0001
TAX COURT OF CANADA
____________________________________
Court Number 2006-407(IT)I
BETWEEN:
RICHARD DRAKE
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
______________________________________________
EXCERPT (RULING)
May 31, 2007
Held at the Courts Administration Service
Calgary, Alberta
Volume 1
_______________________________________________
TAKEN BEFORE:
The Honourable Mr. Justice Rip
0002
APPEARANCES
TAKEN BEFORE:
The Honourable Mr. Justice Rip
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Richard Drake Appeared On His Own Behalf
Darcie E. Charlton, Esq. Appeared for the Respondent
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James Brunton Court Registrar
Jenn vanRootselaar, CSR(A) Court Reporter
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0003
TABLE OF CONTENTS
PAGE
APPEARANCES 2
RULING 4
CLOSING REMARKS 8
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0004
04 JUSTICE RIP: Okay. It's your turn.
05 MR. DRAKE: I guess when you go on
06 these jobs, you're always expecting for a
07 long-term employment --
08 JUSTICE RIP: Beg your pardon?
09 MR. DRAKE: You're always expected
10 to have a long-term employment, good terms with
11 the company, and maybe work for that company.
12 So whenever I go to these jobs, sometimes they
13 only end up being --
14 JUSTICE RIP: When have you had a
15 long-term employment for about a couple of
16 years?
17 MR. DRAKE: Like, recently? Yeah,
18 just --
19 JUSTICE RIP: In 2001, 2000.
20 MR. DRAKE: The long-term is --
21 JUSTICE RIP: No. 2001, 2002, did you
22 have any long-term employment.
23 MR. DRAKE: 2001 I started the
24 Boston long-term employment.
25 JUSTICE RIP: Beg your pardon?
0005
01 MR. DRAKE: The Boston, that was
02 my --
03 JUSTICE RIP: What was it? How long
04 was it?
05 MR. DRAKE: Ten months, but it could
06 have been longer, but the visas couldn't be
07 issued.
08 JUSTICE RIP: Now, Boston. And where
09 were you going, from Boston to where?
10 MR. DRAKE: Well, I got laid off,
11 and that's when I went to Bechtel.
12 JUSTICE RIP: That's where -- the
13 government's consenting to the Boston.
14 MR. DRAKE: Yeah.
15 JUSTICE RIP: They're consenting to
16 that.
17 MR. DRAKE: Oh, yeah. I'm just
18 saying that -- she's saying that I've never
19 permanently had a --
20 JUSTICE RIP: Well, you need a
21 residency; you've got to acquire a residence.
22 MR. DRAKE: Yeah.
23 JUSTICE RIP: When I say "acquire,"
24 you don't have to buy, but you have to live --
25 you have to set up a residence.
0006
01 MR. DRAKE: Yeah, well, that would
02 be the next step, but then when you get laid
03 off, you don't have a choice.
04 JUSTICE RIP: That's the problem.
05 MR. DRAKE: That's the problem. But
06 what do you do, right? You know, I'm just
07 saying that if I -- you know, I'm claiming --
08 for me, if I'm claiming 35 cents a kilometre,
09 you know, gas is taxed probably at 35 cents a
10 kilometre, you're not losing out; I'm bringing
11 in new income into the country, and I'm being
12 penalized.
13 JUSTICE RIP: What does the act --
14 find me somewhere in the Income Tax Act that I
15 can allow it to you.
16 MR. DRAKE: The moving expense?
17 JUSTICE RIP: Anything.
18 MR. DRAKE: Just I know moving
19 expenses, I'm allowed to move from -- like she
20 said, it says in there you can't go from Canada
21 to the US, but I can do moving expenses
22 within -- a move within one country, like, in
23 the same -- a move from, like, say, Boston and
24 New York would be considered allowable.
25 Anything going -- if I was going to Fluor --
0007
01 when I was laid off at Ohio and I worked for a
02 Canadian company, well, I should be allowed
03 that move.
04 JUSTICE RIP: You should be, but
05 you're not.
06 MR. DRAKE: Yeah.
07 JUSTICE RIP: The act doesn't permit
08 you to. You have to show me that the act
09 permits it. Not what should be --
10 MR. DRAKE: Yeah.
11 JUSTICE RIP: -- but what actually is.
12 I've got to follow the laws, not -- what the
13 law is is not necessarily fair --
14 MR. DRAKE: Yeah. Yeah.
15 JUSTICE RIP: -- or not necessarily in
16 common sense.
17 MR. DRAKE: Well, when I phoned the
18 revenue agencies, they're like, As long as
19 it's -- that's what I do, right? I do what
20 they say, right?
