Tax Court of Canada Judgments

Docket: 2003-2292(IT)I

BETWEEN:

LORI DALISAY,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

Appeal heard on December 16, 2003, at Edmonton, Alberta.

Before: The Honourable Justice Gerald J. Rip
Appearances:
For the Appellant:	The Appellant herself
Counsel for the Respondent:	Roxanne Baldwin, Student-at-Law Margaret Irving (conference call)

____________________________________________________________________

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 2001 taxation year is allowed, with costs, and the matter is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that Ms. Dalisay is eligible to carry forward her moving expenses from 2000.

Signed at Ottawa, Canada, this 6^th day of February, 2004.

"Gerald J. Rip"

Rip, J.

Citation: 2004TCC126

Date: 20040206

Docket: 2003-2292(IT)I

BETWEEN:

LORI DALISAY,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Rip, J.

[1]      The issue in this appeal is whether Ms. Lori Dalisay is entitled to deduct moving expenses in computing her income for 2001.

[2]      Prior to July, 2000, Ms. Dalisay and her husband resided and worked in St. John's, Newfoundland and Labrador. At the time, Ms. Dalisay secured employment in Regina, Saskatchewan with Praxair Canada Inc. ("Praxair"), a corporation carrying on business in various parts of the country. At Praxair, Ms. Dalisay stated, employees like her had the benefit of "mobility". In July, 2002 Ms. Dalisay moved from St. John's to Regina to work at Praxair's Regina facility.

[3]      In Regina, Ms. Dalisay and her husband moved into an apartment on a month-to-month lease because she had a "feeling [we] wouldn't be there long". The family's furniture was shipped to Regina. In the meantime, Ms. Dalisay's husband looked for, but could not find, employment in Regina. Ms. Dalisay and her husband decided to leave Regina. Praxair cooperated by transferring her to Edmonton, Alberta and, in October, 2000, Ms. Dalisay moved to Edmonton.

[4]      Ms. Dalisay's stay in Regina was seven weeks. Her eligible moving expenses to Regina were $14,930; she earned $4,462 from Praxair in Regina. Her eligible moving expenses, according to the Minister of National Revenue ("Minister"), of her move from Regina to Edmonton was $2,253. She earned $3,356 in Edmonton during 2000.

[5]      One of the facts the Minister assumed to be true when assessing was that Ms. Dalisay "did not earn any income in the 2001 Taxation Year from the New Work Location #1 [Regina] or New Work Location #2 [Edmonton]. At trial Ms. Dalisay acknowledged this to be true. However, in a subsequent conference call with Ms. Dalisay and counsel for the respondent, Ms. Margaret Irving, Ms. Dalisay stated that in fact she was not employed by Praxair in 2001 but, from February, 2001, was employed by another employer in Edmonton.[1]

[6]      The Minister allowed Ms. Dalisay to deduct $6,715 in 2000 as follows:

Location	Amount of Expense Incurred	Amount Allowed	Reason
Regina	$14,930	$4,462	Limited to income in Regina
Edmonton	$ 2,253	$2,253	Expense incurred in move from Regina to Edmonton.*

[7]      Ms. Dalisay claims that her move from St. John's to Regina and then to Edmonton was one move. There was no "permanence" in Regina and her stay there was "short".

"Eligible Relocation"

[8]      The position of the Minister is that Ms. Dalisay had two "eligible relocations"; one from St. John's to Regina and a second from Regina to Edmonton. The amount of moving expenses she may deduct is limited to her income in a work location or the amount of moving expenses, whichever is less, that is, the expenses from St. John's to Regina cannot exceed her employment income with Praxair in Regina, and the amount she may deduct with respect to her move from Regina to Edmonton is limited to her expenses moving to that city: subparagraph 62(1)(c)(ii) of the Income Tax Act ("Act"). She cannot carry forward her moving expenses between St. John's and Regina to take advantage of any employment income earned from Praxair in Edmonton.

