Citation 2011 TCC 438
Date: 20110920
Docket: 2010-3488(IT)I
BETWEEN:
Stéphane Chabaud,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Archambault J.
Staff, student or employee? The employment status of Canadian
postdoctoral researchers remains unclear – many are struggling with the tax
issues that arise from the ambiguity.
[1]
This citation partially
summarizes the issue raised by the appeal of Stéphane Chabaud, Ph.D. A more
complete way to state it is: Do the amounts Mr. Chabaud received as a
postdoctoral fellow constitute salary, a bursary, scholarship or fellowship, or
a research grant? If they are a bursary, scholarship or fellowship, do they
give rise to the exemption provided for in paragraph 56(3)(a) of the Income
Tax Act (Act)?
[2]
The answer to these
questions could have serious repercussions on the funding of university
research.
Exceptionally, counsel for the respondent asked that the reasons for my
decision be transmitted in writing since there are a number of cases of the
same nature that are awaiting the result of this appeal. According to counsel
for the respondent, it is the Court's first opportunity to consider the
application of the paragraph 56(3)(a) exemption to postdoctoral fellows.
Although, from a strictly legal standpoint, these reasons do not constitute a precedent
since this is an appeal under the informal procedure, I hope they may
enlighten the tax authorities and Canadian taxpayers and contribute to the
debate on the touchy issue raised by this appeal.
[3]
Mr. Chabaud is
appealing from an assessment made by the Minister of National Revenue
(Minister) for the 2008 taxation year. The Minister added $36,101 to
Mr. Chabaud's income as a bursary pursuant to paragraph 56(1)(n) of
the Act. This amount represents the excess of the $36,601 Mr. Chabaud received
over the amount of $500, as provided in that paragraph. At the hearing, the
respondent indicated that she was amending the basis of the assessment, asserting
that the entire amount of $36,601 should have been included in Mr. Chabaud's
income as a research grant pursuant to paragraph 56(1)(o) of the Act.
Although this provision does not provide for a $500 deduction, the respondent
recognizes that the Court does not have the power to increase the tax
established in the assessment. As a result, the amount that could be included
in Mr. Chabaud's income cannot exceed $36,101. Alternatively, the respondent
stated that if paragraph 56(1)(o) did not apply, she would again rely on
paragraph 56(1)(n), and she argued that Mr. Chabaud was not entitled to
the bursary exemption because he was not eligible for the education tax credit,
notably because he was not a student and was not enrolled in any educational
program.
[4]
At the beginning of the
hearing, I raised the possibility that the $36,601 might be considered as
employment income under section 5 of the Act since the Minister had assumed as
a fact that Mr. Chabaud had received $36,601 for his research work at the Laboratoire
d’organogenèse expérimentale (Experimental Organogenesis Laboratory) (LOEX) at
the Centre hospitalier affilié universitaire de Québec (CHA) research centre
and that his research was done under the supervision of a researcher at that
laboratory. Counsel for the respondent asked permission to provide written
submissions regarding the application of section 5 of the Act, and I agreed. I also
allowed Mr. Chabaud to provide his own written submissions in reply to
those presented by counsel for the respondent.
[5]
Mr. Chabaud
considers himself a student even though he has a doctoral degree, and he
believes that the work he performed for a period of around five years was
university training. Moreover, the money he received was, in his opinion, a
bursary or fellowship entitling him to the exemption provided for in paragraph
56(3)(a) of the Act.
[6]
In making the
assessment, the Minister relied on the following assumptions of fact set out in
paragraph 6 of the Reply to the Notice of Appeal:
[translation]
6. In determining the tax payable by the appellant,
the Minster relied on the following assumptions of fact:
(a) in 2005, the appellant obtained a doctoral
degree in molecular biology from the Université de Montréal;
(b) in October 2005, the Laboratoire d’organogenèse
expérimentale at the Centre hospitalier affilié universitaire de Québec research
centre (LOEX) offered the appellant a position as postdoctoral researcher;
(c) during the taxation year in question, the
appellant held this position of researcher at LOEX;
(d) during the taxation year in question, the
appellant's research was related to cellular and molecular biology and was
conducted under the supervision of Véronique Moulin, who was a professor
at the surgical department of the Faculty of Medicine at the Université
Laval and a researcher at LOEX;
(e) during the taxation year in question, to conduct
her research, Véronique Moulin received "operating grants" from
the Canadian Institutes of Health Research (CIHR);
(f) for his research work at LOEX during the
taxation year in question, the appellant received a total of $36,601;
(g) this $36,601 came
from the "operating grants" mentioned above.
[Emphasis
added.]
[7]
Mr. Chabaud
admitted all these facts, with the following exceptions: regarding subparagraph
(a), he stated that he earned his diploma in November 2004, not in 2005; regarding
subparagraph (b), he described his position as that of a postdoctoral fellow
rather than a researcher, which applies as well to subparagraph (c); finally,
regarding subparagraph (f), Mr. Chabaud denies he received the amount of
$36,601 for his research work.
[8]
First, it would be
useful to reproduce the English and French versions of the relevant provisions
of the Act:
|
56(1)
Scholarships,
bursaries, etc.
(n) the amount, if any, by
which
(i) the total
of all amounts (other than amounts described in paragraph 56(1)(q), amounts received in the course
of business, and amounts received in respect of, in the course of or
by virtue of an office or employment) received by the taxpayer in
the year, each of which is an amount received by the taxpayer as or on
account of a scholarship, fellowship or bursary, or a prize for
achievement in a field of endeavour ordinarily carried on by the taxpayer,
other than a prescribed prize,
exceeds
(ii) the
taxpayer’s scholarship exemption for the year computed under
subsection (3);
. . .
Research
grants
(o) the amount, if any, by
which any grant received by the taxpayer in the year to enable the
taxpayer to carry on research or any similar work exceeds the total
of expenses incurred by the taxpayer in the year for the purpose of
carrying on the work, other than
. . .
Exemption for scholarships, fellowships,
bursaries and prizes
56(3) For the purpose of
subparagraph (1)(n)(ii),
a taxpayer’s scholarship exemption for a taxation year is the total of
(a) the
total of all amounts each of which is the amount included under
subparagraph (1)(n)(i)
in computing the taxpayer’s income for the taxation year in respect of a scholarship,
fellowship or bursary received in connection with the
taxpayer’s enrolment
(i) in an educational
program in respect of which an amount may be deducted under subsection
118.6(2) in computing the taxpayer’s tax payable under this Part for the
taxation year, for the immediately preceding taxation year or for the
following taxation year, or
(ii) in an elementary or
secondary school educational program,
(b) the
total of all amounts each of which is the lesser of
(i) the amount included
under subparagraph (1)(n)(i)
in computing the taxpayer’s income for the taxation year in respect of a scholarship,
fellowship, bursary or prize that is to be used by the
taxpayer in the production of a literary, dramatic, musical or artistic work,
and
(ii) the total of all amounts
each of which is an expense incurred by the taxpayer in the taxation
year for the purpose of fulfilling the conditions under which the amount
described in subparagraph (i) was received, other than
(A) personal or living
expenses of the taxpayer (except expenses in respect of travel, meals and
lodging incurred by the taxpayer in the course of fulfilling those conditions
and while absent from the taxpayer’s usual place of residence for the period
to which the scholarship, fellowship, bursary or prize, as the case may be,
relates),
(B) expenses for which the
taxpayer is entitled to be reimbursed, and
(C) expenses that are
otherwise deductible in computing the taxpayer’s income, and
(c) the lesser of $500
and the amount by which the total described in subparagraph (1)(n)(i) for the taxation year
exceeds the total of the amounts determined under paragraphs (a) and (b).
