Kassa v. R. – TCC: Home health care service provider entitled to reasonable car expenses

https://decisia.lexum.com/tcc-cci/decisions/en/item/301134/index.do

Kassa v. The Queen (November 10, 2017 – 2017 TCC 226, Bocock J.).

Précis:  Ms. Kassa worked as a home health care service provider which required her to have the use of a car to drive to visit her clients.   She claimed various deduction including roughly $10,000 per year in car expenses.  CRA denied her claims and she appealed three taxation years to the Tax Court.  The Court allowed her appeal in part.  She was entitled to a reasonable allowance for car expenses which worked out to roughly 40% of the amount she had claimed.. Although this was an informal procedure appeal the Court took the unusual step of awarding Ms. Kassa her costs.

Decision:   The Court determined that Ms. Kassa was entitled to a deduction based on CRA’s prescribed rates:

[20]         VHA’s vehicle reimbursement payment was of limited use to Ms. Kassa because it was taxable. Nonetheless, it is and remains a useful tool for measuring the mileage driven for the employer’s benefit to various work sites in the course of Ms. Kassa’s duties. The employer, as a third party business operator, logically paid only for those distances for which it was responsible. Intuitively, the Court imputes that VHA would not have allowed a claim for over-inflated distances or mileage for personal use. At the rate of $0.36/kilometre, the number of kilometres driven for VHA’s business by Ms. Kassa is reflected in the following rounded quotients derived by dividing the total amount paid by the rate per kilometre:

Year                Taxable Allowance Paid        Kilometres Driven for Duties

2010                      $3,067.00                                 8519

2011                      $3,396.00                                 9433

2012                      $3,667.00                                 10,186

[21]         Produced at the hearing were the following prescribed CRA mileage reimbursement rates from Regulation 7306 of the Act:

Year                                        Reasonable Allowance Rates

2010                $0.52/km for the first 5000km and thereafter $0.46/km;

2011                $0.52/km for the first 5000km and thereafter $0.46/km; and

2012                $0.53/km for the first 5000km and thereafter $0.47/km.

[22]         On that basis, more likely than not, the reasonable costs for expenses, incurred by Ms. Kassa were as follows:

[23]         While these amounts are less than the total actual expenses purportedly incurred, Ms. Kassa kept little in the way of receipts, calculated a very low amount for personal use and gave no testimony regarding the frequency of travel to VHA’s offices. It is noted that the latter two items are personal expenses and not deductible. However, she did use her vehicle in providing services to her employer during the course of her employment. Therefore, she is entitled to the reasonable motor vehicle expense deductions outlined above.

As a result the appeal was allowed in part. Although this was an informal procedure appeal the Court took the unusual step of awarding Ms. Kassa her costs.