The Chairman (orally: April 24, 1973):—This is an appeal by Ludwig Upenieks against the reassessments of the Minister of National Revenue for the taxation years 1968 and 1969.
There are several issues under appeal. The first deals with the alleged and actual use by the appellant of part of his personal residence as a business office. It is not uncommon for the Board to hear, from time to time, allegations by medical practitioners that their homes are used for offices. This is especially true in the case of a family practitioner such as this appellant appears to be. It is clear that, under the Income Tax Act, concessions are made to those who can establish that part of their normal residential property is used for business purposes. However, as is the case with most sections of the Income Tax Act, which is a law that must apply to all the citizens that pay tax in the country and cannot be specific in all details, the onus is on the taxpayer to satisfy this Board or the courts that the assessment is wrong in law or in fact and should be set aside.
The Board has had considerable experience in dealing with this type of claim from coast to coast, and I find as a rule of thumb that the ratio of 40% allowed to,the doctor in this instance is in excess of that which is usually allowed to medical practitioners or salesmen or other persons who find it to their convenience to use part of their personal residence for carrying on their business. However, I cannot base my decision in any case merely on a rule of thumb or my intuition. I must base it on fact.
The doctor has not, in my view, produced evidence to demolish the assumption upon which the Minister has based his assessments with respect to the portion of the residence of the appellant which was used as business premises. The doctor says that much more than 40% is used, but it is clear from his own testimony that such use is merely a convenience to him and, with a house with an area of some 3,200 square feet, it is inconceivable to me that almost all of it, if I were to accept the doctor’s evidence, is used as business premises. At the material time it was convenient for him to have his office in his house, as I have said, and it is his responsibility to satisfy me that the assessments are wrong in law or in fact. This he has failed to do and the appeal, in so far as his claim to an allowance of more than 40% of the house for business use is concerned, is dismissed.
The cost of the Encyclopaedia Britannica is an item which the Minister of National Revenue has said appeared to the assessor to have been obviously of a personal nature. The doctor has testified that this is a book that many find useful in the practice of medicine. It keeps him, he says, abreast of new terminology and helps him to explain to his patients in layman’s language words that would otherwise be unintelligible to them.
I do not express any opinion as to the degree of professionalism demonstrated by the doctor’s choice of this book or set of books, but he has satisfied me that these books were useful to him in the practice of medicine and, as I have pointed out, if he had chosen to spend the same amount on any other books with more obviously medical titles, I am sure no question would have been raised. I would therefore allow the appeal with respect to the amount of $569 laid out for these books in 1969.
The doctor also has appealed his assessments with respect to car allowance. The Minister’s officials have arrived at a figure of 75% as the proportion of his car expenses which should be allowed as having been expended for business purposes. The doctor has given evidence that he has two cars and that he is the only one that really drives them to any extent. I gather that his wife doesn’t do any highway driving. All of us can, I think, on occasion, acknowledge the fact that we do use our car to some small extent in a personal way, even if it is generally looked upon as a vehicle for business use. My experience has been that the various district taxation offices of the Department of National Revenue, Taxation are very inconsistent in their approach to what is a proper car allowance for a doctor. I have had them run as low as 20% in Vancouver and as high as 80% in New Brunswick on almost the same set of facts. It seems to me that there is a great lack of communication between district taxation offices on what should be considered allowable to professional people for business use of their private automobiles. I recently decided a case in Vancouver on similar facts and I cannot find the Minister’s assessment of 75% unreasonable nor can I find that the doctor has shown that more than the allotted 75% should be allowed. The appeal is therefore dismissed with respect to the car allowances for the years in question.
The other items which were in dispute were items of sundry expense involving typewriters and lamps, with some reference to chairs. There is no question whatsoever that, regardless of the state of the equipment in question, the typewriters and lamps are what are normally considered capital assets. They do not represent a recurring daily or monthly expense that one incurs in normal business practice, and I can see nothing in the evidence before me today to show that these were not properly capitalized by the assessor. Therefore the appeal
must be dismissed in this respect also.
In the net result, the appeal will be allowed in part and referred back to the Minister for reassessment in order to allow the cost of the encyclopaedia, namely, $569, as a deductible expense in the 1969 taxation year.
Appeal allowed in part.