118.6. Definitions
(1)
For the purposes of sections 63 and 64 and this subdivision,
“designated
educational institution” means
(a)
an educational institution in Canada that is
(i) a university,
college or other educational institution designated by the Lieutenant
Governor in Council of a province as a specified educational institution
under the Canada Student Loans Act, designated by an appropriate
authority under the Canada Student Financial Assistance Act, or
designated by the Minister of Higher Education and Science of the Province of
Quebec for the purposes of An Act respecting financial assistance for
students of the Province of Quebec, or
. . .
“qualifying
educational program” means a program of not less than three consecutive weeks
duration that provides that each student taking the program spend not
less than ten hours per week on courses or work in the program and, in
respect of a program at an institution described in the definition
“designated educational institution” (other than an institution described in
subparagraph (a)(ii) of that definition), that is a program at a
post-secondary school level but, in relation to any particular student, does
not include a program if the student receives, from a person with whom the student
is dealing at arm's length, any allowance, benefit, grant or reimbursement
for expenses in respect of the program other than
(a)
an amount received by the student as or on account of a scholarship, fellowship
or bursary, or a prize for achievement in a field of endeavour
ordinarily carried on by the student,
(b)
a benefit, if any, received by the student because of a loan made to the student
in accordance with the requirements of the Canada Student Loans Act or
An Act respecting financial assistance for education expenses, R.S.Q.,
c. A-13.3, or because of financial assistance given to the student in
accordance with the requirements of the Canada Student Financial
Assistance Act, or
(c) an amount that is received by the student in
the year under a program referred to in subparagraph 56(1)(r)(ii) or
(iii), a program established under the authority of the Department of
Human Resources and Skills Development Act or a prescribed program;
“specified educational program” means a program that would be a
qualifying educational program if the definition “qualifying educational
program” were read without reference to the words “that provides that each
student taking the program spend not less than 10 hours per week on courses
or work in the program”.
Education credit
(2) There may be deducted in computing an individual's tax
payable under this Part for a taxation year the amount determined by the
formula
A × B
where
A is the appropriate percentage for the year; and
B is
the total of the products obtained when
(a)
$400 is multiplied by the number of months in the year during which the
individual is enrolled in a qualifying educational program as a full-time
student at a designated educational institution, and
(b)
$120 is multiplied by the number of months in the year (other than months
described in paragraph (a)), each of which is a month during which the
individual is enrolled at a designated educational institution in a specified
educational program that provides that each student in the program
spend not less than 12 hours in the month on courses in the program,
if the enrolment is proven by filing with the
Minister a certificate in prescribed form issued by the designated
educational institution and containing prescribed information and, in
respect of a designated educational institution described in subparagraph (a)(ii)
of the definition “designated educational institution” in subsection (1), the
individual has attained the age of 16 years before the end of the year
and is enrolled in the program to obtain skills for, or improve the
individual's skills in, an occupation.
Income from office or employment
5. (1) Subject to this Part, a taxpayer’s income
for a taxation year from an office or employment is the salary,
wages and other remuneration, including gratuities, received by the
taxpayer in the year.
|
56(1)
Bourses
d’études, de perfectionnement, etc.
n) l’excédent
éventuel :
(i) du total des
sommes (à l’exclusion des sommes visées à l’alinéa q), des sommes reçues dans
le cours des activités d’une entreprise et des sommes reçues au titre,
dans l’occupation ou en vertu d’une charge ou d’un emploi) reçues
au cours de l’année par le contribuable à titre de bourse d’études,
de bourse de perfectionnement (fellowship) ou de récompense
couronnant une oeuvre remarquable réalisée dans son domaine d’activité
habituel, à l’exclusion d’une récompense visée par règlement,
sur :
(ii) l’exemption pour
bourses d’études du contribuable pour l’année, calculée selon le
paragraphe (3);
. . .
Subventions de
recherches
o) l’excédent éventuel
de toute subvention reçue au cours de l’année par le contribuable pour
la poursuite de recherches ou de tous travaux similaires sur le total
des dépenses qu’il a engagées pendant l’année dans le but de poursuivre
ces travaux, à l’exception :
. . .
Exemption pour bourses d’études, bourses de
perfectionnement (fellowships) ou récompenses
56(3) Pour l’application du
sous-alinéa (1)n)(ii),
l’exemption pour bourses d’études d’un contribuable pour une année
d’imposition correspond au total des sommes suivantes :
a) le total des sommes représentant
chacune la somme incluse en application du sous-alinéa (1)n)(i) dans le calcul du revenu
du contribuable pour l’année au titre d’une bourse d’études ou d’une bourse
de perfectionnement (fellowship)
reçue relativement à son inscription :
(i) soit à un programme d’études
pour lequel une somme est déductible en application du paragraphe
118.6(2) dans le calcul de l’impôt à payer par le contribuable en
vertu de la présente partie pour l’année, pour l’année d’imposition
précédente ou pour l’année d’imposition subséquente,
(ii) soit à un programme d’études d’une
école primaire ou secondaire;
b) le total des sommes représentant
chacune la moins élevée des sommes suivantes :
i) la somme incluse en application du
sous-alinéa (1)n)(i)
dans le calcul du revenu du contribuable pour l’année au titre d’une bourse
d’études, d’une bourse de perfection-nement (fellowship) ou d’une récompense
dont il doit se servir dans la production d’une oeuvre littéraire,
dramatique, musicale ou artistique,
(ii) le total des sommes représentant
chacune une dépense engagée par le contribuable au cours de l’année en
vue de remplir les conditions aux termes desquelles la somme visée au
sous-alinéa (i) a été reçue, à l’exception des dépenses suivantes :
(A) ses frais personnels ou de
subsistance, sauf ses frais de déplacement, de repas et de logement engagés
en vue de remplir ces conditions, pendant qu’il était absent de son lieu de
résidence habituel pour la période visée par la bourse d’études, la bourse de
perfectionnement (fellowship)
ou la récompense,
(B) les dépenses qu’il peut se faire rembourser,
(C) les dépenses déductibles par ailleurs dans le calcul de
son revenu;
c) 500 $ ou, s’il est moins élevé, l’excédent du total visé au sous-alinéa (1)n)(i) pour l’année sur le total
des sommes déterminées selon les alinéas a)
et b).
118.6. Définitions
(1) Les
définitions qui suivent s'appliquent aux articles 63 et 64 et à la présente
sous-section.
« établissement
d'enseignement agréé »
a) Un des
établissements d'enseignement suivants situés au Canada:
(i) université,
collège ou autre établissement d'enseignement agréé soit par le
lieutenant-gouverneur en conseil d'une province au titre de la Loi
fédérale sur les prêts aux étudiants, soit par une autorité compétente en
application de la Loi fédérale sur l'aide financière aux étudiants, ou
désigné par le ministre de l'Enseignement supérieur et de la Science de la
province de Québec pour l'application de la Loi sur l'aide financière aux
étudiants de cette province,
. . .