[9]      Ms. Dalisay's work location, according to the Minister, was the place where she actually worked for Praxair. That is, her first "new work location" was Praxair's facility in Regina and her second "new work location" was Praxair's facility in Edmonton. Paragraph 62(1)(b) in effect permits a taxpayer to carry forward and deduct moving expenses in the year following the move but only if the taxpayer earned income in the "new work location" where she was employed as a result of her move.

[10]     Subsection 62(1) of the Act states that moving expenses incurred in respect of an "eligible relocation":

... may be deducted in computing a taxpayer's income for a taxation year amounts paid by the taxpayer as or on account of moving expenses incurred in respect of an eligible relocation, to the extent that

(a)         ...

(b)         they were not deductible because of this section in computing the taxpayer's income for the preceding taxation year;

(c)         the total of those amounts does not exceed

(i)          in any case described in subparagraph (a)(i) of the definition "eligible relocation" in subsection 248(1), the taxpayer's income for the year from the taxpayer's employment at a new work location or from carrying on the business at the new work location, as the case may be, and ...

[11]     The term "eligible relocation", as defined in subsection 248(1), means a relocation of a taxpayer where:

(a)         the relocation occurs to enable the taxpayer

(i)          to carry on a business or to be employed at a location in Canada (in section 62 and this subsection referred to as "the new work location"), ...

(b)         both the residence at which the taxpayer ordinarily resided before the relocation (in section 62 and this subsection referred to as "the old residence") and the residence at which the taxpayer ordinarily resided after the relocation (in section 62 and this subsection referred to as "the new residence") are in Canada, and

(c)         the distance between the old residence and the new work location is not less than 40 kilometres greater than the distance between the new residence and the new work location

except ...

[12]     One question before me is whether or not Ms. Dalisay was "ordinarily resident" in Regina within the meaning of paragraph (b) of the definition of "eligible relocation" in subsection 248(1) of the Act. Another question is what is "the new work location", as that term is defined in subsection 248(1) and applied in subparagraph 62(1)(c)(i) of the Act.

[13]     On the facts before me, I find that it is highly probable that Ms. Dalisay and her husband never settled in Regina. She had her doubts about Regina from the very beginning of the move. As a result, she and her husband rented an apartment on a month-to-month basis, realizing, I infer, that they may soon be leaving Regina. When Ms. Dalisay's husband could not find employment in Regina within a very short time, her doubts were confirmed and she decided to move. The appellant was never "ordinarily" resident in Regina. She had no settled routine of her life in Regina and it was not in the course of her customary mode of life.[2] Ms. Dalisay and her husband were searching for a place where they would be "ordinarily" resident and Regina was not it. Regina was a temporary "way-station" to a place Ms. Dalisay would "ordinarily" reside, Edmonton.[3] Her eligible relocation was from St. John's to Edmonton.

"The New Work Location"

[14]     The second problem before me is what does "the new work location" mean? The term "the new work location" refers to a relocation by a taxpayer that enables the taxpayer to carry on business or to be employed at a location in Canada: subsection 248(1). As previously stated, the Minister is of the view that the term "the new work location" means the actual business location, the actual place, the certain building or site where a taxpayer carries on business or is employed. Respondent's counsel relies on the Federal Court of Appeal's decision in Giannakopoulos v. M.N.R.[4]

[15]     The Federal Court of Appeal considered the definition of "the new work location" in subsection 62(1) of the Act, as that provision applied before 1998, to determine whether the distance between a taxpayer's "old residence and his new work location is not less than 40 kilometres greater than the distance between his new residence and his new work location" should be calculated along a straight line or along the shortest normal route.

[16]     I do not believe the Giannakopoulos case is of any assistance in deciding the appeal at bar. In Giannakopoulos, the Court was concerned with the measurement of length between specific points, an old residence, a new work location and a new residence.

