The Federal Court of Appeal Decision
HER MAJESTY THE QUEEN
Heard at Enter City, Province and Date(s) of Hearing just after[Comment] code.Toronto, Ontario, on Friday, June 5, 1998Judgment deliveredat Enter City, Province and Date of release just after [Comment]code.Ottawa, Ontario, on Thursday, July 23, 1998
Please enter name of additional author(s) separated by a hardreturnand flush to the right just after the first author.You mayalso indicate whether additional authors are concurring or descenting.REASONSFOR JUDGMENT BY:McDONALD J.A.CONCURRED IN BY: STRAYERJ.A.
HER MAJESTY THE QUEEN
REASONS FOR JUDGMENT
 The issue to be addressed in this applicationfor judicial review is whether the provisions of the Income Tax Act(the Act) governing business expense deductions should be interpreted ina manner that responds to Canada's changing business environment. Specifically,this Court must determine whether a 'foot and transit courier' travelling150 kms a day throughout the Toronto area and carrying a backpack weighingbetween 20-50 pounds can deduct as a business expense a modest amount forextra food and water. The Tax Court Judge was of the view that the Actprecluded the applicant's food and beverage expenses from being deductedas they are of a personal nature. Paragraph 18(1)(h) of the Act specificallyexcludes personal and living expenses from being deducted.
 The facts of this case are straightforward.During the years under review the applicant was a self-employed foot andpublic transit courier. He states that his typical working day would beginat 6:45 a.m. when he was advised via a dispatcher of the packages thatwere waiting to be delivered that day. From 7:45 a.m. to approximately9:30 a.m. he picked up and dropped off packages on foot in the downtownToronto core. At 9:30 a.m. he would travel by subway to make deliveries.He travelled north on the subway line picking up and dropping off packagesen route. Between subway stations he would travel between buildings onfoot. He would continue to make deliveries in this manner until 6:00 p.m.
 According to the applicant, he would coverapproximately 150 km on foot and by public transportation every day. Heregularly worked ten hours per day, five days per week, fifty-two weeksper year. His courier company considered him an independent contractor.He did not receive vacation pay and was not paid for any break or mealtimes. The applicant claims to have been paid on a commission basis, receivinga percentage of the amount the client paid for its courier services. Accordingto the applicant, the typical cost of delivering a package is based uponits weight, the speed with which it must be delivered and the distanceit is being transported. The further the package must go, the more theclient pays and the more money the applicant receives for its delivery.In order to make his job financially viable, he must deliver as many packagesas possible, as quickly as possible.
 The applicant claims that this type of employmentrequires him to consume what essentially amounts to an extra meal per day.At the tax court he sought to deduct $8.00 of what he terms extra foodand $3.00 for extra bottled water and juice. It is important to stressthat the above figures represent amounts over and above what the averageindividual would need to consume on a daily basis. The applicant is notasking this Court to approve a deduction for all food and beverages consumedbut only a reasonable amount for the extra food and water his body requiresas fuel for his job.
 Pursuant to subsection 9(1) of the Act,a taxpayer is required to declare as income profit from a business or property.In calculating one's profit the Act allows for certain business deductions.Other deductions are specifically disallowed. Paragraph 18(1)(a) prohibitsa deduction for an outlay or expense "except to the extent that it wasmade or incurred by the taxpayer for the purpose of gaining or producingincome from the business or property." Paragraph 18(1)(h) prohibits thededuction of personal or living expenses. In order to determine whetheran expense qualifies as a reasonable business expense or whether it isa personal and living expense the following questions are helpful: (1)what is the need that the expense meets? (2) would the need exist apartfrom the business? and (3) is the need intrinsic to the business? (SeeKrishna, The Fundamentals of Canadian Income Tax (5th ed) (Carswell:Scarborough, 1995) at 368). According to Iacobucci J. in Symes v. Canada1 CTC 40 at 60:
If a need exists even in the absence of business activity, andirrespective of whether the need was or might have been satisfied by anexpenditure to a third party or by the opportunity cost of personal labour,then an expense to meet the need would traditionally be viewed as a personalexpense. Expenses which can be identified in this way are expenses whichare incurred by a taxpayer in order to relieve the taxpayer from personalduties and to make the taxpayer available to the business are notconsidered business expenses since the taxpayer is expected to be availableto the business as a quid pro quo for business income recovered.