« programme
de formation admissible » Programme d'une durée minimale de trois
semaines consécutives, aux cours ou aux travaux duquel l'étudiant doit
consacrer dix heures par semaine au moins et qui, s'il s'agit d'un programme
d'un établissement visé à la définition de « établissement d'enseignement
agréé » (sauf un établissement visé au sous-alinéa a)(ii) de cette
définition), est de niveau postsecondaire, à l'exclusion du programme au
titre des frais duquel l'étudiant reçoit d'une personne avec laquelle
il n'a aucun lien de dépendance une allocation, un avantage, une subvention
ou un remboursement, qui n'est :
a) ni une
somme reçue au titre d'une bourse d'études, d'une bourse de
perfectionnement (fellowship) ou d'une récompense couronnant une
oeuvre remarquable réalisée dans son domaine d'activité habituel;
b) ni un
avantage reçu en raison d'un prêt consenti à l'étudiant conformément à
la Loi fédérale sur les prêts aux étudiants ou à la Loi sur l'aide
financière aux études, L.R.Q., ch. A-13.3, ou en raison d'une aide
financière consentie à l'étudiant conformément à la Loi fédérale
sur l'aide financière aux étudiants;
c) ni une somme que l'étudiant reçoit au cours
de l'année dans le cadre d'un programme mentionné aux sous-alinéas 56(1)r)(ii)
ou (iii), d'un programme établi sous le régime de la Loi sur le ministère
des Ressources humaines et du Développement des compétences ou d'un
programme visé par règlement.
« programme de formation déterminé » Programme
qui serait un programme de formation admissible s'il n'était pas tenu compte
du passage « au cours ou aux travaux duquel l'étudiant doit consacrer 10
heures par semaine au moins » dans la définition de « programme de
formation admissible ».
Crédit d'impôt
pour études
(2) Le montant
obtenu par la formule suivante est déductible dans le calcul de l'impôt
payable par un particulier en vertu de la présente partie pour une année
d'imposition:
A × B
où:
A représente le taux de base pour l'année;
B la somme des
produits suivants:
a)
400 $ multipliés par le nombre de mois de l'année pendant lesquels le
particulier est inscrit à un programme de formation admissible comme étudiant
à temps plein d'un établissement d'enseignement agréé,
b)
120 $ multipliés par le nombre de mois de l'année (sauf ceux visés à
l'alinéa a)) dont chacun est un mois pendant lequel le particulier est
inscrit à un programme de formation déterminé d'un établissement
d'enseignement agréé, aux cours duquel l'étudiant doit consacrer
au moins 12 heures par mois.
Pour que le montant soit déductible, l'inscription du
particulier doit être attestée par un certificat délivré par
l'établissement — sur le formulaire prescrit contenant les renseignements
prescrits — et présenté au ministre et, s'il s'agit d'un établissement
d'enseignement agréé visé au sous-alinéa a)(ii) de la définition
de cette expression au paragraphe (1), le particulier doit avoir
atteint l'âge de 16 ans avant la fin de l'année et être inscrit au programme
en vue d'acquérir ou d'améliorer sa compétence à exercer une activité
professionnelle.
Revenu tiré d’une charge ou d’un emploi
5. (1) Sous
réserve des autres dispositions de la présente partie, le revenu d’un
contribuable, pour une année d’imposition, tiré d’une charge ou d’un
emploi est le traitement, le salaire et toute autre rémunération,
y compris les gratifications, que le contribuable a reçus au cours de
l’année.
|
[Emphasis added.]
Historical evolution of the legislative
provisions
[9]
To properly understand
the context in which the debate herein is taking place, it is useful to remind
ourselves of the legislative evolution of the relevant provisions, namely, paragraph
56(1)(n) and subsection 56(3) of the Act.
[10]
A first relevant
amendment replaced the expression "bourse de recherches" used
as the French equivalent of "fellowship" in paragraph 56(1)(n)
with "bourse de perfectionnement" in 1979. Another
amendment is that described by Associate Chief Justice Rossiter in Dimaria:
30 Paragraph
56(1)(n) of the Act states as follows:
. . .
(n) scholarships, bursaries, etc. -- the amount, if any, by
which
(i) the total of all amounts (other than … amounts
received in respect of, in the course of or by virtue of an office or
employment) received by the taxpayer in the year, each of which is an
amount received by the taxpayer as or on account of a scholarship, fellowship
or bursary, or a prize for achievement in a field of endeavour ordinarily
carried on by the taxpayer (other than a prescribed prize),
. . .
32 The
Supreme Court of Canada had
occasion to consider the interplay between section 6 and paragraph 56(1)(n)
in its 1986 [actually, 1983] decision, R. v. Savage. Subparagraph 56(1)(n)(i) was amended to include the
underlined portion in 1986, as a direct result of that decision.
[11]
The technical
interpretation
that supports this statement reads as follows:
Paragraph 56(1)(n) includes in the income of a taxpayer for a year
certain scholarships, bursaries and prizes for achievement to the extent that
the total of such amounts exceeds $500. Some employers give awards, prizes
or similar payments to their employees in the course of their employment. Generally,
these payments represent taxable benefits to the employee and are intended
to be fully included in income. However, a recent court decision
indicated that certain of these awards might qualify for the $500 exemption.
This amendment, which applies to amounts received after May 23, 1985, clarifies
that work-related and business-related awards, prizes and similar
payments do not qualify for the $500 exemption.
[Emphasis added.]
[12]
Subsection 56(3), which
creates the bursary exemption, was added by S.C. 2001, c. 17, subs. 39(2),
and applies to the 2000 and subsequent taxation years. Essentially, the
exemption was increased from $500 to $3,000 for bursaries received for
registration in an educational program for which an amount was deductible under
subsection 118.6(2) in the calculation of tax payable.
[13]
As of 2006, the
exemption became full (S.C. 2007, c. 2, subs. 6(3)). As of 2007, new conditions
were added to improve the exemption (S.C. 2007, c. 35, subs. 17(1)). These
conditions are not relevant for the purposes of the debate herein.
[14]
In the Notice of Ways
and Means Motion to Amend the Income Tax Act and Income Tax
Regulations, dated March 4, 2010, the Minister of Finance announced
certain measures to amend the bursaries exemption scheme and the education
credit. In particular, the exemption would be limited to tuition fees and the
cost of materials related to an educational program in the case of full-time
students. However, the most relevant measure for the purposes of the issue
raised by this case is that announced at paragraph 17, which states:
(17) That, for the
2010 and subsequent taxation years, a program at a post-secondary school level
referred to in the definition "qualifying education program" in
subsection 118.6(1) of the Act does not include a program that consists
primarily of research, unless the program leads to a diploma from a college
or a Collège d'enseignement général et professionnel (CEGEP), or a bachelor,
masters or doctoral degree (or an equivalent degree).
[Emphasis added.]
[15]
Clarifications are
provided in the supplementary information found with the March 4, 2010, federal
budget:
Budget 2010 proposes to clarify that a post-secondary program
that consists principally of research will be eligible for the
Education Tax Credit, and the scholarship exemption, only if it leads to a
college or CEGEP diploma, or a bachelor, masters or doctoral degree (or
an equivalent degree). Accordingly, post-doctoral fellowships will be
taxable.
[Emphasis added.]
