Beaubier J.T.C.C.: - This appeal was heard at Edmonton, Alberta pursuant to the Informal Procedure on July 10, 1996. The Appellant was the only witness.
In his evidence the Appellant agreed with the facts described in the Reply. The assumptions of the Minister of National Revenue read:
8. In so reassessing the Appellant, the Minister made the following assumptions of fact:
(a) the facts as admitted above;
(b) on or about December 1, 1992, the Appellant moved from Calgary, Alberta (his “Old Residence”) to Edmonton, Alberta (his “New Residence”);
(c) the Appellant commenced employment with MacKay & Partners in Edmonton, Alberta (the “new work location”);
(d) the Appellant moved on December 1, 1992 and sold his Old Residence on February 1, 1993;
(e) the Appellant calculated moving expenses of $17,330.19 of which $4,583.33 was claimed as moving expenses in the 1992 Taxation Year to the extent of income from the new work location. The balance of $12,746.86 was carried forward to be claimed in the 1993 Taxation Year;
(f) the Appellant requested that the claim for moving expenses he sought to
deduct in the 1993 Taxation Year of $12,746.86 be increased by $779.06;
(g) the amount of $3,012.53 ($2,233.47 plus $779.06) which represents the mortgage interest, heating and utility bills from the time of the move to the date of the sale of the Old Residence is not a moving expense.
The Appellant obtained a new job and moved. He appears to be in this thirties. He and his wife have two children and they purchased a house immediately upon moving to Edmonton so that their children would not be unduly upset in their move from Calgary to Edmonton.
They listed their Calgary house at $164,900 on October 27, 1992 after he obtained his new job on October 13, 1992. They sold the Calgary house to the first person who offered to buy it for $153,500 on February 1, 1993. The Appellant appears to be of reasonable, but modest, circumstances. Everything that he did respecting the sale of the Calgary house and the purchase in Edmonton was reasonable and sensible.
His actions and circumstances fit the judgment and description of Mogan, J.T.C.C. in McLay v. Minister of National Revenue [1992] 2 C.T.C. 2649, 92 D.T.C. 2260 (T.C.C.) in the last paragraph of his judgment when he said at page 2657:
With respect to subsection 62(3) of the Act, I assume that most “moving expenses” as defined therein have been allowed as deductions in computing the Appellant’s income to the extent that they were not paid by the R.C.M.P. The only specific expense identified in this appeal which the Respondent did not allow as a deduction under section 62 and which was apparently not reimbursed by the R.C.M.P. is the amount of $1,310.89 representing mortgage payments on the Surrey residence from July 16 to September 10, 1985. In my view, the interest portion (if any) of those mortgage payments should be deducted as a moving expense because those payments cover a period when the Appellant was required to own two homes; a person in the Appellant’s circumstances does not ordinarily own two homes; and the need to retain his Surrey residence for a period of 57 days after he purchased his St. John’s residence was a direct consequence of his move from Vancouver to St. John’s.
I would allow the Appellant to deduct only the interest portion of those mortgage payments because he would have recovered the principal portion of those payments upon the sale of the Surrey residence. Because no other specific expense was identified as an alleged moving expense in this appeal, I would not grant to the Appellant any further relief under this third issue. The appeal is allowed in part without costs in accordance with the above reasons.
The appeal is allowed. This matter is referred to the Minister of National Revenue for reconsideration and reassessment accordingly.
The Appellant is awarded costs of $50.00 for his out of pocket expenses for the purposes of this appeal.
Appeal allowed.