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Docket: 2004-4322(IT)I |
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BETWEEN: |
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WILLIAM MacKENZIE, |
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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 July 20, 2005 at Winnipeg, Manitoba
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Before: The Honourable Justice L.M. Little |
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Appearances: |
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Agent for the Appellant: |
Steve Dmyterko |
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Counsel for the Respondent: |
Julien Bédard |
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JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 2003 taxation year is dismissed, without costs, in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 8th day of August 2005.
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"L.M. Little" |
Little J.
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Citation: 2005TCC464 |
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Date: 20050808 |
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Docket: 2004-4322(IT)I |
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BETWEEN: |
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WILLIAM MacKENZIE, |
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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 was employed by the Canadian National Railway ("CNR") for 39 years. For the past 20 years the Appellant worked as a Conductor on freight trains and passenger trains.
[2] The Appellant retired from the CNR in January 2005.
[3] In the 2003 taxation year the Appellant was employed as a Conductor on a railway train operated by the CNR. The Appellant's regular trip was to work as the Conductor of a train between Winnipeg, Manitoba and Sioux Lookout, Ontario. According to the Appellant's records he was away from home while travelling between Winnipeg and Sioux Lookout for 116 days in the 2003 taxation year.
[4] While the Appellant was travelling in the course of his employment with the CNR he was required to pay for his own meals.
[5] While the Appellant was in Sioux Lookout he slept at a Bunkhouse that was provided to the employees of the CNR at no cost to them.
[6] When the Appellant prepared his income tax return for the 2003 taxation year he claimed meal expenses of $45.00 per day (3 meals x $15.00 per meal) for the 116 travel days while he was away from Winnipeg for a total amount of $5,220.00. The Appellant then reduced the employment expenses claim to 50 percent of $5,220.00 or $2,610.00.
[7] On May 10, 2004 the Minister of National Revenue (the "Minister") assessed the Appellant's income tax return for the 2003 taxation year and accepted the tax return as filed.
[8] The Appellant filed a Notice of Objection for the 2003 taxation year dated June 2, 2004. In the Notice of Objection the Appellant maintained that he should be allowed to claim expenses of $48.00 per day to cover the cost of meals while he was travelling in the course of his employment.
B. ISSUES:
[9] The issues to be decided are:
(a) whether the Appellant is entitled to a deduction for meals in excess of the amount of $2,610.00 that he claimed;
(b) whether any of the rights of the Appellant guaranteed by the Canadian Charter of Rights and Freedoms have been denied or infringed.
C. ANALYSIS AND CONCLUSION:
[10] Subsection 8(1)(g) of the Income Tax Act (the "Act") provides that employees of transport companies may deduct the cost of meals and lodging when computing their income for the year providing that they do not receive a reimbursement from their employer. The amount that may be deducted by a taxpayer is limited, however, by subsection 67.1(1) of the Act.
[11] Subsection 8(1) of the Act provides as follows:
8. (1) In computing a taxpayer's income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:
. . .
(g) where the taxpayer was an employee of a person whose principal business was passenger, goods, or passenger and goods transport and the duties of the employment required the taxpayer, regularly,
(i) to travel, away from the municipality where the employer's establishment to which the taxpayer reported for work was located and away from the metropolitan area, if there is one, where it was located, on vehicles used by the employer to transport the goods or passengers, and
(ii) while so away from the municipality and metropolitan area, to make disbursements for meals and lodging,
amounts so disbursed by the taxpayer in the year to the extent that the taxpayer has not been reimbursed and is not entitled to be reimbursed in respect thereof;
[12] Subsection 67.1(1) of the Act reads as follows:
67.1(1) For the purposes of this Act, other than sections 62, 63 and 118.2, an amount paid or payable in respect of the human consumption of food and beverages or the enjoyment of entertainment shall be deemed to be 50% of the lesser of
(a) the amount actually paid or payable in respect thereof, and
(b) an amount in respect thereof that would be reasonable in the circumstances.