[16]
In the House, the
Minister of Finance repeated the government's position that this budgetary
measure was not intended to change Canada's tax policy
with respect to postdoctoral research fellowships:
40 :3 Hansard – 15 (2010/3/23)
(1440)
[English]
Hon. Jim Flaherty (Minister of Finance, CPC):
Mr. Speaker, there has been no change in the tax policy
in Canada with respect to post-doctoral fellowships. It is exactly the tax policy that was followed by the Liberal
government.
We made a big
change several budgets ago and that is with regard to scholarships. Pure scholarships are not taxable in Canada. However
as we know, post-doctoral fellows work. Just as the Liberal government recognized, they are going to be paid
through the fellowships, $70,000 a year. As I said earlier, they should pay their fair share of taxes in Canada.
[Emphasis added.]
[17]
On June 8, 2010, the Minister
of Finance also wrote to the president of the Canadian Association of
Postdoctoral Scholars, Marianne Stanford. In his letter, the Minister explained
the government's position regarding its budgetary measure. He wrote in
particular:
Unlike post-secondary students enrolled in courses and pursuing a
degree or diploma, post-doctoral fellows can be compared to a number of
other professionals, such as lawyers, medical residents and accountants,
where there is a period of paid training at the beginning of their careers.
Similar to those other professionals, the compensation received by
post-doctoral fellows is taxable.
[Emphasis added.]
[18]
The Minister of Finance
also reminds Ms. Stanford of the tax policies the Canadian government adopted
to fund science and technology initiatives. He notes, in particular, that
between 2005 and 2010, the government provided $2.2 billion in funding for this
purpose. He adds, at page 2 of his letter:
Budget 2010 continues this momentum by providing additional new
funding in support of post-secondary education, research and innovation.
Notably, $45 million over five years will be provided to the granting councils
to establish and administer the Canada Postdoctoral Fellowships Program. When
fully implemented, the program will annually fund 140 new taxable two-year
post-doctoral fellowships valued at $ 70,000 each per year. Other
support includes the following . . . .
[Emphasis
added.]
[19]
At the time of writing these
reasons, the Act had not yet been amended to give effect to the March 4, 2010,
Notice of Ways and Means setting out the measures to amend the bursary
exemption and education tax credit scheme.
Administrative interpretation of the bursary exemption
[20]
The Commissioner of the
Canada Revenue Agency (CRA), William V. Baker, wrote to Danielle
Morin and Louise Dandurand of the Conférence des recteurs et des
principaux des universités du Québec (CREPUQ) on June 24, 2008, to inform them
that the CRA did not consider postdoctoral fellows as students and that they
should not be issued a T2202A. In his letter, he states, at pages 1, 2 and 3:
[TRANSLATION]
Dear Ms. Morin and Ms. Dandurand:
This is further to your May 15, 2008, letter regarding the
taxation of certain amounts paid to postdoctoral fellows. You stated
that some officers of the Canada Revenue Agency indicated that these
amounts are taxable wages while other officers feel they are
non-taxable bursaries. Moreover, you indicated that the status of fellow
results in a T2202A Tuition, Education, and Textbook Amounts Certificate being
issued. You note that Quebec's universities consider postdoctoral fellows at their institutions to be students in training and that they
should be treated as such in tax matters. You asked us to determine whether
postdoctoral fellows are students for the purposes of the Income Tax Act
(the Act).
. . .
In regard to postdoctoral fellows' status as students, we feel that,
when a postdoctoral fellow participates in an internship for the purpose of
acquiring research expertise that is more specialized or
complementary, the postdoctoral fellow is not a student for the purposes
of the Act. No T2202A should be issued to a person who is not a student
enrolled in an educational program covered by the Act. The fact that a
postdoctoral fellow receives a bursary is not a determining factor regarding
the relevance of issuing a T2202A.
[Emphasis added.]
[21]
In his letter, the CRA
Commissioner defines "scholarship", "fellowship",
"research grant" and "salary" as follows:
[translation]
Scholarships are amounts granted to
students to allow them to continue their studies. They usually help the
student continue studies for the purpose of obtaining a university degree,
diploma or certificate.
Fellowships are similar to scholarships,
in that they are amounts granted to people to allow them to continue their studies.
However, the recipient is usually a graduate student and the payor, a
university, charitable organization or similar organization. Generally, fellowships
are awarded for doctoral studies or for postdoctoral work.
An amount received as a fellowship is usually included as such in
the recipient's income, but it can sometimes be included as a
research grant. The treatment depends on the main purpose for granting the fellowship,
determined based on the terms and conditions of the fellowship.
If the main purpose of the fellowship is
for the recipient to continue his or her studies and training, for himself
or herself, for example, if he or she is studying to obtain a doctoral
degree, the bursary is included in income as a fellowship, even if
the research is conducted in order to achieve this goal. However, if the
main purpose of the fellowship is to conduct research for his or her own
benefit, for example, to increase knowledge in a particular field by making
a discovery or finding a new interpretation for known facts, the fellowship
is a research grant for the purposes of the Act.
The amounts granted to postdoctoral fellows could also be
considered salary if there is an employment relationship between the
payor and the fellow. The issue of whether a relationship between two parties
is an employment relationship remains a question of fact that depends on
the analysis of the circumstances of each case. A number of factors must be
considered to resolve this issue. One is to establish whether the person who
was hired to perform the services does so as an employee or in some
other capacity. The level of control the payor has over the worker's
activities is also considered and the opportunity the worker has to profit from
the performance of his or her duties. All other relevant factors must also be
considered.
[Emphasis added.]
Reaction from academia to the
administrative interpretation and treatment of fellows in the education
environment in Quebec
[22]
Despite the position
expressed by the CRA Commissioner, the members of CREPUQ decided to disregard
it and to continue to issue T2202As. The members relied on opinions contrary to
those of the CRA to justify their interpretation. In particular, this is what
the Université Laval,
through its director of Financial Services and its dean of the Faculty of
Graduate Studies, wrote to postdoctoral fellows on February 20, 2009 (Exhibit
A-16):
[translation]
The Université Laval is hereby issuing the T2202A–Tuition,
Education, and Textbook Amounts Certificate, for the months in
2008 during which you received postdoctoral training.
We consider it
very important to let you know that this decision goes against the public
position issued by the Legislative Policy and Regulatory Affairs Branch of
the Canada Revenue Agency (hereinafter the CRA). According to the CRA, fellows
receiving postdoctoral training are not students and therefore not eligible for
this tax credit.
The
Université Laval and the entire Quebec university network obtained
opinions from their tax advisors that were contrary to that issued by the
CRA. Moreover, the matter of student status for postdoctoral fellows has not
yet been the subject of a decision by a tribunal competent in tax
matters. There is therefore significant uncertainty regarding the issue.
Despite this
controversy, Quebec
universities have unanimously decided to issue the T2202A to their fellows in postdoctoral training. To ensure that its
fellows are treated fairly, the Université Laval is conforming to the decision
to issue the T2202A for 2008.
The Université Laval must remind you, however, that it is
possible, should you use this form when filing your income tax return for
2008, that the tax authorities will make corrections to your tax return, in
accordance with their public position. These corrections may lead to
additional taxes and interest. Moreover, any challenge to the CRA decisions
will have to be made by you personally.
[Emphasis added.]
