Teachers Win Case At Canadian Tax Court :CRA SOTW
Alan Baggett
PAUL WALDIE
November 26, 2008 at 5:19 AM EST
As headmaster of Appleby College in Oakville, Ont., Guy McLean lives
rent-free in a 100-year-old house overlooking Lake Ontario and
entertains dignitaries such as Prince Edward and Archbishop Desmond
Tutu.
But life isn't always idyllic at the elite private school where
tuition and board cost more than $40,000 a year.
Mr. McLean and a group of teachers who also live on campus have
complained in court documents about having no privacy and constantly
dealing with noise, drunken students, "mental instability," girls
running away, bullying, fights, rundown accommodations, no air
conditioning, pushy parents and intrusive alumni.
Mr. McLean said he can't get out of his driveway most days because
people park behind his car, while another teacher said people
constantly take his lawn chairs and use a swing set he installed for
his children. One teacher said she teaches six courses and supervises
a dorm housing 52 girls - all while raising her own two children.
Another said she lives crammed into a 500-square-foot apartment in the
middle of a dorm.
The headmaster’s residence at Appleby College in Oakville, Ont., is
seen from the school grounds. The Canada Revenue Agency valued the
benefit of living in the home at $33,100 a year, but the headmaster –
and the Tax Court of Canada – disagreed.
The intrusions were so extensive that Mr. McLean and the teachers felt
they were entitled to a break on their taxes. The Canada Revenue
Agency disagreed and said the disruptions were just part of their
jobs.
The agency reassessed the tax returns of Mr. McLean and the six others
in 2000 and said they had failed to include thousands of dollars in
their income to reflect the taxable benefit they received from the
college for the campus accommodation. Mr. McLean claimed $6,000 in
annual taxable benefit for use of the house. But the CRA calculated
the benefit at $33,100, based largely on the rental market in the
area, and planned to add that to his income for tax purposes. The
teachers were hit with increases of as much as $19,000 on their
incomes.
"It was a big shock and the amounts of money were pretty significant,
obviously," Mr. McLean recalled.
The group took the case to the Tax Court of Canada and won. In a
ruling released last week, Mr. Justice Eugene Rossiter said Mr. McLean
and the others were entitled to discounts of up to 80 per cent on the
taxable benefits. The CRA's fair-market-value assessment didn't
reflect the issues confronting the group, the judge said. "You cannot
simply use a strict mathematical approach in determining the level of
disturbance whether it is for loss of quiet enjoyment or for loss of
privacy," he ruled.
Referring to Mr. McLean's demands, the judge said the headmaster lives
"in a very large public fish bowl" and has to entertain constantly,
meet students and parents at all hours and handle administrative
duties. Even his clothing is monitored. There is "a certain code of
conduct that the headmaster must adhere to in his own home, including
dressing appropriately on certain days, all of which is scrutinized
very closely due to the location of his residence."
As for the teachers who have apartments inside dorms, the judge said
"being attached to a dormitory that houses 50 to 60 children or
teenagers should be enough to turn off any reasonably prudent and
competent person from renting the premises and paying very much for
it."
Mr. McLean said he and the others are happy with the ruling and he
questioned how the CRA came to its conclusions in the first place. "If
there was a massive taxable benefit, then we'd have every teacher that
worked here lining up to live on campus," he said.
About one-third of the college's 100 teachers live on campus. Appleby
has about 750 students from around the world and about 250 live in
four dorms spread across 55 acres. The school rents out many of its
facilities year round, which adds to the commotion on campus,
according to court documents.
Mr. McLean, who has been headmaster for 21 years, said he loves his
job. But he added that "it comes with a lot of other expectations and
a lot of disturbances and a lot of other things that are not the same
as, you know, your own private home on a piece of property on a lake,
for sure."
He said he and his wife have a home about two hours away. "You sort of
try to holiday to the extent you can, holiday elsewhere from where you
are living, because the living equals work, in one sense, when you are
on campus."
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