[13] In Information Circular 73-21R8 (Exhibit R-1) the Minister states for the benefit of those claiming meal allowances that they may use either the detailed method or the simplified method to make their claim. The detailed method requires that the taxpayer maintain a record of each meal taken and each payment for lodging, together with vouchers to prove the expenditure. If the taxpayer maintains these records then the Minister will allow a deduction based upon the full amount paid, provided that it is a reasonable amount as required by subsection 67.1(1). Those taxpayers who do not wish to keep such detailed records are advised by the Circular that they may base their claim simply upon the number of meals that they ate during the year while away from home in the course of their employment, and the Minister will allow a deduction based upon an assumed cost of $11.00 per meal, up to a maximum of three meals per day. (Note: According to the testimony of the Appellant the amount of $11.00 per meal was increased in 2003 to $15.00 per meal.)
[14] In this situation the Appellant filed his 2003 income tax return without any detailed records or vouchers. The Appellant simply claimed $45.00 per day (3 x $15) for meals.
[15] The Appellant did not claim any expenses for lodging because the CNR did not charge employees for the use of the Bunkhouse.
[16] The Appellant testified that when he was acting as a Conductor on the Winnipeg, Sioux Lookout train he would carry a packed lunch and that he would frequently have a meal at a restaurant in Sioux Lookout. In connection with the fact that the Appellant would carry a packed lunch on the train I refer to the following comment from the Circular:
Amounts deductible for meals
8. The cost of a meal may only be claimed and a portion allowed as a deduction if the meal has, in fact, been paid for. Generally, neither paragraphs 8(1)(e), 8(1)(g) nor 8(1)(h) of the Income Tax Act permit a deduction for meals consumed by individuals who, though they may otherwise qualify under either of these provisions, do not pay for meals but instead carry a lunch from home to work.
[17] During the hearing Mr. Dmyterko, the Appellant's agent, filed a copy of a Directive issued by the Minister dated October 1, 2002 (Exhibit A-1). In the Directive it is stated that when officials of the Canada Revenue Agency ("CRA") are required to travel in the course of their employment they are allowed to claim $69.75 per day. This amount is broken down in the Directive as follows:
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All Provinces |
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Breakfast |
$10.95 |
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Lunch |
$10.85 |
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Dinner |
$30.45 |
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Incidentals |
$17.50 |
[18] Mr. Dmyterko suggested that employees such as the Appellant should be allowed meal expenses similar to those expenses allowed to employees of the CRA. In connection with this argument, I refer to the comments by my colleague, Mr. Justice Bowie in Kasaboski v. Canada, [2005] T.C.J. No. 245 where he said at paragraph 13:
[13] Mr. Velle offered no rationale for the contention that truckers should be allowed deductions for meals and other expenses at the rates established as non-accountable allowances for public servants travelling on business for the Government of Canada, other than that he thought it to be fair. I have no mandate to allow deductions that are not provided for by Parliament simply on the basis that i think them to be fair. The Act is very specific as to the amounts that may be deducted. What paragraph 8(1)(g) and subsection 67.1(1) permit when they are read together is simply this - one-half of the amount actually spent for meals and lodging, provided always that it a reasonable amount that was spent. ... Allowances paid to public servants are established as a term of their employment. They are not at all relevant to the matter before me, unless as a possible test of reasonableness for the purposes of section 67.1, and they certainly cannot establish an entitlement to a deduction from income not found in the Act.
[19] I agree with the comments of Justice Bowie.
[20] After considering the Appellant's argument carefully and after recognizing that the Appellant carried a lunch and did not eat all of his meals in a restaurant while travelling in the course of his employment, I have concluded that the position adopted by the Minister in allowing the Appellant to claim $45.00 per day for meals was reasonable.
[21] If the Appellant is convinced that he actually spent more than $45.00 per day for meals while travelling for his employer he should have kept receipts of the amounts that he actually spent.
[22] I have also concluded that this is not a situation where the Appellant's rights under the Canadian Charter of Rights and Freedoms have been violated.
[23] The appeal is dismissed, without costs.
Signed at Vancouver, British Columbia, this 8th day of August 2005.
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"L.M. Little" |
Little J.
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CITATION: |
2005TCC464 |
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COURT FILE NO.: |
2004-4322(IT)I |
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STYLE OF CAUSE: |
William MacKenzie and Her Majesty the Queen |
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PLACE OF HEARING: |
Winnipeg, Manitoba |
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DATE OF HEARING: |
July 20, 2005 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice L.M. Little |
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DATE OF JUDGMENT: |
August 8, 2005 |
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APPEARANCES: |
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Agent for the Appellant: |
Steve Dmyterko |
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Counsel for the Respondent: |
Julien Bédard |
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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 Attorne-y General of Canada Ottawa, Canada |