[23]
To improve the position
of postdoctoral fellows, some institutions implemented additional measures. In
particular, the following is what the Assistant to the Science Director and
Director of Graduate Studies at the INRS wrote (Exhibit A‑11):
[translation]
The INRS is working on developing operating procedures for
registering postdoctoral fellows that, we hope, may
allow them to be considered students for tax purposes. In a few weeks, you
will be informed of the simple procedures we will implement in order to
improve the student records of postdoctoral fellows so they meet as
fully as possible the definition of student for tax purposes. We will
also inform you of the possible ways to proceed, regarding source deductions
for 2009.
[Emphasis added.]
[24]
Mr. Goutier, an
official from the Ministère de l’Éducation, du Loisir et du Sport of Quebec (MEQ), gave his department's position on the status
of postdoctoral fellows. He indicated that fellows are considered researchers
in a university institution. They are neither employees nor students. However,
he recognized that, even if the fellows may not be considered university
employees, there could still be a contract of employment, an employer-employee
relationship between a university and a fellow. He justified this statement by noting
that there is a service rendered, remuneration paid and a relationship of
subordination between the university and the fellow. However, such a
relationship does not exist when the postdoctoral fellow obtains a grant directly
from a research institute. In such cases, the amount would be a bursary, not
salary. He did mention, however, that the nature of the contractual
relationship with the postdoctoral fellow was irrelevant for the MEQ's
administrative purposes.
[25]
In either case, the
fellow is not considered a "student". This is true even if the holder
of a doctoral degree can increase his or her knowledge by participating in
postdoctoral training. For Mr. Goutier, a student is a person involved in university
training that leads to a degree, which is not the case with postdoctoral fellows.
The difference between a master's or doctoral student who participates in a
research project and a fellow is that the student spends a significant amount
of time on his or her thesis. Moreover, Mr. Goutier clearly stated
that postdoctoral training is not considered a 4th level of university
education.
[26]
The MEQ adopted this
approach in its administration of education in Quebec.
Grants are based on the number of students registered in various programs.
Since postdoctoral fellows are not considered students, they are not taken into
consideration when setting the amount of the operating grants to Quebec's universities. However, for capital grants, that is,
the amounts given to universities to fund maintenance and construction of the
buildings they need, the postdoctoral fellows are taken into account, as are
employees and students. This is why it is useful for the Université Laval to
provide the number of postdoctoral fellows to the MEQ.
[27]
Among his duties, Mr.
Goutier is program secretary for the MEQ. At articles 183 to 186 of the Université
Laval’s Règlement des études (Student Regulations) is a description of
the three categories of students at the university (Exhibit I-7). They are:
students registered in a program,
non-program students and auditors. Non-program students are those registered in
one or more learning activities per session but not in a program; they are
evaluated. Visiting students are non-program students. They are authorized to
register in learning activities while still being registered at their home
institution. Auditors are registered in one or more learning activities per
session but are not entitled to evaluations.
[28]
Under article 187 of
the Student Regulations, a student is considered a full‑time student when
registered in learning activities worth 12 credits or more per session, and a
part-time student when registered in learning activities worth fewer than 12
credits per session. According to Mr. Goutier, postdoctoral fellows are
not covered by these categories of students. Another witness, the registrar of
the Université Laval, confirmed this interpretation: postdoctoral fellows are
not included in the categories of students described at articles 183 to 186 of
the Université Laval’s Student Regulations.
[29]
The MEQ set up in 1992 a
focus group, composed of six academics, that considered the issue of
postdoctoral training. In October 1994, the group presented a report (Report on
Postdoctoral Fellows) that summarized the consensus points, the issues to be resolved
and the possible solutions regarding receiving postdoctoral fellows in Quebec. This is how postdoctoral training is defined at
pages 1 and 2 of this report:
[translation]
2. Meaning of postdoctoral training
Postdoctoral training allows research
expertise to be developed in a complementary or more specialized field. At
the same time, it allows the evaluation of the fellow's ability to become an
independent and high-level researcher. In many fields, without being a
guarantee, postdoctoral training has become, in practice, a condition for
obtaining a teaching position at a university or even a position as a
researcher in some companies.
. . .
With particular regard to the natural and biomedical sciences, postdoctoral
fellows are an integral part of the carrying out and development of research
activities in universities. They provide a significant contribution to the
development of knowledge and to the training of researchers. They
contribute to the expansion of research teams’ influence and their presence
stimulates the circulation of new ideas.
In light of this, postdoctoral fellows should be considered
researchers whose employment status is temporary.
[Emphasis
added.]
[30]
The report defines
"postdoctoral fellow" as follows:
[translation]
3. Definition of postdoctoral fellow
A postdoctoral fellow is anyone who has held a Ph.D. (or the
equivalent) for less than five years, or a professional degree in medicine,
dentistry, optometry, pharmacy or veterinary medicine. Moreover, this
person has undertaken to acquire, on a full-time basis and during a determined
period, complementary or more specialized expertise by
participating in university research work.
An additional five-year period after obtaining the required
degree may be granted (making the total period of admissibility ten years
from the obtaining of the degree) to anyone who left the workforce and stopped
research activities due to child-bearing or child-rearing for a period of at
least one year after obtaining the required degree.
4. Postdoctoral training: a developing activity
The local and international increase in Ph.D. graduates, the
expansion of research activities in most disciplines, the increasing complexity
of certain research tools, the near stability of positions available for
renewing the teaching staff in universities, a greater awareness in
business of the research-innovation-competitiveness link, and a difficult
economic situation, are all
factors that feed the growth and development of postdoctoral training in
Quebec and elsewhere.
[Emphasis added.]
[31]
Under heading 5, [translation] "Issues to resolve,
possible solutions and recommendations", the following was suggested
regarding the reception, status and working conditions of postdoctoral fellows
at Quebec universities:
[translation]
5.1 Reception, status and working conditions
of postdoctoral fellows at Quebec universities
. . .
Postdoctoral fellows would like their status and contribution to the
universities' activities to be better defined. Hence, the fellows' working
conditions could be clarified, including benefits and access to
various services offered by the universities.
Recommendation 1:
Considering that postdoctoral fellows must be considered as researchers
with temporary employment status, it is recommended:
That universities clarify the status and working conditions of
postdoctoral fellows accordingly.
Recommendation 2:
Based on the proposed status in recommendation 1 and
the proposed definition above, and considering the need for more formal
monitoring of postdoctoral fellows, it is recommended:
That each university conduct a permanent enumeration of the postdoctoral
fellows it receives and that, to this end, they take into consideration
recommendation 6, which proposes that CREPUQ implement a permanent enumeration
for all of Quebec's universities.
Foreign fellows would like the constraints imposed by immigration
services to be relaxed, both for themselves and their families. With other fellows,
they are asking for a thorough review of their contribution to certain
social benefit plans (for example, employment insurance, pension plans)
based on the real possibilities of access to the benefits of the various schemes.
They
wish the clarification of the tax treatment of their income at the
various levels of government.
[Emphasis added.]
[32]
The following is found
under heading 5.2, [translation] "Funding
postdoctoral training":
[translation]
Recommendation 6:
Considering a clearer definition of the status of postdoctoral
fellows and their enumeration would lead to a better assessment when taking
into account the costs incurred by universities to receive them;
[C]onsidering that postdoctoral fellows should be part of the
temporary research staff in universities and that according to the
MEQ-CREPUQ memorandum of understanding on the development of the information
systems, CREPUQ is responsible for ongoing management of the system relating
to personnel, it is recommended:
That CREPUQ, together with the universities and the MEQ, implement, as
part of this information system, a permanent enumeration of the postdoctoral fellows
received at all of Quebec's universities.
