T-1189-77
Marvin R. V. Storrow (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Collier J.—Vancouver, October 26
and November 17, 1978.
Income tax — Income calculation — Deductions — Moving
expenses — Whether or not difference between sale price of
old house and purchase price of new house deductible moving
expense — Income Tax Act, S.C. 1970-71-72, c. 63, s.
62(1),(3).
Plaintiff, who took up new employment in Vancouver, sold
his house in Ottawa. The proceeds from the sale of the Ottawa
house were substantially less than the purchase price of a
smaller Vancouver house with essentially the same characteris
tics of the Ottawa house. The principal issue is whether or not
the difference in price and the mortgage interest on that sum,
are deductible moving expenses.
Held, the appeal is dismissed. The disputed outlays were not
moving expenses in the natural and ordinary meaning of that
expression. The outlays or costs embraced by those words are
the ordinary out-of-pocket expenses incurred by a taxpayer in
the course of physically changing his residence. Only outlays
incurred to effect the physical transfer of the taxpayer, his
household, and their belongings to the new residence are
deductible. The expression does not include (except as may be
specifically delineated in subsection 62(3)) such things as the
increase in the cost of the new accommodation over the old
(whether it be by virtue of sale, lease, or otherwise), the cost of
installing household items taken from the old residence to the
new, or the cost of re-fitting household items from the old
residence (such as drapes, carpeting, etc.). Moving expenses, as
permitted by subsection 62(3), do not mean outlays or costs
incurred in connection with the acquisition of the new
residence.
INCOME tax appeal.
COUNSEL:
B. J. Wallace for plaintiff.
P. N. Thorsteinsson for defendant.
SOLICITORS:
Lawson, Lundell, Lawson & McIntosh, Van-
couver, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
COLLIER J.: The plaintiff is a barrister and
solicitor. Until July 1975 he resided and worked in
Ottawa. He was employed there by the defendant.
In July 1975 he moved to British Columbia. He
took up new employment in Vancouver. He sold
his residence in Ottawa. He purchased a new
residence in Vancouver.
He alleges he incurred, as moving expenses, an
amount of $32,282.08. His new employer con
tributed $3,000. He, in calculating his taxable
income for 1975, claimed as a deduction
$29,283.08.
The Minister of National Revenue, in assessing
and re-assessing, allowed certain of the deductions
claimed, and disallowed others. It is in respect of
the latter this appeal is brought.
The disputed amounts are set out in the state
ment of claim as follows (paragraph 6):
(a) $22,750.00 being the amount paid by the Plaintiff, in
excess of the amount received by him as proceeds from the
sale of his old residence, to acquire his new residence,
(b) $1,094.84 being the mortgage interest paid in 1975
attributable to the amount of $22,750.00 referred to above,
(c) $135.20 being the amount paid in 1975 as Land Registry
Office fees on the purchase of the Plaintiffs new residence,
(d) $15.00 being the amount paid in 1975 as an installation
fee for telephone service at the Plaintiffs new residence,
(e) $22.50 being the amount paid in 1975 as an installation
fee for cablevision service at the Plaintiffs new residence,
(f) $107.49 being the amount paid in 1975 for the installa
tion of the dishwasher at the Plaintiff's new residence, and
(g) $112.00 being the amount paid in 1975 to install new
locks on the outside doors of the Plaintiffs new residence.
At trial, the defendant agreed to the allowance
of items (d) and (e). The serious difference of
opinion is, of course, in respect of items (a) and
(b).
The parties agreed to the following facts:
1. The Plaintiffs old residence in the City of Ottawa was a
two-storey brick, four bedroom house having in excess of 2,000
square feet of interior space constructed in or about 1961 and
located in the Alta Vista area;
2. The Plaintiffs new residence acquired in Vancouver, British
Columbia is a two-storey, stucco, three bedroom house having
total interior space of less than 2,000 square feet constructed in
or about 1928 and is situated in the Shaughnessy district;
3. The Plaintiffs new residence is smaller, of inferior construc
tion and older than his old residence but in all other respects
the two houses are essentially similar in character, con
venience, condition, lot size and location in relation to amenities
and to the Plaintiffs place of employment;
4. The difference between the amount which the Plaintiff
received on the sale of his old residence and the amount which
he was required to pay to acquire his new residence arises solely
from the difference in the level of real estate prices between
Ottawa and Vancouver in the Spring of 1975. In fact by all
indicia other than market criteria the Plaintiffs old residence
should have been more valuable than his new residence.
I set out, next, what I think to be the relevant
portions of the relevant provisions of the Income
Tax Act', as they stood in 1975:
62. (1) Where a taxpayer
(a) has, at any time,
(i) ceased to carry on business or to be employed at the
location or locations, as the case may be, in Canada at
which he ordinarily so carried on business or was so
employed,...
and commenced to carry on a business or to be employed at
another location in Canada (hereinafter referred to as his
"new work location"), ...
and by reason thereof has moved from the residence in Canada
at which, before the move, he ordinarily resided on ordinary
working days (hereinafter referred to as his "old residence") to
a residence in Canada at which, after the move, he ordinarily so
resided (hereinafter referred to as his "new residence"), so that
the distance between his old residence and his new work
location is not less than 25 miles greater than the distance
between his new residence and his new work location, in
computing his income for the taxation year in which he moved
from his old residence to his new residence or for the immedi
ately following taxation year, there may be deducted amounts
paid by him as or on account of moving expenses incurred in
the course of moving from his old residence to his new resi
dence, to the extent that
(3) In subsection (1), "moving expenses" includes any
expense incurred as or on account of
' R.S.C. 1952, c.148, as amended by S.C. 1970-71-72, c. 63
(the "New" Act).
(a) travelling costs (including a reasonable amount expend
ed for meals and lodging), in the course of moving the
taxpayer and members of his household from his, old resi
dence to his new residence,
(b) the cost to him of transporting or storing household
effects in the course of moving from his old residence to his
new residence,
(c) the cost to him of meals and lodging near the old
residence or the new residence for the taxpayer and members
of his household for a period not exceeding 15 days,
(d) the cost to him of cancelling the lease, if any, by virtue
of which he was the lessee of his old residence, and
(e) his selling costs in respect of the sale of his old residence.
"Moving expenses" is not, in the statute, other
wise defined.
The main issue, in this appeal, is whether the
additional monies laid out by the taxpayer, when
he moved, in acquiring a new residence reasonably
comparable to his old residence, were
... amounts paid by him as or on account of moving expenses
incurred in the course of moving from his old residence to his
new residence ...
I agree with certain initial propositions put for
ward by counsel for the plaintiff:
(a) Where a definition section uses the word
"includes", as it does in subsection 62(3), then
the expression said to be defined includes not
only those things declared to be included, but
such other things ". as the word signifies
according to its natural import." 2
(b) The words "moving expenses" must be con
strued in their ordinary and natural sense in
their context in the particular statute'.
The plaintiff submits that a moving expense is
an expense of moving from one dwelling to
another; it includes all costs directly and solely
related to the move from the time of the decision
to leave to the time of resettlement. The additional
monies laid out to acquire a comparable residence
in Vancouver, the interest on that amount, and the
2 The King v. B.C. Fir and Cedar Lumber Co. Ltd. [1932]
A.C. 441 at 448 (J.C.P.C.).
3 See: Driedger, The Construction of Statutes, 1974, (Butter-
worth's, Canada) p. 67. Cross, Statutory Interpretation, 1976,
(Butterworth's, England) p. 29 ff.
costs of registration, of installing the dishwasher
and new locks were all incurred, it is said, because
of the move from one residence to another.
For the defendant, it is contended the amounts
in issue are not really expenses at all; they are the
extra costs incurred, in this case, in replacing an
asset, the old residence.
I agree generally with the defendant's conten
tion.
The disputed outlays were not, to my mind,
moving expenses in the natural and ordinary
meaning of that expression. The outlays or costs
embraced by those words are, in my view, the
ordinary out-of-pocket expenses incurred by a tax
payer in the course of physically changing his
residence. The expression does not include (except
as may be specifically delineated in subsection
62(3)) such things as the increase in cost of the
new accommodation over the old (whether it be by
virtue of sale, lease, or otherwise), the cost of
installing household items taken from the old resi
dence to the new, or the cost of replacing or
re-fitting household items from the old residence
(such as drapes, carpeting, etc.). Moving expenses,
as permitted by subsection 62(3), do not, as I see
it, mean outlays or costs incurred in connection
with the acquisition of the new residence. Only
outlays incurred to effect the physical transfer of
the taxpayer, his household, and their belongings
to the new residence are deductible.
The disallowance by the Minister of items (a),
(b), (c), (f) and (g), set out in the statement of
claim is confirmed. The assessment is referred
back to the Minister for re-assessment in respect
of the allowance of items (d) and (e). The defend
ant is entitled to costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.