21 JUSTICE RIP: Well, maybe you
22 shouldn't be doing that.
23 MR. DRAKE: Yeah, well, they
24 shouldn't be doing that, but . . .
25 Also for my expenses, if
0008
01 I work for Fluor Canada and I get a job test
02 there and I worked for -- in Edmonton, like
03 Boilermakers is in Edmonton, I reported there,
04 I just had a T2200. As a company they filled
05 it out.
06 JUSTICE RIP: The thing is, we're not
07 concerned with that.
08 MR. DRAKE: Yeah. I just pretty
09 much just gave you the information what I feel
10 like --
11 JUSTICE RIP: Beg your pardon?
12 MR. DRAKE: Just the information
13 that I provided with my moving expenses and
14 employment expenses, it's your decision.
15 JUSTICE RIP: The problem is, sir, is
16 they're not eligible expenses. An employee --
17 first of all, to deduct an employee expense,
18 you have to be an employee. And you did not
19 become an employee of these companies until you
20 are on the site. Is that not true?
21 MR. DRAKE: Yes, that's true.
22 JUSTICE RIP: So the expenses getting
23 there, they're lost. They're somewhere in
24 cyberspace, so to speak. They're nothings.
25 MR. DRAKE: Yeah.
0009
01 JUSTICE RIP: So they're not deducted.
02 It's a problem. I feel for you. I feel for
03 you because if you -- if there was evidence
04 that, you know, and there isn't any, and I
05 don't know how you would prove this, if you are
06 an independent contractor, a person carrying on
07 his own business is entitled to expenses that
08 an employee is not. Whether it's fair or not,
09 I'm not here to rule. But if you carry on a
10 business on your own, you're allowed certain
11 expenses that an employee's not.
12 MR. DRAKE: Yeah.
13 JUSTICE RIP: But I can't help that.
14 MR. DRAKE: I just think if you're
15 moving to earn an income or start a new job --
16 JUSTICE RIP: But that is not -- it's
17 a difference. Employment income is not an
18 expense, is not -- it's -- you're restricted.
19 The act states specifically, living expense as
20 an employee, no way. It's Section 6.
21 MR. DRAKE: Mm-hmm. Just because I
22 didn't hold the residence long enough --
23 JUSTICE RIP: Never mind residence. I
24 didn't go into -- I questioned you on it, Did
25 you set up a residence? The answer is --
0010
01 except in Boston, the answer is no.
02 MR. DRAKE: Yeah, well, it takes a
03 little bit of time to set up a residence when
04 you're --
05 JUSTICE RIP: But you have to do it.
06 That's what the law says.
07 MR. DRAKE: Well, people get their
08 mail sent to hotels, people in Canada that live
09 in motels, and that's their residency.
10 JUSTICE RIP: They are living in
11 hotels when they may have a residence somewhere
12 else.
13 MR. DRAKE: They get their mail sent
14 there, and you know, if someone's been living
15 in a motel in Canada for the last five years,
16 where do you consider them a resident? People
17 sitting in camps up there, they've been up
18 there for probably five or six years, or some
19 have been up for 10, 15, 20 years, 30 years,
20 and that's a residence. How do you tax the
21 person.
22 JUSTICE RIP: That may be their
23 residence, but when you are in a hotel on a
24 short-term basis, that's not your residence.
25 MR. DRAKE: But the 15 days for --
0011
01 JUSTICE RIP: But that's if you set
02 up -- assuming you set up a residence when
03 you're going to a residence. So if you don't
04 set up the residence, you don't get this moving
05 expense.
06 MR. DRAKE: So if you set up the
07 residence, just -- you know, it's just after
08 the fact. You know, whatever happens after the
09 15 days it shouldn't matter if --
10 JUSTICE RIP: It does matter. Quite
11 so. It's very important.
12 MR. DRAKE: Yeah, but how does that
13 benefit the system?
14 JUSTICE RIP: Because you are in the
15 hotel because a residence may not be ready, may
16 not be available.
17 MR. DRAKE: Yeah.
18 Well, it's your
19 decision. Whatever. If I . . .
20 (EXCERPT ENDS)
0012
01 JUSTICE RIP: Okay. What I'm going to
02 do, sir, I'm going to give you what the Crown
03 consented to. I'm going to give you an --
04 the -- I'm going to have to -- as I say, I
05 don't want to repeat myself again. But I think
06 you understand we've gone through the appeal
07 during the trial; we've gone through the --
08 the -- the RRSP and the pension. I think you
09 understand why you're not -- that's not
10 available to you, because you had a contingent
11 right in those years.