[Emphasis added.]
[33]
Ms. Audette, dean of Graduate
Studies at the Université Laval since 2007, indicated that among her duties were
those of postdoctoral training coordinator. She works with the Registrar's Office,
the laboratories, and the research directors. She testified about the
importance of postdoctoral fellows at the university, not only for the fellows
themselves but also in terms of the visibility their presence brings to the
university. Moreover, it was recently decided to change the name of the Faculty
of Graduate Studies to Faculty of Graduate and Postdoctoral Studies. In doing so,
the Université Laval joined the Université de Montréal, McGill University and the University of Ottawa.
[34]
The registrar referred
to the document stating the reception and support policy for postdoctoral fellows,
which was adopted by the university board in March 2005 (see Exhibit I‑15).
In this document, it is stated that postdoctoral training usually lasts from
one to four years and cannot exceed five years or be less than six months
(paragraph 6). Paragraph 7 states that the postdoctoral fellow commits to
undertaking or continuing research at the Université Laval in compliance with
the policies and regulations in effect, particularly regarding intellectual
property, and in a spirit of collaboration with co-workers. Paragraphs 7, 8 and
9 of this policy state:
[translation]
7. RESPONSIBILITIES
• Of the postdoctoral fellow
The postdoctoral fellow agrees to undertake or continue research at
the Université Laval in a manner consistent with the policies and
regulations in effect, particularly regarding intellectual property, and with
the culture of the environment in which the postdoctoral fellow is received, to
the best of his or her abilities and in a spirit of collaboration with
his or her co-workers.
• Of the professor in charge of the training
The professor who agrees to receive a postdoctoral fellow agrees to
ensure, in a manner consistent with the University's policies and regulations,
in particular regarding intellectual property, support that is conducive
to a fruitful collaboration in conducting a joint research project.
• Of the head of the receiving unit
The head of the receiving unit ensures that the postdoctoral fellow
receives the support that is appropriate to his or her status and has the material
resources and space necessary for the proper conduct of his or her research
activities. The head of the receiving unit encourages the integration of the
postdoctoral fellow into the receiving unit's activities in a manner
consistent with the policies, regulations and collective agreements in
effect at the University.
• Of the Registrar's Office
The Registrar's Office is responsible for the registration of postdoctoral
fellows. It determines the admissibility of candidates, registers the postdoctoral
fellows and provides them with an ID card. It also ensures the management and
maintenance of the files of all the postdoctoral fellows the University
receives.
• Of the Faculty of
Graduate Studies
The Faculty of Graduate Studies coordinates the services offered by
the University to postdoctoral fellows. With the cooperation of the Registrar's
Office, the receiving units and the professors in charge of the training, it
ensures that postdoctoral fellows are provided with favourable conditions during
their stay. As needed, it establishes a conflict resolution mechanism.
8. FINANCIAL SUPPORT
Postdoctoral fellows may receive financial support coming
entirely or in part from:
• a bursary from an external
organization;
• a bursary from a research unit of the University;
• a bursary or salary paid from the grants
or contracts obtained by one or more professors.
The University does not set the amounts of the grants the receiving units offer to postdoctoral fellows, or of the
contracts professors may enter into with the fellows. It does, however,
encourage the units to determine a minimum amount based on the amounts
recommended by the granting organizations recognized in their field.
9. TEACHING
Postdoctoral fellows are an important intellectual
resource for the University. Their main activity is research, but they
can also contribute to the quality of the learning programs at the undergraduate,
master’s and doctoral levels by participating in teaching.
[Emphasis added.]
[35]
In the Université Laval
statutes dated September 2007, in Book II, [translation]
"University Members", students are described as follows:
[translation]
Title III — Students
12. Students are individuals regularly registered
as such in the University records. They make up various categories
according to the object they are pursuing and the time devoted to their
studies.
13. To register at the University, a person must
first meet the admission requirements specific to a program or to one or
more courses and be officially admitted to undertake or pursue these
studies.
14. Registration is valid for one session; it
must be renewed each session.
15. A regular student is either a student
registered in an undergraduate, master’s or doctoral program, or a
non-program student.
A non-program student is one registered
in a credit course without being registered in a program, and has the right to be
graded, but not to a degree, or one registered in a non-credit learning
activity; the level of the course determines the level of the student.
An auditor is a person admitted and
registered in a course for the sole purpose of attending, without having the
right to be graded for the course; the level of the course determines the level
of the student.
A postdoctoral fellow is a person who
has a Ph.D. or equivalent and who undertakes to acquire, on a full-time
basis and during a fixed period, complementary or more specialized expertise
by participating in research work at the University.
16. Depending on the time spent on his or her
studies, a student is either a full-time or part-time student. The minimum
time required to be a full-time student is set by regulation of the
Executive Committee.
17. A student is attached to a faculty based on the
following provisions:
1. a student registered in a program or in a main
component of a program for which a faculty is responsible is a student in
that faculty;
2. moreover, a student registered in a master’s
or doctoral program is also under the jurisdiction of the Faculty of
Graduate Studies.
[Emphasis added.]
[36]
At Title X, [translation] "Management the
Faculty of Graduate Studies", the following articles are of interest:
[translation]
Title X — Management of the Faculty of Graduate Studies
176. The Faculty of Graduate Studies is managed by a dean appointed
for four years by the Board of Directors.
Under the authority of the Vice-Rector of academics and
international activities, and together with the deans, the Dean of the Faculty
of Graduate Studies is responsible for academic quality at the master’s and doctoral
levels and coordinates the administration of these programs. On the basis
of the presentations of the faculty councils, the Dean establishes the list of
professors and other teaching staff who are authorized to direct students'
research work and teach at the master’s and doctoral levels.
. . .
179. The Dean is assisted by the Faculty of Graduate
Studies Board.
This Board considers all general interest issues
regarding master’s and doctoral studies, in particular with respect to
the evaluation of essays, dissertations and theses, accreditation and the
conferring of diplomas. It also supports the Dean and the Faculty in
establishing strategic monitoring for graduate studies and research training.
[Emphasis added.]
[37]
Title XVIII of Book IV
has provisions regarding degrees and diplomas, as follows:
[translation]
Title XVIII — Degrees and diplomas
222. The University grants doctoral, master's and bachelor's degrees.
The diploma awarded to the recipient to attest a degree bears the University's
seal and the Rector's and Secretary General's signatures.
223. The University also awards diplômes d’études and certificats
d’études signed by the Secretary General.
[Emphasis added.]
[38]
Postdoctoral fellows receive
from the Université Laval a certificate of participation in research activities
as a postdoctoral fellow, but according to the Registrar, this certificate is neither
a degree nor a diploma.
[39]
According to the
information on the Faculty of Graduate Studies website, the Université Laval is
6th out of the 50 Canadian universities in terms of total funding received for
research activities (Exhibit I-18). It is also stated that [translation] "every year, around
180 postdoctoral fellows, the majority of whom are from abroad, enter this
stimulating and innovative environment."
[40]
In the same document,
the following information regarding official admission and registration for
postdoctoral fellows who are not Canadian citizens can be found:
[translation]
Postdoctoral fellows who are not Canadian citizens must also present
the following documents:
a.
the original work permit issued by
Citizenship and Immigration Canada
b.
proof of medical and hospital insurance that is
valid in Canada for the entire
duration of the postdoctoral training
c.
a copy of the contract of employment
between you and the Université Laval or an official attestation that a
postdoctoral fellowship has been obtained.
