response was "No". The Appellant explained that she understood this to mean that she was not required to pay for lunches for clients and did not stay in hotels outside the city.
[12] The Appellant testified that St. Leonard's knew what she was doing in her work and travels.
RESPONDENT'S POSITION:
[13] Respondent's counsel referred to section 8(1)(h.1) of the Income Tax Act (the "Act")[1]. It provides that a taxpayer may deduct:
(h.1) 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
[14] Paragraph 6(1)(b) provides that a taxpayer shall include in income as income from an office or employment all allowances received except "reasonable allowances for the use of a motor vehicle received by an employee ... from the employer for travelling in the performance of the duties of the office or employment."
[15] Counsel submitted that the foregoing two provisions had been interpreted by Judge Mogan of this Court[2] to mean that a taxpayer could not, under section 8(1)(h.1), deduct any amount if in receipt of an allowance under paragraph 6(1)(b) that was not included in income. However, that is not the case. It is apparent from reading his Reasons for Judgment with care, that the Appellant could not deduct the same expenses in respect of which she had received reasonable allowances. I accept the Appellant's evidence without compromise. She was impliedly required to use her automobile without reimbursement when not transporting a client. Such requirement was for the purpose of carrying on her duties of employment away from the St. Leonard's Society premises respecting which she would pay her own motor vehicle expenses. It is only logical that the Appellant could deduct motor vehicle expenses where she was required to carry on duties away from her employer's place of business when required to pay such expenses incurred in performing those duties when such duties were in addition to those for which she was reimbursed.
[16] The appeal will be allowed.
Signed at Ottawa, Canada, this 1st day of August, 2000.
"R. D. Bell"
J.T.C.C.