Date: 20100610
Docket:
A-42-09
Citation:
2010 FCA 156
CORAM: NOËL
J.A.
DAWSON J.A.
TRUDEL
J.A.
BETWEEN:
DEBORAH ANN
NEDELCU
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
REASONS FOR JUDGMENT
NOËL J.A.
[1]
This is an appeal
from a decision of McArthur J. of the Tax Court of Canada (the Tax Court Judge)
rendered pursuant to the informal procedure. The Tax Court Judge held that
Deborah Ann Nedelcu (the appellant) was not entitled to child tax benefits
totaling $23,406 which she claimed for 2003, 2004 and 2005 because she did not
reside in Canada during those years.
[2]
The appellant who is
presently in Romania made a request that her appeal be heard
by teleconference. The request was denied by direction of the Chief Justice
dated March 17, 2010 and the appeal was set to be heard on May 26, 2010 in Toronto. A request for reconsideration of that direction was
dismissed by the Chief Justice on May 21, 2010. On the same day, a further
direction was issued advising the parties that should the appellant not appear
on the scheduled date, the panel would dispose of the appeal on the basis of
the written submissions filed by the parties. As the appellant did not appear,
the following reasons dispose of the appeal on the basis of the written
arguments set out by the parties in their respective submissions.
THE FACTS
[3]
The appellant was
born in Zambia, Africa in 1964. She moved to Canada in 1979 (presumably
with her parents) and settled in London,
Ontario. In 1987, she moved to Toronto and
obtained employment at the University
of Toronto. This is where she met her husband to be,
Stefan Radu Barbu Nedelcu, who was enrolled at the same university.
[4]
They married in 1988
in a ceremony which took place in Toronto. Mr. Nedelcu was born in Romania. He is a citizen of both Romania and Canada. Three children were born from the marriage in Toronto in August 1990, September 1991 and January 1993. They had a
fourth child born in Romania in April 1994.
[5]
In 1993, the
appellant, along with her husband and children, moved to Bucharest, Romania. Mr. Nedelcu owns a mini-bus and operates a transport
business carrying tourists and tour groups from the airport to their respective
hotels in Bucharest. During the years in issue, the
appellant and her family lived in the family home owed by Mr. Nedelcu in Bucharest. The appellant’s children were enrolled in Romanian schools
during those years.
[6]
The
appellant explained that from 1993 to 2003, her legal status in Romania was that of a visa holder which
had to be renewed every six months. Beginning in 2003, these visas were granted
to her for a one year term.
[7]
Although, they have
extensive family in Canada, neither the appellant nor her husband has any
business interest or real estate holding in Canada.
The appellant has no memberships in any social, recreational, religious
organizations, professional organizations or unions based in Canada.
[8]
The appellant has
been collecting child tax benefits since she left Canada in 1993. Her residency status was reviewed by Revenue Canada in 2000 when she and her family members were confirmed to
be “factual residents” of Canada. A further confirmation of this status
was obtained in 2002. As a result, the appellant testified that she continued
to file annual returns during the three years in issue and claim the child tax
benefits for her four children on the basis that she and her family resided in Canada.
[9]
By notice issued in
September of 2006, the Minister of National Revenue (the Minister) advised the
appellant that she was no longer considered to be a resident of Canada beginning with year 2003 and throughout 2005, and that as a
result she was not entitled to the child tax credits claimed during this
period.
[10]
The essence of the
position adopted by the appellant in opposing this change in status has been
throughout that all the factors which tied her and her family to Canada up to 2002 continued to be present in the following years,
and that accordingly there was no basis for the change.
DECISION OF THE TAX COURT JUDGE
[11]
Dealing with this
last contention, the Tax Court Judge noted that no issue of estoppel is
involved in the present matter, and that the Minister is entitled to adopt a
position different from that adopted in the past (Reasons, para. 7). The issue
to be decided was therefore whether the appellant resided in Canada during 2003, 2004 and 2005.
[12]
Turning to this issue,
the Tax Court Judge applied the test set out in Thompson v. The Minister of
National Revenue, [1946] S.C.R. 209 (Thompson) and found as a fact
that Romania was the spatial bounds within which the appellant spends her life
and to which her ordered or customary living is related (Reasons, para. 16):
All the children are enrolled, and during the relevant years were
enrolled, in school there as they still are. They all live as a family in her
husband's home which obviously is the family home. He has a business in Romania
with little or no known ties to Canada.
Surely, Romania is the spatial bounds within which she
spends her life to which her ordered or customary living is related.