[Boldface
and underlining added.]
[41]
In another document
published by the Faculty of Graduate Studies on its website, there is
information regarding its training programs (Exhibit I-19). These are the
characteristics of its doctoral program as identified in that document:
[translation]
Characteristics of the programs
. . .
At the doctoral level, students must strengthen their
abilities to critically interpret data relevant to their specialty, to apply
the research principles and methods specific to their field in an independent
and original manner, to develop new research or intervention practices, to pursue
original research independently, and to present a complex problem both
orally and in writing. To this end, the University offers a program leading
to a Philosophiæ Doctor (Ph.D.) degree and another leading
to a doctoral degree in a field of learning. Exceptionally, the
University may create a custom doctorate.
[Emphasis added.]
[42]
The document states the
following about the doctoral program leading to a Ph.D. degree:
[translation]
Doctoral program leading to a Philosophiæ Doctor
(Ph.D.) degree
This type of program includes some courses, but consists
essentially of carrying on an original research project leading to the
presentation and defence of a thesis. Unless the University Board grants an
exception, the total number of credits for such a program is 90 or 96,
at least three-quarters of which are attributed to the research project
and at least six to master’s or doctoral courses, excluding the credits
attributed to the doctoral exam.
[Emphasis added.]
Statement of facts regarding Mr. Chabaud's
training
[43]
Stéphane Chabaud is
French but has acquired Canadian citizenship. In January 2000, he began a
doctoral program in molecular biology at the Université de Montréal, and at the
end of his studies, obtained his Philosophiæ Doctor degree on November
11, 2004 (see Exhibit A-1). To admit him to this doctoral program, the
Université de Montréal recognized a diploma Mr. Chabaud obtained in France as being the equivalent of a master's degree.
[44]
After obtaining his
doctoral degree, Mr. Chabaud worked as an unpaid volunteer at a Université
de Montréal laboratory until March 2005, which allowed him to complete for
publication one or more articles resulting from his thesis work on molecular
biology, more specifically, on cell death. According to Mr. Chabaud, in
the life sciences it is typical and usual for Ph.D. holders to work as postdoctoral
fellows to round out their knowledge. It is almost impossible to find a
position as a professor or laboratory researcher. Moreover, it is preferable to
do postdoctoral training in an institution other than the one where the
doctoral degree was earned. It is possible to obtain a research grant from an
institute such as the Canadian Institutes of Health Research (CIHR), a body
corporate incorporated pursuant to the Canadian Institutes of Health
Research Act (Institutes Act), S.C. 2000, c. 6, given royal
assent on April 13, 2000.
[45]
According to
Mr. Chabaud, only around one hundred people can expect to receive a
research grant directly from the CIHR; the vast majority can only hope to
benefit from these grants through work at institutions such as LOEX or with research
professors associated with these institutions who receive the grants directly.
At LOEX there were around 60 people: 8 or 9 researchers, 15 to 20 research
assistants, 2 administrative support staff, 20 to 25 master’s and doctoral
students (2 to 4 per researcher), and 6 postdoctoral fellows, half of whom were
from abroad.
[46]
One of the LOEX members,
Véronique Moulin, Ph.D., is a professor at the Surgery Department of the
Faculty of Medicine at the Université Laval. In her testimony, she indicated
that she had the title of professor but considered herself more as a research
professor. Indeed, she spent the vast majority of her time on research
activities and was only occasionally called upon to give lecture courses. She
is considered an employee of the Université Laval, with the fringe benefits
generally offered to the university’s employees. However, she did not have
tenure.
[47]
Judicial notice is
taken of the fact that laboratories such as LOEX operate partially through
funding from research institutes, including the CIHR, and that part of these
laboratories’ work is to continually seek the funding required for their
research. Professor Moulin is interested, generally, in the problems of
hypertrophic scarring and since 2004 has been more particularly interested in
scleroderma. It should be noted that LOEX specializes in tissue engineering. In
early 2004, Professor Moulin applied for a grant from the CIHR. Unfortunately,
the Court was not provided with the details of the application or the
description of the research project or the terms and conditions of the grant.
However, in a January 2004 document entitled [translation]
"Operating Budget Module", the operating budget of $104,546 is
allocated as follows:
[translation]
1. RESEARCH STAFF AND FELLOWS
A postdoctoral fellow with experience in the understanding
of signalling pathways (to be recruited) $36,750.00
Ines Boufaied, current master's student, will
continue her work $17,850.00
A summer student will also be recruited $ 5,252.00
Total staff
and students $ 59,852.00
2. MATERIALS, SUPPLIES AND SERVICES
CONSUMABLES
* Culture medium $20,000.00
* General and plastic reagents $7,500.00
* Antibodies for flow cytometry,
immunohistology and
immunoblotting $3,500.00
* Molecular biology $1,000.00
* Growth factors and neutralizing antibodies $2,500.00
* Dosage kits $10,000.00
Subtotal $34,500.00
Taxes (13.95% - 2.3%) $4,019.25
Delivery and customs charges $1,500.00
Total consumables $40,019.25
SERVICES:
* Publications $1,500.00
Subtotal $1,500.00
Taxes (13.95% - 2.3%) $174.75
Total services $1,674.75
3. TRAVEL
This amount represents anticipated
expenses for the researchers and the student to present their results at
international and national conferences. $3,000.00
Total travel $3,000.00
Total operating budget $104,546.00
[Emphasis added.]
[48]
It must be noted that
the grant was requested on behalf of a principal candidate (Professor Moulin)
and an institution (the Saint-Sacrament Hospital in Quebec City, where LOEX is located). (See Exhibit I-11, page 1.) This document
indicates that Professor Moulin will work 15 hours a week on the research
project and that the research team that will benefit from the grant will consist
of three members, including a student already named in the application, as well
as a postdoctoral fellow and a summer student, both of whom are to be recruited
(Exhibit I-11, pages 2 and 3).
[49]
It should be pointed
out that the CIHR define certain standards regarding the remuneration of the
researchers recruited by laboratories. In particular, the minimum compensation
for a postdoctoral fellow was $36,750. Similar standards also apply for
master's and doctoral students. In general, the money received from the various
research institutes, particularly from the CIHR, was deposited to a bank
account controlled by the Université Laval and managed by the principal
candidate, that is, the researcher whose name appears on the grant application.
Université Laval employees handled the disbursement of the amounts owing to the
various staff members and then students, including the postdoctoral fellow, and
of the amounts to pay for the necessary equipment. The university is
accountable to the granting organizations, which can conduct audits regarding
the way the money has been spent. However, the spending decisions for the research
project are made by the professor in charge of the project.
[50]
In July 2005, Professor
Moulin advertised on different websites the postdoctoral fellow position she
wanted to fill, and she contacted Mr. Chabaud. A letter of offer was sent to
him on October 11, 2005 (Exhibit I-2). The three significant paragraphs of this
letter are the following:
[translation]
Dear Dr. Chabaud:
I hereby confirm that LOEX is offering you a
postdoctoral researcher position starting in October 2005. All means, both
from an organizational standpoint and in terms of scientific instrumentation,
required to carry out your research will be provided.
