All parties in the “Branksome Hall” parking cases (Geraldine Anthony, Heather Friesen, Leslie Morgan, Jarrod Baker v. The Queen) have filed their Memoranda of Fact and Law in the Federal Court of Appeal.
The hearing has been scheduled for December 1, 2011 in Toronto.
The issues are whether parking provided to the Appellants by their employer (a private school in Toronto) was a benefit taxable under paragraph 6(1)(a) of the Income Tax Act (the “Act”), and if so, how should the value of that benefit be assessed.
The Appellants, along with approximately 100 other employees of Branksome Hall, were reassessed for their 2003 and 2004 taxation years to include $92 per month (inclusive of GST and PST) in their income representing the value of free parking provided by their employer. These four appeals were chosen as test cases and were heard on common evidence.
In the decision of the Tax Court, Mr. Justice Brent Paris found that (a) the Appellants received a taxable benefit within the meaning of paragraph 6(1)(a) of the Act because they had a right to a parking spot by virtue of their employment, the benefit to them was not incidental to any benefit to their employer and they saved money by being given a parking spot, (b) relying on Schroter v. The Queen (2010 FCA 98), the value of that taxable benefit was its fair market value and (c) the fair market value of the taxable benefit was $75 per month in 2003 and $77 per month in 2004.
The Appellants take issue with the finding of a taxable benefit in the circumstances and the legal test used by the Tax Court to determine its quantum. The Appellants argue that there was no economic benefit to them and the provision of parking was incidental to the infrastructure of their place of employment. They also contend that their case is nothing like Schroter v. The Queen, in which a corporate executive was rewarded with a free parking pass for his downtown office tower on his promotion. If the free parking at Branksome Hall is determined to be a taxable benefit, the Appellants argue that the value should be computed on the basis of the employer’s cost of providing that privilege, which is “in accordance with the text, context and purpose of [the Act], provides certainty, predictability and fairness, and is most appropriate in this case.” Finally, the Appellants argue that the Tax Court’s decision would have far reaching implications if left undisturbed. For example, a domestic caregiver who enjoys free parking on the driveway of an employer’s home would potentially be subject to tax on that “benefit”.