 Traditionally, food and beverages have alwaysfallen within the confines of paragraph 18(1)(h) for the valid reason thatwe all need food and water to survive, regardless of our business. ApplyingProfessor Krishna's analysis, the rationale for not allowing food and beveragesto be deducted as business expenses is as follows: the human need for foodand water exists apart from the business. It is not a need that is intrinsicto the business. While appropriate meals may make one available for businessor better able to perform at one's business, the need to satisfy thirstand hunger exists independently from the business. Parenthetically I notethat the Act allows business persons to deduct up to 50% of their foodand beverage expenditures for meals of a business nature.1While presumably these individuals require food regardless of their businessneeds, the Act specifically allows for this deduction. Similarly, if theapplicant worked in a business office which provided water coolers forits employees would not the employer be able to deduct the cost of thosecoolers as a business expense? Having said this, it is not necessary toconsider these allowable business deductions further because my analysisof this case does not turn on them. I simply note them in passing.
 Thus, because an expense has been consideredpersonal in the past does not mean that it necessarily follows that itshould be classified as personal today. Justice is not served by remainingwedded to concepts which are outdated and in need of change in order torespond to the ever changing framework of our society. As Iacobucci J.stated in Symes, supra when faced with the argument that the childcare expense deduction should be disallowed because it has traditionallybeen classified as an expense that is personal in nature (at 54):
This appeal presents a particular expense which has been traditionallycharacterized as personal in nature. If, in coming to a decision, thisCourt stated that since such expenses have always been personal they mustnow be personal, the conclusion could be easily and deservedly attacked.For this reason, proper analysis of this question demands that the relationshipbetween child care expenses and business income be examined more critically,in order to determine whether that relationship can be sufficient to justifythe former's deductibility. This proposition, in my opinion, leads naturallyto paragraph 18(1)(a), which sets out the relationship required by theIncomeTax Act.
Iacobucci J. went on to state that:
In turning to paragraph 18(1)(a), however, I must take pains notto eviscerate needlessly paragraph 18(1)(h) and its related jurisprudence,when faced with a particular expense, and it may be both proper and expedientto refer to past decisions which have characterized the expense as 'personal'within 18(1)(h), such that an extensive analytical approach invoking thewords of paragraph 18(1)(a) may not be required. On the facts of this case,paragraph 18(1)(a) may be of greater assistance than the simple prohibitionagainst deducting 'personal expenses' in paragraph 18(1)(h), as I re-examinewhether child care expenses truly constitute personal expenses. However,not every expense which has been traditionally characterized as a personalexpense will deserve a similar re-examination.
 The Minister urges this Court to relyon the latter part of this quotation as well as past jurisprudence thatestablishes quite correctly that food and beverages are personal expenses.However, the facts of this case are such that a re-examination of the prohibitionon this deduction is necessary. Indeed, the reasoning of Iacobucci J. inSymesatpage 55 is applicable to the case at hand:
The decision to characterize child care expenses [in this case,food and beverage] as personal expenses was made by judges. As part ofour case law, it is susceptible to re-examination in an appropriate case.In Saluturo v The Queen [cite omitted] this Court had occasion tostate the following:
Judges can and should adopt the common law to reflect the changingsocial, moral and economic fabric of the country. Judges should not bequick to perpetuate rules whose social foundation has long since disappeared.Nonetheless, there are significant constraints on the power of the judiciaryto change the law....The judiciary should confine itself to those incrementalchanges which are necessary to keep the common law in step with the dynamicand evolving fabric of our society.
 I would also note that unlike in Symes,supra where the Supreme Court analyzed the deductibility of child careexpenses generally, this Court is not re-considering the prohibition onthe deduction of the broad category food and beverage expenditures. Instead,it is considering the more limited issue of whether the extra foodand beverages consumed by a courier can be deducted when a correspondingdeduction in the form of fuel is allowed for couriers using automobiles.