[17]     The phrase "the new work location" is not to be interpreted with any rigidity. The words "to carry on a business or to be employed at a location in Canada" have a very broad meaning. The words allow for flexibility in interpretation depending on the facts. For example, if the term "new work location" in the context of the facts at bar refers to an actual business location only, then the taxpayer who moves to enable herself to carry on a business or to be employed at a location in Canada must remain employed at that actual business location until such time as her employment income earned at that site equals her moving expenses. Otherwise she will not have sufficient income to deduct the whole of her moving expenses. For example, if her employer becomes bankrupt or if she is fired from her job or she is forced to resign from her job or changes employment or starts a business and subsequently works at a different work site in this city, town or village, then, if the Crown is correct, she would not be permitted to deduct moving expenses from the income earned from her new employment or business. She would be bound to her original employer until her income earned from this employer equalled her moving expenses.

[18]     This could not have been the intent of Parliament. If a person moves from St. John's to Edmonton and immediately is employed by employer "A", it is not the purpose of tax legislation to force that person to remain in A's service of employment in order to get a tax deduction. So long as the person continues to work in Edmonton as an employee or in her business, moving expenses to get to Edmonton to work should be deductible from income earned from that employment or business.

[19]     The words "work location" and the phrase "the new work location" are elastic, depending on the context in which they are applied. When one "zooms in" on a map to find the location of a street address, one may first be directed to a province, then to a city, then to a district, then to a street, and finally to the address. Similarly, a person who works in Edmonton may inform a person of her work location depending where the person making the inquiry is from. If the person is from outside the country, she may describe her work location to be in Canada or Alberta. To someone in New Brunswick, she may tell them her work location is in Alberta or Edmonton; to someone in Alberta, she may describe her work location to be in Edmonton or in some area of Edmonton; but to an Edmontonian she may inform that person that her work location in a specific area of the city or volunteer the specific building or site. In all cases the person is describing her "work location". Therefore in Giannakopoulos, where a measure is required, the term must be restrictive. But on the facts before me, the term must have a wide connotation. When a person moves her employment from one city to another, the cities refer to different work locations and when one moves her employment from neighbourhood to neighbourhood, the neighbourhoods describe the different work locations. Ms. Dalisay relocated to Edmonton to enable herself to be employed at a location in Canada, that is, Edmonton, within the meaning of section 62 and subsection 248(1) of the Act. In the case at bar, when Ms. Dalisay changed her employment from St. John's to Edmonton, her new work location was Edmonton.

[20]     Although at trial Ms. Dalisay admitted the Minister's assumption of fact that she "did not earn any income in the 2001 Taxation Year" from her work location in either Regina or Edmonton, in the conference call she stated she was in fact employed in Edmonton in 2001 and earned employment income in that year. Subsection 62(1)(b) would permit her to carry forward her moving expenses from 2000 to 2001 but only if she earned employment or business income in Edmonton during 2001 and to the extent she earned such income. It is clear that Ms. Dalisay was employed in 2001 while in Edmonton, but not with Praxair. She is nevertheless eligible to carry forward her moving expenses from 2000 to 2001. As I have concluded, her "new work location" in 2000 and 2001 was Edmonton.

[21]     The appeal is allowed with costs, if any.

          Signed at Ottawa, Canada, this 6^th day of February, 2004.

"Gerald J. Rip"

Rip, J.

CITATION:

2004TCC126

COURT FILE NO.:

2003-2292(IT)I

STYLE OF CAUSE:

Lori Dalisay v. The Queen

PLACE OF HEARING:

Edmonton, Alberta

DATE OF HEARING:

December 16, 2003

REASONS FOR JUDGMENT BY:

The Honourable Justice Gerald J. Rip

DATE OF JUDGMENT:

February 6, 2004

APPEARANCES:

For the Appellant:

The Appellant herself

Counsel for the Respondent:

Roxanne Baldwin, Student-at-Law Margaret Irving (conference call)

COUNSEL OF RECORD:

For the Appellant:

Name:

Firm:

For the Respondent:

Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada

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