12 MR. DRAKE: Yeah.
13 JUSTICE RIP: Okay. Then -- and I
14 told you -- and I told you to get in touch with
15 your minister of finance, your member of
16 parliament to try to get -- maybe they can give
17 you permission regarding to this.
18 MR. DRAKE: Yeah, I'll -- I'll --
19 JUSTICE RIP: So do that. With
20 respect to the moving expenses, you may even
21 want to try that. Say, Look, in my situation,
22 I'm falling through the cracks. And you may
23 want to even discuss that with them at your --
24 that you're going to various employment sites
25 across North America, and you can't deduct it
0013
01 even. You may want to discuss that as well.
02 MR. DRAKE: Yeah.
03 JUSTICE RIP: Because as I said to
04 you, and I just want to repeat to you, that's
05 wholly discretionary to the Minister or to the
06 government, and they may or may not allow you
07 or give you the -- the remission. Okay?
08 So I'm going to allow
09 you a deduction. And what year is that?
10 That's in 2001, I understand, is that correct,
11 the deduction, the Boston to New York via
12 Newfoundland?
13 MS. CHARLTON: I believe that's 2002.
14 JUSTICE RIP: 2002.
15 Now, the other thing I
16 want to bring out, in paragraph 9 of the reply,
17 that -- that has been assessment establishing
18 the increase in the union fees; is that
19 correct? It's not something the Minister's
20 conceding that hasn't been assessed?
21 MS. CHARLTON: I apologize.
22 JUSTICE RIP: Beg your pardon?
23 Because it's not clear, to be quite honest with
24 you. It says -- okay, it says the Minister
25 increased the deduction. Okay.
0014
01 MS. CHARLTON: The Minister allowed the
02 $3,787 that he asked for.
03 JUSTICE RIP: Okay. So I don't have
04 to worry about that.
05 So for 2002 there'll be
06 a deduction of 2,193.17 with respect to moving
07 expenses.
08 And I want you -- you
09 know, what's important, Mr. Drake, is the
10 comments here of Chief Justice Bowman. Are --
11 he's usually very sympathetic to taxpayers, as
12 I hope to be. And in Jenner, in which he
13 explained at the end -- and this Jenner is not
14 all together different than you, going into
15 various areas.
16 And Justice Bowman says
17 (quoted as read):
18 "Mr. Jenner seeks to import into
19 section 8 deductions that are
20 analogous to the allowances that are
21 specifically excluded by
22 subsection 6(6). While such arguments
23 by analogy may be philosophically
24 attractive they do not fit within the
25 accepted rules of statutory
0015
01 interpretation employed in construing
02 the Income Tax Act. The taxation of
03 employment income as well as the
04 deduction of amounts spent in earning
05 that income is spelt out in the Income
06 Tax Act with great specificity. The
07 cost of travel from Mr. Jenner's home
08 in Sturgeon Falls to the various
09 places where he was employed
10 by...different employers as well as
11 his living expenses when he was
12 working at those work sites is simply
13 not covered by section 8 of the Income
14 Tax Act, even though in the broad
15 sense one might say that the expenses
16 were related to his employment."
17 You've found the same
18 trap as he has. I'm using a "trap" not in any
19 way, I'm just saying that it's an unfortunate
20 situation he found himself in and you found
21 yourself in.
22 MR. DRAKE: Yeah.
23 JUSTICE RIP: And what I would like to
24 add to your expenses, I don't think I can. So
25 I will dismiss 2001, and I will allow 2002 to
0016
01 meet your deduction of 2,193.17.
02 MR. DRAKE: That was for the moving
03 expense.
04 JUSTICE RIP: For the moving
05 expense.
06 MR. DRAKE: And that was
07 two-thousand . . .
08 JUSTICE RIP: 193.17.
09 Other than that, I have
10 a problem. I don't think I can --
11 MR. DRAKE: Yeah, well, that's --
12 that's -- that will be all right. That's the
13 first step, and then my RRSPs, you know, if it
14 works out.
15 JUSTICE RIP: There's no guarantee.
16 MR. DRAKE: No, but it's the second
17 step, right?
18 JUSTICE RIP: Beg your pardon?
19 MR. DRAKE: It's a second step.
20 JUSTICE RIP: It's a kick at the can.
21 MR. DRAKE: I found a few other
22 things to -- I didn't bring up.
23 JUSTICE RIP: Thank you very much.
24 Sorry if I kept you.
25 THE REGISTRAR: Order. All rise.
0017
01 The hearing is now
02 concluded. The court is now closed for the day
03 and will resume tomorrow at 9:30.
04 (PROCEEDINGS ADJOURNED AT 3:41 P.M.)
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