Guy Tremblay:—This case was heard in Saskatoon, Saskatchewan on October 11, 1978.
1. The Point at Issue
The point is to know whether the appellant is well founded to claim automobile expenses for the 1973, 1974 and 1975 taxation years during which he was a commission salesman for Simpsons-Sears Ltd. He did not claim the expenses from his employer because he thought he had the choice to claim directly in his income tax returns.
2. Burden of Proof
The appellant has the burden of showing that the respondent’s assessments were not justified. This burden of proof is based not on a particular section of the Income Tax Act but on several judicial decisions, among them a decision of the Supreme Court of Canada rendered in R W S Johnston v MNR, [1948] CTC 195; 3 DTC 1182.
3. Facts
3.01 For the 1973, 1974 and 1975 taxation years the appellant was a furniture salesman for Simpsons-Sears Ltd in Prince Albert, Saskatchewan.
3.02 He was engaged on a verbal contract. He said that when he was hired, he was told by Mr Erickson, operating superintendent, that if he did not have a car, he would not be hired. Later, Mr Erickson told him that if he refused to use his car, he would find himself looking for another job.
3.03 He was paid only on commission.
3.04 The appellant was obliged to stay in the showroom 7 /2 hours a day. Since he was remunerated only on commission, he was not paid for overtime.
3.05 The appellant said he had to deliver furniture or in some way use his car for work at least twice, up to seven times a day. He sold’ about 200 television sets per year. He had to deliver about 100 sets. He said that many times after the delivery he had to visit the purchaser once or twice to adjust the television set.
3.06 The appellant never claimed automobile expenses from his employer even if the latter would have paid 0.195¢ a mile. After consulting persons who were learned in taxation, he said he had the choice either to claim the reimbursement of the expenses from his employer or to claim them in his income tax return. He chose the latter method.
3.07 The witness for the respondent, Mr Erickson, operating superintendent of Simpsons-Sears Ltd at the Prince Albert store, declared that the salesmen were required to submit a daily log to have the reimbursement of the automobile expenses. A special questionnaire concerning certain deductions allowable under the Income Tax Act was introduced as Exhibit A-2.
3.08 Mr Erickson confirmed that if the appellant had filed his claims for travelling expenses on that form (Exhibit R-2) he would have been paid 0.195¢ per mile ‘‘which is a fair return” he said. The employer never paid in advance but only after the expenses were incurred.
3.09 According to Mr Erickson, salesmen were not required on a general basis to leave the place of business. The majority of the salesmen do not claim for automobile expenses because they don’t have to.
3.10 Mr Erickson said substantially that the appellant was one of the best salesmen of his branch.
3.11 Concerning the words Mr Erickson supposedly told the appellant described in paragraph 3.02, Mr Erickson testified that he did not remember saying them but he admitted that he could have.
4. Law—Jurisprudence—Comments
4.1 Law
Paragraph 8(1 )(h) of the new Act is the main section involved in the present case and it reads as follows:
8. Deductions allowed.
(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:
(h) Travelling expenses—where the taxpayer, in the year,
(i) was ordinarily required to carry on the duties of his employment
away from his employer’s place of business or in different places,
(ii) under the contract of employment was required to pay the travelling expenses incurred by him in the performance of the duties of his office or employment, and
(iii) was not in receipt of an allowance for travelling expenses that was, by virtue of subparagraph 6(1)(b)(v), (vi) or (vii), not included in computing his income and did not claim any deduction for the year under paragraphs (e), (f) or (g),
amounts expended by him in the year for travelling in the course of his employment.
4.2 Jurisprudence
The jurisprudence cited by the parties is:
Gerald C Shangraw v MNR, [1976] CTC 2415; 76 DTC 1309;
Jos C Tremblay v MNR, [1969] Tax ABC 1211; 70 DTC 1006;
Marcel Provost v Her Majesty the Queen, [1976] CTC 445; 76 DTC
6254.
4.3 Comments
The requirements of paragraph 8(1 )(h) are conjunctive—it means that the expenses being deductible must meet all the conditions provided in the above section.
One fact is sure and admitted by both parties: the employer paid the travelling expenses (see paragraphs 3.06 and 3.08 of the Facts). Consequently, the appellant was not required under the contract of employment to pay the travelling expenses incurred by him in the performance of the duties of his employment. Since this requirement is not fulfilled, the appellant cannot deduct the travelling expenses.
The fact that the employer was ready to pay the expenses after they were incurred, and not in advance, is immaterial to. interpret the above section. The fact is that the employee was not required to pay the travelling expenses. Since one requirement is missing, the appeal must be dismissed.
5. Conclusion
The appeal is dismissed in accordance with the above reasons for judgment.
Appeal dismissed.