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Businesses . . . Taxes . . . Automobile . . .Recent Court Cases:Pronovost v. The Queen , (2003) (Tax Court of Canada) Definitions of "All or Substantially All" Explored - The taxpayer claimed the cost of a pick-up truck as "automotive equipment". CRA assessed based on their assertion that it was an "automobile" and a "passenger vehicle". The Court interpreted the phrase "all or substantially all" "in the course of earning income" in the definition of automobile at section 248 of the Act. The court determined that the previous approach of 90% should not be rigid imposed on every case. It found that the facts in this case supported that the truck was used "substantially for the transportation of goods, equipment or passengers in the course of earning income" so as to qualify for the Class 10 definition under the Act as opposed to the Class 10.1 definition.
Ilott et al v. The Queen (2002) (Tax Court of Canada) Definition of "Auto" and "Substantially" Good News; No Log Bad - The taxpayers were farmers. They claimed the deduction under 8(1)(h.1). The taxpayers argued that their pickup trucks were not "automobiles" as defined under s. 245 of the Act. CRA disallowed the expenses on the basis that the trucks were passenger vehicles and that they were not used "substantially" for earning income. The court tries to interpret the meaning of "automobile" and "substantially" as stated in the Act. The court determined that a pick-up truck, especially one that has an extended cab, fit the definition of "automobile". The court also discussed that "substantially" cannot be interpreted with reference to an absolute percentage of time used. In this case the court found that the fact that the employees had not kept an auto log was fatal to their case of establishing that their trucks were used substantially for the purpose of producing income.
Juralowicz v The Queen (2000) (Tax Court of Canada) Auto Log Saves the Day - The taxpayer in this case kept a careful log of the mileage, dates and times for which the taxpayer was not reimbursed and those for where the employer reimbursed. The taxpayer claimed the travel expenses for which the employer did not reimburse. CRA disallowed the expenses. The Court accepted the evidence of the taxpayer's "auto log" and applied the law by allowing the expenses.
Pedersen v. The Queen (2000) (Tax Court of Canada) No Log , No Claim - The taxpayer claimed travel expenses but failed to keep an "auto log". CRA disallowed the expenses. The Court was convinced that the taxpayer had travel expenses but found against the taxpayer because of the failure to provide adequate evidence to establish those expenses.
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