Judge Flanigan (orally: September 25, 1974):—This is an appeal by Emil Schilder against: the reassessment of the Minister of National Revenue for the 1972 taxation year. It involves section 62 of the 1972 legislation which, for the first time, permits a taxpayer to deduct from his income expenses incurred where he has, at any time after the 1971 taxation year, ceased to carry on a business or be employed in one location and has moved to another location within certain minimal mileage restrictions. \; . . , ;
lt is admitted by counsel for the Minister that the expenses claimed ‘are proper expenses, with perhaps some doubt as to the eligibility of travelling expenses for the signing of documents, but he contends that the move in question took place prior to January 1, 1972 and therefore, by section 27 of the Income Tax Application Rules, 1971, the appellant is not entitled to take advantage of the provisions of this deducting section.
The facts are really not in dispute. Prior to the summer of 1971 the appellant was a self-employed management consultant living with his wife and family in King Township in the Toronto area in a home in which he had resided since about 1966. I believe he had purchased the lot in 1965. He says the house was purchased in his wife’s name for business reasons. His wife was unemployed and had no financial means, and all payments in connection with the King Township house were made by the appellant.
There is no question in law that there was a resulting trust in favour of the wife by putting her name on the deed and registering her as the owner; but I think it is also well-established law, even well-established income tax law, that the necessities of life would include the payment of the mortgage by the husband on behalf of the wife in the course of maintaining the family residence.
Apparently in the summer of 1971 the appellant received an offer from the federal Bureau of Management Consulting and he accepted employment with it, being put on probation for a period of one year. In or about April of 1972 he was offered a permanent position and accepted it.
Prior to moving to Ottawa in the summer of 1971 he listed the King Township property for sale with a real estate agency for a period of two months, subsequently trying other means of selling it, but he was not able to obtain an offer equal to what he felt was a proper price in the market at that time for his residence. He subsequently relisted the property with the original real estate agents and sold it in March of 1972 for less than the price at which it was listed. By this time, as I have said, the appellant had moved his wife and family to Ottawa in the summer of 1971, where they purchased a $40,000 house, I believe with funds supplied by friends, and he probably felt that it was expedient to accept the offer for the King Township residence and clear off his obligations in Ottawa.
The question before me is whether he ceased to carry on business in King Township when he went to Ottawa in 1971, or in 1972 when he accepted what he described as permanent employment with the Government of Canada. If his move was in 1971, then, of course, the deducting section 62 of the 1972 legislation would not apply because there was no corresponding section in the pre-1972 Act. As I have said, he was not employed, so there is a question as to whether or not he ceased to carry on his management consulting business.
To determine this one must consider, as I have already mentioned, some of the facts. He severed all connections with the King Township residence so far as his family was concerned. The children were enrolled in school in Ottawa in September of 1971. His wife became the registered owner of the house in Ottawa in 1971. He worked full-time for the Government in 1971, although he was not restricted by his terms of employment from carrying on occasionally, or when time permitted, his self-employment as a management or business consultant, which he said he did to some small degree, keeping, as he described it, his irons in the fire in case he decided to return to private business.
I think one must look at the entire section to determine whether or not in this case the appellant is entitled to the deduction. The purport of the section as a whole is, in my view at least, to allow people to accept employment in various parts of this country which might otherwise not be available to them because of the prohibitive cost of moving. The statute, in particular subsection 62(1), provides in part: “Where a taxpayer has. . . ceased to carry on business . . . and by reason thereof has moved from the residence in Canada at which, before the move, he ordinarily resided on ordinary working days ...”—which is referred to as “the old residence”—“to a residence in Canada at which, after the move, he ordinarily so resided . . .”—whioh is referred to as “the new residence”.
There is no question whatsoever on the evidence before me that from mid-June or July, or at least during: the summer of 1971, this appellant, his wife and children were ordinarily resident on ordinary working days in the City of Ottawa. I therefore can come to no other conclusion than that the move contemplated by section 62 of the Act was made in 1971 and not in 1972.
It is perhaps not part of the ratio of this decision, but it seems to me that had he decided that he did not wish to remain in the employ of the Government of Canada in 1972 he could have returned to his King Township residence and had the advantage of section 62 because he would again have been changing his employment or ceasing to carry on business in this City. Also, in my view, the accounting principle of matching income and expenses only applies if he is under the 1972 Act for this move.
I make this finding without making any finding on the question of whether the registration of the title in the name of the wife or the fact that the house was rented for a period of time would affect the decision had I decided that the move had taken place in 1972. Having decided that the move was effectively completed in 1971, I find it unnecessary to rule on the question of the effect of the ownership of the house by the wife. The appeal will therefore be dismissed.
Appeal dismissed.