Tilahun v. R. – TCC: Additional automobile expenses disallowed – a portion (50%) of cell phone expenses allowed

Tilahun v. R. – TCC:  Additional automobile expenses disallowed – a portion (50%) of cell phone expenses allowed


Tilahun v. The Queen (June 29, 2018 – 2018 TCC 118, Russell J.).

Précis:   The taxpayer worked in construction and was required to report to various work sites.  He received a fixed automobile allowance from his employer which filed a Form 2200 stating that the employee was required to pay any other expenses.  The taxpayer claimed additional automobile expenses in excess of the allowance and cell phone expense (which his employer did not reimburse).  The Tax Court disallowed the additional automobile expense claim but allowed 50% of the cell phone expenses (which the Crown conceded).  There was no order as to costs since this was an informal procedure appeal.

Decision:   The Court denied the additional automobile expense claims:

[7]  So is a paragraph 8(1)(h.1) deduction permitted? The answer is yes, unless either of subparagraphs (iii) and (iv) applies. Subparagraph (iv) would not, on the facts. Does subparagraph (iii) apply? The Appellant did receive an allowance (a “fixed allowance”) for motor vehicle expenses (fuel and maintenance). Was that allowance “because of paragraph 6(1)(b), not included in computing [the Appellant’s] income for the year”? Paragraph 6(1)(b) includes in income personal and living allowances except as therein listed. Subparagraph 6(1)(b)(vii.1) is on that list. It encompasses “reasonable allowances for the use of a motor vehicle received by an employee…for travelling in the performance of the duties of the …employment”. But here the allowance received was a so-called “fixed allowance”, not a “reasonable” allowance per subparagraph 6(1)(b)(x) which requires calculation of the allowance to be used solely the on number of kilometres for which the vehicle is used in connection with or in the course of the office or employment. Therefore, the Appellant’s allowance is not a subparagraph 6(1)(b)(vii.1) allowance and so is not excluded per paragraph 6(1)(b) from being included in computing the Appellant’s income. And consequently subparagraph 8(1)(h.1)(iii) does not apply, leading to the conclusion that the Appellant is not entitled to any paragraph 8(1)(h.1) deduction for motor vehicle expenses.

[8]  The Respondent cited Hogg v. Her Majesty, 2002 FCA 177 and Colavecchia v. Her Majesty, 2010 TCC 194 for the proposition that the travel in this case was personal travel. In my view, however, where the Appellant is driving from home to various construction sites and back without any suggestion that such sites are the employer’s place of business or a field office prompts me to prefer the Federal Court of Appeal decision of Dionne v. Her Majesty the Queen, 2006 FCA 79, endorsing Champaigne v. Canada, 2006 TCC 7 which appears to recognize somewhat similar travel as not personal. Also and in any event the Appellant’s driving accords with the description noted above in paragraph 8(1)(h.1), i.e., driving as “ordinarily required to carry on the duties of the … employment away from the employer’s place of business or in different places.” From that phrasing one may assume that Parliament does not consider such driving as personal travel.

[9]  Therefore the motor vehicle travel expenses claimed must be denied. They would be denied in any event, if and to the extent such travel between home and construction sites for employment purposes.

Based at least in part on a concession by the Crown the Court permitted 50% of the cell phone expenses claimed:

[10]  Turning to the cell phone charges, per the quite fair acknowledgment of Respondent’s counsel, based on testimony of the Appellant at the hearing, I am prepared to allow one-half of the agreed-upon amount of the claim for cell phone expenses for each of the 2010 and 2012 years. I will include the 2011 year for this as well. Taking the totality of evidence into consideration I accept that non-reference to cell phone expenses in the 2011 T2200, while included in each of the sandwiching years’ 2010 and 2012 T2200s, was unintended. In his testimony the Appellant did not except 2011 in his description of cell phone use for employment purposes.

[11]  Respondent counsel’s concession did not include indication of any statutory basis for allowing the claim. I believe it could fit under paragraph 8(1)(h) which deals with non - motor vehicle travel expenses. This predominantly includes lodging and meals expenses, but I do not see that it could not also include employment usage of a cell phone. The cell phone is needed for communication when an employee is travelling, i.e. is away from the employer’s place of business. Here, phone calls to and from the employer were made or taken by the Appellant on almost a daily basis to advise the Appellant what work site to travel to next for his employment work, and for other work-related communications.

Thus the appeal was allowed in part;  there was no order as to costs since this was an informal procedure appeal.