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Docket: 2004-3543(IT)I |
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BETWEEN: |
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DANIEL L. BEAUDOIN, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
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Appeal heard on January 20, 2005 at Nanaimo, British Columbia
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Before: The Honourable Justice L.M. Little |
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Appearances: |
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Agent for the Appellant: |
Ed R. Heese |
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Counsel for the Respondent: |
Nadine Taylor Pickering |
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JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 2003 taxation year is allowed, with costs, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 4th day of February 2005.
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"L.M. Little" |
Little J.
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Citation: 2005TCC94 |
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Date: 20050204 |
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Docket: 2004-3543(IT)I |
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BETWEEN: |
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DANIEL L. BEAUDOIN, |
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Appellant, |
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And |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
Little J.
A. FACTS:
[1] The Appellant commenced to work for Dairyland Fluid Division ("Dairyland") at its plant in Nanaimo, British Columbia in 1978.
[2] Dairyland closed its plant in Nanaimo in October 1996 and relocated its dairy operation to Courtenay, British Columbia.
[3] During the 1996 taxation year the Appellant resided at 1914 Kelsie Road in Nanaimo ("Kelsie Road Home").
[4] In May 1997 the Appellant purchased 1.104 acres of vacant land located at 6671 Elm Road, in Lantzville, B.C. The Appellant built a house on the Elm Road property ("Elm Road Home").
[5] The Appellant moved from the Kelsie Road Home to the Elm Road Home in 1999.
[6] The Appellant commuted from either the Kelsie Road Home or the Elm Road Home to the Courtenay Plant of Dairyland for approximately seven years.
[7] In the fall of 2003 the Appellant purchased a home located at 4636 Arran Road ("Arran Road Home") in Courtenay.
[8] In November 2003 the Appellant sold the Elm Road Home and relocated to the Arran Road Home.
[9] The Appellant testified that he incurred net moving expenses in the amount of $23,452.50 (this number includes a real estate commission in the amount of $14,252.40 which the Appellant paid when he sold the Elm Road Home).
[10] In filing his income tax return for the 2003 taxation year the Appellant deducted the amount of $6,250.00. (Note: The amount of $6,250.00 is the salary received by the Appellant from Dairyland after he relocated to the Arran Road Home in Courtenay in November 2003 until the end of 2003. The agent for the Appellant said that the Appellant intends to deduct the difference between $23,452.50 minus $6,250.00 or $17,202.50 when the Appellant files his income tax return for the 2004 taxation year).
B. ISSUE:
[11] The issue is whether the Appellant is entitled to deduct moving expenses in the amount of $6,250.00 in calculating his income for the 2003 taxation year.
C. ANALYSIS:
[12] Counsel for the Respondent maintains that the moving expenses claimed by the Appellant in the 2003 taxation year are not deductible in calculating the Appellant's income for the 2003 taxation year as the Appellant did not move from the Elm Road Home to the Arran Road Home to enable him to earn income from employment within the meaning of subsection 248(1) and section 62 of the Income Tax Act (the "Act").
[13] Counsel for the Respondent noted that Dairyland closed its plant in Nanaimo in 1996 and relocated to Courtenay at that time. However the Appellant commuted from his homes in Nanaimo to Courtenay until 2003 when he purchased a home in Courtenay and moved to this home. Counsel for the Respondent said that the seven year period between the move of the plant to Courtenay in 1996 and the move by the Appellant to Courtenay is a long time.
[14] The phrase "moving expenses" is defined in subsection 62(3) of the Act as follows:
62. (3) In subsection (1), "moving expenses" includes any expense incurred as or on account of
(a) travel costs (including a reasonable amount expended for meals and lodging), in the course of moving the taxpayer and members of the taxpayer's household from the old residence to the new residence,
(b) the cost to the taxpayer of transporting or storing household effects in the course of moving from the old residence to the new residence,
(c) the cost to the taxpayer of meals and lodging near the old residence or the new residence for the taxpayer and members of the taxpayer's household for a period not exceeding 15 days,
(d) the cost to the taxpayer of cancelling the lease by virtue of which the taxpayer was the lessee of the old residence,
(e) the taxpayer's selling costs in respect of the sale of the old residence,
(f) where the old residence is sold by the taxpayer or the taxpayer's spouse or common-law partner as a result of the move, the cost to the taxpayer of legal services in respect of the purchase of the new residence and of any tax, fee or duty (other than any goods and services tax or value-added tax) imposed on the transfer or registration of title to the new residence, and
(g) interest, property taxes, insurance premiums and the cost of heating and utilities in respect of the old residence, to the extent of the lesser of $5,000 and the total of such expenses of the taxpayer for the period
(i) throughout which the old residence is neither ordinarily occupied by the taxpayer or by any other person who ordinarily resided with the taxpayer at the old residence immediately before the move nor rented by the taxpayer to any other person, and
(ii) in which reasonable efforts are made to sell the old residence, and
(h) the cost of revising legal documents to reflect the address of the taxpayer's new residence, of replacing drivers' licenses and non-commercial vehicle permits (excluding any cost for vehicle insurance) and of connecting or disconnecting utilities,
but, for greater certainty, does not include costs (other than costs referred to in paragraph (f)) incurred by the taxpayer in respect of the acquisition of the new residence.