[13]
He further held that
the appellant’s infrequent visits to Canada to see relatives, when considered in
light of the other relevant circumstances, were not sufficient to make the
appellant a resident of Canada (Reasons, para. 17):
… I find she visits here occasionally, perhaps 50 days over a 1,000-day
period being the relevant one before us. She has relatives here but no
residence, property or means of support other than the [child tax benefits].
She stated that she did not know when she would return to Canada
although she would like her children to attend university here.
ALLEGED ERROR
[14]
In support of her
appeal the appellant contends that the decision of the Tax Court Judge reveals
a number of errors and omissions. First, she argues that the Tax Court Judge
failed to address the duality of her residency (Memorandum, p. 9, para. 1).
[15]
Second, she contends
that no consideration was given to the fact that she filed bona fide tax
returns and claimed child care benefits for the years 2000 to 2006 in
accordance with Revenue Canada’s finding made in 2000 that she was a factual
resident of Canada (Memorandum, p. 9, para. 2).
[16]
Third, she alleges
that no consideration was given to the retroactive nature of the assessments,
which required the repayment of benefits already paid out for the period
February 2004 to 2006 (Memorandum, page 9, para. 3).
[17]
Fourth, she contends
that the Tax Court Judge erred by improperly identifying the period under
investigation; by stating that sojourn is the only requirement for residency;
by inaccurately stating the appellant’s place of birth; by proceeding on the basis
of presumptions rather than law; by assuming the Minister’s reply to be
correct; and by not considering the temporary nature of her status in Romania
(Memorandum, p. 10, para. 4).
[18]
Fifth, she contends
that a number of irregularities were committed during the hearing of the appeal
before the Tax Court Judge. The appellant bases her contentions on a review of
the transcript which, according to her, shows that the Tax Court Judge was
distracted, hearing-impaired, inattentive, and confused (Memorandum, pp. 11 and
12, para. 5).
ANALYSIS AND DECISION
[19]
In my respectful
view, the Tax Court Judge determined the issue of the appellant’s residence
applying the proper test, and the evidence supports the conclusion that he
reached. Despite the appellant’s extensive submissions, I can detect no error
in the decision of the Tax Court Judge.
[20]
Contrary to what she
asserts, the Tax Court Judge, having found that the appellant resided in Romania (Reasons, paras. 15 and 16), did not have to address the
notion of dual residency. While a person who becomes resident in another
country does not necessarily loose this status in Canada when close personal and economic ties are maintained, the
Tax Court Judge was obviously of the view that no such ties had been maintained
with Canada. This is a conclusion that was open to
him when regard is had to the evidence.
[21]
The fact that the
appellant believed in good faith that she was entitled to the child tax
benefits as she asserts and that these benefits were taken away retroactively
is also of no assistance to her. As was noted by the Tax Court Judge, the
Minister is not bound by his assessment for prior taxation years, and a
reassessment by its nature operates retroactively. No taxpayer can assume that
his or her tax affairs are finally settled until the statutory reassessment
period has expired.
[22]
Turning to the
alleged specified errors, the appellant asserts that the Tax Court Judge did
not properly identify her place of birth. However, this error could not have
had any impact on the decision which he reached and is therefore immaterial.
The same applies to the appellant’s claim that the investigation period begun
in January 1994 rather than July 1994 as stated by the Tax Court Judge.
[23]
In the same vein, the
appellant alleges that the Tax Court Judge erred in stating that the sojourn
rule is the only requirement for granting residency (Reasons, para. 2).
However, when the paragraph is read in context, it becomes apparent that the
statement in question is that unless the appellant can establish that she
resided in Canada or bring herself within one of the deemed residency rules
such as sojourning for 183 days, she cannot succeed. I can detect no error in
this regard.
[24]
The appellant
correctly points out that the Tax Court Judge did not address the temporary
nature of her status in Romania. However, given that she had been living
in Romania for almost 15 years when the appeal
before the Tax Court was heard, one can understand why the Tax Court Judge did
not place emphasis on the “temporary” nature of her status.
[25]
Finally, with respect
to the “irregularities” that are alleged to have taken place during the hearing
of the appeal, I have carefully reviewed the transcript of the proceedings and
can detect no basis for interfering with the decision of the Tax Court Judge.
[26]
I would dismiss the
appeal with costs.
“Marc
Noël”
“I
agree.
Eleanor R. Dawson J.A.”
“I
agree.
Johanne Trudel J.A.”
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