 This case would be different from thatof an individual who chooses to eat more or more expensive food productswhich is clearly a personal preference or choice. In this case, the extrafood would not have been consumed because the applicant wishes to eat moreon a given day. The extra food would be required to enable the applicantto get from point A to point B. He would not be choosing to eat and drinkmore -- he would have to. Just as a courier's automobile requires fuelin the form of gas to move, the applicant alleges that he requires fuelin the form of food and water. The foot and transit courier and the automobilecourier are engaged in identical activities the only difference being oneuses a car as a means of transport and the other his body or a bicycle.Because the courier who drives the automobile is allowed to deduct hisor her fuel, the foot and transit courier should be able to deduct thefuel his body needs. However, because we all require food and water tolive, he can only deduct the extra food and water he must consumeabove and beyond the average person's intake in order to perform his job.This is similar to the automobile courier who is only entitled to deductthat portion of the fuel used for a business purpose. The extra fuel consumedfor personal needs cannot be deducted. This result takes into account thedifferent methods by which the same job is done and puts all couriers onan equal footing. Arguably, it also recognizes and encourages [rather thandiscourages as a prohibition on this expense would] new environmentallyresponsible ways of producing income.
 The concern with this decision is thatby moving away from a bright line rule prohibiting the deduction of foodand beverage expenses I have opened the floodgates to a myriad of claimsfor deductions for personal expenses. I would note that the floodgatesargument is always referred to when seeking to preserve the status quo.However, in this context, I do not find these concerns valid as the analogybetween fuel for an automobile and fuel for the human body provides anappropriate line for the courts to draw. Only where there is a correspondingbusiness deduction allowed for fuel in the form of gasoline for the sametype of business will a deduction for the extra food and water a humanneeds to consume as its fuel be allowed. For instance, a rickshaw driverwould be entitled to deduct the extra food and drink he needs to consumeto do his job because his corresponding compatriot -- the taxi driver --is entitled to a deduction for his gasoline. A construction worker, however,who engages in physically demanding work would not be entitled to deducthis food and beverage expenses despite the fact that his job may requirehim to eat and drink more because there is no corresponding position wherefuel in the form of gasoline would be entitled to a deduction under theAct. Thus, this decision provides a narrow exception for the deductionof food and beverages as business expenses under the Act and should inno way be interpreted as providing a basis to challenge all traditionalprohibitions on the deduction of food and beverages as a business expenseunder the Act.
 In light of the above conclusion, the mattermust be referred back to the Tax Court Judge for determination of two factualissues not addressed by him because of the position taken on the preliminarylegal question: that is as to the deductibility of the expense. Specifically,it was unnecessary to determine whether in fact the taxpayer required extraamounts of food and beverages because of the nature of his business asa "foot and transit courier". Thus, it is open to ask whether there ispersuasive evidence to support the allegation that the needs of the taxpayerare, for example, greater than those of a construction worker. As well,if the taxpayer is able to establish what he is alleging then the Tax CourtJudge must fix an amount which represents a reasonable deduction. I havedoubts as to whether Perrier is necessary in lieu of tap water orcommercially bottled water.
 For the above reasons I would allow theapplication for judicial review, set aside the judgment of the Tax Courtdated August 6, 1997, and remit the matter to the Tax Court Judge for adetermination with respect to the factual issues which remain outstanding.
"I agreeB.L. Strayer J.A."
"I agreeJ.T. Robertson J.A."
FEDERAL COURT OF APPEAL
BETWEEN:Enter Style of Cause just after [Comment] code.- ALAN WAYNE SCOTT
REASONS FOR JUDGMENT
1 Section 67.1(1) provides:For the purposes of this Act, other than sections62, 63 and 118.2, an amount paid or payable in respect of the human consumptionof food or beverages or the enjoyment of entertainment shall be deemedto be 50% of the lesser of(a) the amount actually paid or payable in respectthereof, and(b) an amount in respect thereof that would be reasonable inthe circumstances.