Docket: 2005-3722(IT)I
BETWEEN:
OLIVIA McANDREW,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
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Appeal heard on May 3 and 5, 2006 at Vancouver, British Columbia
By: The Honourable Justice Judith Woods
Appearances:
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Agent for the Appellant: |
Graham C. Thody
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Counsel for the Respondent: |
Max Matas, student-at-law |
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JUDGMENT
It is ordered that the appeal in respect of assessments made under the Income Tax Act for the 2001 and 2002 taxation years is dismissed.
Signed at Ottawa, Canada, this 30th day of June, 2006.
"J. Woods"
Woods J.
Citation: 2006TCC379
Date: 20060630
BETWEEN:
and
Respondent.
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REASONS FOR JUDGMENT
Woods J.
[1] The appellant, Olivia McAndrew, appeals assessments made under the Income Tax Act for the 2001 and 2002 taxation years. In the assessments the Minister of National Revenue increased the amount of taxable benefits arising from the appellant's use of an employer-owned automobile.
[2] The only issue before me is whether the appellant's use of the automobile is "all or substantially all" in connection with her employment. The parties agree that this finding will determine the calculation of the standby charge under paragraph 6(1)(e) and the operating expense benefit in paragraph 6(1)(k).
[3] The automobile used by the appellant is a BMW purchased by her employer in 2000 for $73,822. It was the only automobile available to the appellant during the relevant taxation years.
[4] The appellant is employed by Sherlock Enterprises Ltd., a corporation of which she is the sole shareholder. Sherlock is in the business of managing rental real estate.
[5] According to the appellant's testimony, she used the automobile frequently in connection with her employment which involved managing the following rental properties: a 40-unit apartment building in Burnaby, B.C., a residential property in Vancouver and two condominiums in Whistler.
[6] Pursuant to the relevant statutory provisions, the taxable benefits arising from the use of the automobile can be reduced if "all or substantially all of the distance traveled by the automobile in the total available days is in connection with or in the course of the office or employment."
[7] The appellant attempted to establish that over 90 percent of the distance traveled by the automobile was in connection with her employment.
[8] Because she had no log book, the appellant tried to reconstruct her employment use of the automobile from her memory and from documentation such as bank deposit slips which were introduced to establish that she made numerous trips to the bank to deposit rent cheques.
[9] Based on the appellant's estimate of employment-related kilometers traveled, she submitted that her employment use of the automobile was 98.59 percent of the total.
[10] This figure is derived from the appellant's estimate of the number of employment-related trips from her home and back each year. The estimate is as follows:
(a) 168 trips to the Burnaby apartment complex. Supporting documentation was introduced in the form of bank deposit slips for 108 of these trips. There was no supporting documentation for the remaining 60 trips;
(b) Nine trips to Sherlock's accountant and lawyer;
(c) 54 trips in connection with other rental properties, including six trips to Whistler; and
(d) 12 trips to purchase office supplies.
[11] The above estimates were based largely on the appellant's recollection except for the 108 trips supported by the bank deposit slips. The appellant suggests that, even if the estimates are adjusted to take into account the fact that more than one task could be accomplished on one outing, the employment-related use is still close to 90 percent.
[12] The evidence provided is simply not sufficient to enable me to be satisfied of the distance that was traveled for employment purposes. There are a number of deficiencies: (1) there is no documentary support for many of the trips; (2) there is no support for the assumption that all trips started from and ended at the appellant's home; and (3) there is not sufficient detail regarding the Whistler trips for me to be satisfied that they are all reasonably in connection with employment.
[13] Previous decisions in the Tax Court have emphasized the importance for employees to keep log books so that they will have a record of the employment use of an employer-owned vehicle. This is especially important where one vehicle is used for both personal and business purposes. In this case, the evidence presented by the appellant is not adequate to establish the use that was made of the automobile.
[14] The appeal is dismissed.
Signed at Ottawa, Canada, this 30th day of June, 2006.
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"J. Woods" |
Woods J.
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CITATION: |
2006TCC379 |
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COURT FILE NO.: |
2005-3722(IT)I |
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STYLE OF CAUSE: |
Olivia McAndrew and Her Majesty the Queen |
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PLACE OF HEARING: |
Vancouver, British Columbia |
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DATE OF HEARING: |
May 3 and 5, 2006 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice Judith Woods |
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DATE OF JUDGMENT: |
June 30, 2006 |
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APPEARANCES: |
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Agent for the Appellant: |
Graham C. Thody |
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Counsel for the Respondent: |
Max Matas, student-at-law |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
n/a |
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Firm: |
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For the Respondent: |
John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada |
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