Citation: 2013TCC52
Date: 20130218
Docket: 2011-3994(IT)I
BETWEEN:
WILLIAM DAVID JAMIESON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
The Appellant has
appealed the reassessment of his 2009 taxation year in which the Minister of
National Revenue (the “Minister”) disallowed expenses of $8,242 as follows:
|
Expenses
|
Amount
|
|
Continuing Legal Education Courses
|
$1,741
|
|
Travel
|
5,697
|
|
Meals
|
238
|
|
Office
|
171
|
|
Supplies
|
83
|
|
Telephone
|
312
|
|
Total
|
$8,242
|
[2]
In his 2009 income tax
return, the Appellant reported that he earned no business income and he incurred
business expenses of $10,520. He was allowed a deduction of $2,278 for
professional membership fees. At the audit stage of this appeal, the Appellant
submitted an additional receipt and was allowed a further deduction of $228 for
professional membership fees so that in total he was allowed a deduction of
$2,506 for professional membership fees.
[3]
The Appellant is a
lawyer and has been a member of the bars of Ohio, New York and Massachusetts since 1969. He became an employee of J.D. Irving Limited (“J.D. Irving”) in
December 1979; and, in 2009, he was the Executive Vice President of J.D. Irving
and Corporate Secretary of numerous companies affiliated with J.D. Irving.
[4]
The Appellant explained
that he was required to take at least 12 hours of continuing legal education
(“CLE”) courses to maintain his professional certification as a lawyer; and, in
2009, he was able to take these courses in conjunction with the American Bar
Association meetings in Chicago and Vancouver.
[5]
With respect to his
travel and meal expenses, the Appellant testified that these expenses were
incurred to take the CLE courses and to attend meetings of the National Council
of the Moritz Law School of The Ohio State University at Columbus, Ohio (the “National Council of Moritz”). It was his evidence that he is required as a
member of the legal bar to provide pro bono services to support the
profession. His membership on the National Council of Moritz fulfils this
obligation. He maintained that the expenses related to his attendance at the
meetings of the National Council of Moritz were business expenses; but, if I
disagreed, then the expenses should be allowed as charitable contributions to a
listed university.
[6]
It was the Appellant’s
position that he was in the business of being a lawyer and he earned fees as a
lawyer from his services as a director on various boards of directors and as a
trustee for various trusts. In 2009, he earned fees as a director on the board
of directors for J.D. Irving and two affiliated companies. He stated that in 2010
and 2011 he received and reported business income from his services as trustee
for the Susan E. Quagliata
Testamentary Trust. In his oral submissions, the Appellant argued that
paragraph 53 of the decision in Stewart v. R., 2002 SCC 46 summarized
his position. Based on this, he stated that he had a “law practice” and that it
should not even be questioned whether his “law practice” was a source of
income. Paragraph 53 of Stewart reads:
53
We emphasize that this “pursuit of profit” source test will only require
analysis in situations where there is some personal or hobby element to the
activity in question. With respect, in our view, courts have erred in the past
in applying the REOP test to activities, such as law practices and restaurants,
where there exists no such personal element: see, for example, Landry ,
supra, Sirois ,
supra, Engler v. R. (1994),
94 D.T.C. 6280 (Fed. T.D.). Where the nature of an activity
is clearly commercial, there is no need to analyze the taxpayer's business
decisions. Such endeavours necessarily involve the pursuit of profit. As such,
a source of income, by definition, exists, and there is no need to take the
inquiry any further.
[7]
It was the Respondent’s
position that in 2009 the Appellant was an employee of J.D. Irving and as such
he could only deduct those expenses which were allowed by section 8 of the Income
Tax Act (the “Act”). Counsel for the respondent further submitted
that the Appellant did not have a law practice and he did not earn income from
business.
Analysis
[8]
With all due respect to
the Appellant, being a lawyer is not in and of itself a business. One must
practice law as a business to be in the business of law. There was no evidence
before me from which I could conclude that the Appellant had a law practice.
[9]
The positions which the
appellant held as director were offices. Subsection 248(1) of the Income Tax
Act (the “Act”) clearly defines an office to include “the position
of a corporation director” and an officer is a person holding such an office.
An employee includes an officer. The director fees received by the Appellant in
2009 were treated as income from an office and were properly included in the T4
which he received from J.D. Irving.
[10]
The Appellant was not
in the business of being a trustee. According to his evidence, he has refused
opportunities to be trustee because he is very busy in his capacity as Vice
President and Corporate Secretary of J.D. Irving.
[11]
I note that the Appellant
was trustee of the Susan E. Quagliata Testamentary Trust and that Susan E.
Quagliata was his sister-in-law. It is my view that the trustee fees he
received in 2010 and 2011 were remuneration from an office.
[12]
As I have concluded
that, in 2009, the Appellant did not have a law practice but occupied the
offices of director and trustee, he is limited to the deductions permitted by
section 8 of the Act.
[13]
There is no provision
in section 8 that would allow the Appellant to deduct the costs of his CLE
courses and the related travel and meal expenses from his office and employment
income.
[14]
The Appellant
volunteered his services and time to be a member on the National Council of
Moritz. He stated that his membership was pro bono. The expenses he
incurred to perform his pro bono services are not deductible nor should
they be deductible. The taxpayers of Canada should not have to bear the
expenses associated with the Appellant’s pro bono services. I agree with
the comments made by Justice Campbell Miller at paragraph 16 in Furman v. R.,
2003 TCC 298 when he stated:
One might altruistically hope that lawyers enter volunteer,
charitable, sports or other activities because they are sincerely interested in
contributing to the betterment of such organizations, be it as a volunteer,
director, coach, teacher, whatever. To suggest such activities are “in the
course of the individual's employment as a lawyer” is frankly not how I would
like the public to perceive a lawyer's involvement.
[15]
In 2011, the Appellant sent a
“Declaration of Conditions of Employment” (Form T2200) for the 2009 taxation
year to the Canada Revenue Agency (“CRA”). According to Form T2200, the
appellant was not required under his contract of employment to have an office
away from his employer’s place of business. He was not required to pay for supplies
or for the use of a cell phone. Consequently, the expenses incurred for office,
supplies and telephone are also not deductible.
[16]
For all of these reasons, the
appeal is dismissed.
Signed at Ottawa, Canada, this 18th
day of February 2013.
“V.A. Miller”
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