[15] The Appellant testified during the hearing that he and an associate had incorporated a company by the name of J. Star Investments Ltd. ("J. Star") in 1993. J. Star was involved in the house construction and the land development business.
[16] The Appellant said that at the time that Dairyland moved its plant to Courtenay in 1996, J. Star was involved in land development at Chemanius, B.C. and certain complications had occurred with this development that required "management" by the Appellant.
[17] The Appellant testified that the property in Chemanius owned by J. Star was sold and J. Star was dissolved in 2003.
[18] The Appellant further testified that after J. Star sold its property he and his wife decided to relocate to the Courteney area to be nearer Dairyland's plant and they purchased their home on Arran Road in Courtenay.
[19] The Appellant also said that the Credit Union had filed a lien against his Elm Road Home. The Appellant said that Credit Union officials told him that they wanted the business problems of J. Star cleaned up before they would remove the lien. The Appellant said that the main reasons for the delay in moving from Nanaimo to Courtenay were caused by the business problems encountered by J. Star and the lien registered by the Credit Union against the Elm Road Home.
[20] In James D. Beyette v. M.N.R., 89 DTC 701 Judge Taylor considered the deduction of moving expenses. Judge Taylor said at page 702:
Counsel for the Respondent argued that section 62(1) of the Act implied a certain time limit - between the change of work site and the move - and that five years was unreasonable. In addition the critical word in the legislation was "commenced", in his view and there was a requirement for a relationship between the "commencement of employment" and the "move".
I do not agree with either point raised by the Respondent. In this matter, I was satisfied from the evidence and testimony that there were good reasons for which the taxpayer delayed his move from Winnipeg to Beausejour - illness, lack of housing in Beausejour, inactive real estate selling market in Winnipeg, etc. - but that is probably irrelevant. In my opinion, the taxpayer and he alone is left to determine the timing of the move, and the costs associated with the move, and no time limit is expressed by the wording of the Act. While clearly five years is an unusually long period of time between the change of work locale and the move, that cannot be put in issue - the Respondent has no basis upon which to conclude (I.T. Bulletin 178R2) that there is some time frame that is "reasonable" and another that is unreasonable. As I read section 62(1) of the Act, it is a requirement that the taxpayer " - has - commenced to be employed previous to the move for which an expense claim is made. I do not see that one should read into the word "commenced" more than that. Mr. Beyette "commenced to be employed" in 1981 at the new work location, he "moved" in 1986 and is entitled to his costs of moving.
I agree with the comments of Judge Taylor.
[21] I also refer to the decision of Justice Bowman in Jaggers v. Canada, [1997] T.C.J. No. 477. In Jaggers Justice Bowman held that moving expenses claimed by the Appellant should be allowed. In that situation Revenue Canada (as it then was) refused to allow Mr. Jaggers to deduct the cost of selling his home because the home was sold two years after the move. At page 6 of the Reasons for Judgment, Justice Bowman said:
...What section 62 is aimed at is the deduction of moving costs where a move is occasioned by a change of job. Its purpose would be defeated if an unduly narrow and technical approach were followed. We have here a taxpayer who moves to another city to take up new employment. He buys a home there but, sensibly, retains his old home until he is sure that the job will work out. He rents the old home as an interim measure. Because he does not evict the tenants as soon as he could - for reasons of commercial morality, it appears, rather than pure commerciality - he loses, in the view of the Department of National Revenue, the right to any deductions under section 62. I do not find this acceptable interpretation of section 62. These expenses are precisely the type contemplated by section 62.
[22] I have concluded that the Appellant should be allowed to deduct moving expenses of $6,250.00 that he incurred in moving from the Elm Road Home to the Arran Road Home in calculating his income for the 2003 taxation year.
[23] The appeal is allowed with costs.
Signed at Vancouver, British Columbia, this 4th day of February 2005.
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"L.M. Little" |
Little J.
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CITATION: |
2005TCC94 |
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COURT FILE NO.: |
2004-3543(IT)I |
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STYLE OF CAUSE: |
Daniel L. Beaudoin and Her Majesty the Queen |
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PLACE OF HEARING: |
Nanaimo, British Columbia |
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DATE OF HEARING: |
January 20, 2005 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice L.M. Little |
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DATE OF JUDGMENT: |
February 4, 2005 |
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APPEARANCES: |
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Agent for the Appellant: |
Ed R. Heese |
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Counsel for the Respondent: |
Nadine Taylor Pickering |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada |