Measuring Distance for Moving Expense Purposes

Hauser v The Queen, 2014 TCC 328

At issue was how to measure the distance between two locations (old home and work) for purposes of the moving expense deduction (ITA, s 62) so as to determine whether a move was an “eligible relocation” (ITA, s 248(1)) or not.

POSITIONS

The Crown argued that the distance should be measured using a commute along the major urban route, being the shortest normal route.

The Taxpayer argued that the distance should be measured according to the most efficient route in a particular tax year – in this case a freeway route that goes around the city and bypasses detours and delays on the urban route caused by construction and light rail transit.

ANALYSIS

To qualify for a work-related moving expense deduction – section 62 of the ITA – the move must be an “eligible relocation” as defined in subsection 248(1) of the ITA.  An eligible relocation requires that the distance between the old residence and the work location be not less than 40 Km greater that the distance between the new residence and the work location.  In other words, the taxpayer must move to be more than 40 Km closer to work.

The principles applicable were set out in Giannakopoulos v MNR, 95 DTC 5477 (FCA), at paragraphs 7-9:

• The usual starting point is that the taxpayer travels “to work using ordinary routes of public travel, i.e. roads, highways, railways”;
• The distance should be measured “using real routes of travel” so as to get “a realistic measurement of traveling distance”;
• The straight-line method is not appropriate because it does not relate to how an employee travels to work;
• The normal route is not the subjective route that the worker normally takes to get to work, but rather refers to the shortest normal route of the travelling public;
• Consideration of the normal route can include routes under construction, so long as construction projects do not last an inordinate amount of time (not that the delay caused by the project adds inordinately to the commute);

The deduction for moving expenses is meant to recognize that although the commute to work is a personal expense, the move to be within a reasonable distance of work is a legitimate employment expense.  To be eligible the move is expected to provide long-term benefits (a number of years), and not short term ones (for example avoiding a short term construction project).

In this case, the court was not convinced that the delays and detours lasted sufficiently long to make the urban route not an appropriate route for section 62 purposes.

– Sas Ansari

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