Your remuneration is guaranteed for a
minimum of two years, considering, obviously, your involvement with
regard to this position. We ask you, however, to take all necessary steps
to obtain a postdoctoral bursary from provincial or national organizations.
I am happy to consider you as one of the postdoctoral fellows at
LOEX.
[Emphasis added.]
[51]
Mr. Chabaud accepted
this offer of a postdoctoral research position. Although the letter refers to steps
Mr. Chabaud was to take to obtain a postdoctoral scholarship from provincial or
national organizations, these steps were unsuccessful and the only remuneration
Mr. Chabaud received was from LOEX.
[52]
Lastly, it is
interesting to note that Mr. Chabaud filled in forms entitled, [translation] "Professional Fees Claim—Research
Projects" (addressed to the CHA (Exhibit I-6)) and [translation] "Request for Remuneration"
(addressed to the Université Laval Financial Services (Exhibit I-5)), in which
he asked for the payment of "bursaries" (in the first
case) or a "CIHR award, postdoctoral level, annual basis $36,750.00, ICO
Project 87888" (in the second case). Mr. Chabaud was paid every two
weeks. According to him, he was not required to produce time sheets, whereas
employees would have had this obligation. However, during his testimony,
Mr. Chabaud used the term "salary" more than once to describe
the compensation he received.
[53]
In addition to the
agreement on his compensation, according to Mr. Chabaud, there was also
the agreement to respect the confidentiality of the research conducted until
the publication of an article reporting on the results of the research.
[54]
As for the intellectual
property in the results of the research, if the research were to lead to an
invention protected by a patent, the economic value of those results would be
shared, with 50% going to the Université Laval and the remaining 50% to be
shared among all the researchers, including postdoctoral fellows and students.
[55]
Among the other rules
Mr. Chabaud was to follow as a postdoctoral fellow, there were some rules of
conduct. In particular, one’s conduct was not to be detrimental to the research
performed by the other researchers.
[56]
On the T4A slips given
to Mr. Chabaud after the end of the year, "Université Laval (Human
Resources)"
is shown as the employer or payor. There was also a "Tuition, Education,
and Textbook Amounts Certificate" (T2202A) issued by the Université Laval.
On that form it is indicated that the name of the program or course was [translation] "postdoc. fellow
training in cellular and molecular bio." (Exhibit I-1). Mr. Chabaud's
student number is provided along with the "session periods,
part-time and full-time" for 2008, totalling 12 months.
[57]
After Mr. Chabaud
was recruited by Professor Moulin, certain administrative requirements of the
Université Laval had to be met. In particular, an [translation] "Admission and Registration in Postdoctoral
Training" form had to be submitted to the Registrar's Office. On this
form, submitted as Exhibit I-3, the following questions are asked: [translation] "Have you obtained a bursary
from a granting organization . . .?" to which the answer was no; [translation]"Do you have other
sources of funding?" to which the answer was yes, and he indicated the
grant obtained by professor Véronique Moulin. During her testimony, the registrar
of the Université Laval confirmed that, contrary to the situation with
admission and registration applications for undergraduate, master’s and doctoral
students, there were no steps taken or analyses done before the registration was
approved, since, as the postdoctoral fellow was invited and recruited by
Professor Moulin, registration occurred automatically, with no other steps
being taken. This registration was renewed every trimester (see Exhibit I-4).
Although Professor Moulin had sent an offer on behalf of LOEX for a [translation] "postdoctoral
researcher position starting in October 2005" with guaranteed remuneration
for a minimum of two years, the postdoctoral registration record was completed
for each of the trimesters during which Mr. Chabaud worked as a postdoctoral
fellow.
The Université Laval also issued Mr. Chabaud an ID card that indicates he is a
student.
[58]
During her testimony,
the registrar of the Université Laval indicated that when a student makes an
application for admission, the student must indicate the program in which he or
she is interested and must pay analysis fees. The student must provide
documents such as transcripts and diplomas. A studies management adviser
analyzes the documentation. Once the Registrar's Office has completed its
analysis, the application is sent to the faculty concerned, which decides
whether to accept the student. In the case of a postdoctoral fellow, there is,
strictly speaking, no admission application, no admission fee and no formal
analysis to determine the candidate's admissibility because the postdoctoral fellow
has already been invited by a professor to fill a research position.
[59]
An administrative
technician from the Registrar's Office reviews the documentation provided to
verify, among other things, whether the documents regarding the candidate’s
education and training are included and whether the application was filed
within five years after obtaining the doctorate. After registration, the
Université Laval provides the postdoctoral fellow with an ID card which
indicates his or her status as being that of student.
[60]
The Université Laval’s
policy is to employ postdoctoral fellows for only a maximum period of five
years after the fellow obtained his or her Ph.D. As for Mr. Chabaud, he
was offered the position of project leader in October 2010, more than five
years after he had earned his Ph.D. Thus it seems the usual rule was not
followed because Mr. Chabaud held a postdoctoral fellow’s position until
October 2010, more than five years after obtaining his doctorate in November
2004. However, he only held this position for a period of five years after he
was hired, since he started working for LOEX in October 2005.
[61]
Mr. Chabaud
described the way his research activity was conducted. He stated that, first,
he had to classify all the documentation available in his field of research.
Then, he formulated hypotheses that he had to prove.
[62]
Mr. Chabaud
described the differences between the work he did as a postdoctoral fellow and
the work he did as project leader at LOEX,
where he was still working at the time of the hearing. As a postdoctoral fellow,
Mr. Chabaud received compensation of around $36,700, with no source deductions
or employment insurance or pension contributions. As project leader, he had the
same fringe benefits as those offered to Université Laval employees, including
a pension plan. He was also covered by the employment insurance plan and by Quebec’s Commission de la santé et de la sécurité du travail
(CSST). As a postdoctoral fellow, he worked a minimum of 50 hours a week
whereas, as project leader, he had to work 35 hours a week. If he did any
overtime, he could exchange those hours for leave; he generally did not receive
additional remuneration. His work as project leader included supervising
doctoral students' work. He essentially became the right-hand man of the
researcher in charge of the research project. However, this did not prevent him
from continuing to conduct research himself.
[63]
As a postdoctoral fellow,
Mr. Chabaud believed he could have the last word regarding the direction to
be taken by the research project and the way it should be conducted.
Mr. Chabaud always managed to convince Professor Moulin to accept the
modifications he wanted to make to the execution of the project. When
questioned on this, Professor Moulin indicated there was no conflict between
them regarding the way to conduct the research, that she always got along with
the postdoctoral fellows and the students when they discussed a different
orientation for the research. However, when asked whether she ever disagreed,
she replied that she would have had the last word. She replied that she would
have terminated Mr. Chabaud's training if he had not complied with a directive
she gave him. During his testimony, Mr. Chabaud stated that the ultimate goal
was to publish and disseminate the knowledge obtained through the research
program.
[64]
Among the differences
between postdoctoral fellows, students and employees, according to Mr. Chabaud,
there was the obligation for students and postdoctoral fellows to participate
in scientific conferences, whereas employees were not allowed to do so. This
was also true for participation in the Faculty of Medicine's science days.
Students and postdoctoral fellows were required to attend seminars or reading
club meetings and give lectures, whereas employees were required only to attend
seminars and not to give presentations at the seminars. There was no obligation
for them to participate in the reading club either. According to Mr.
Chabaud—and this was confirmed by Professor Moulin—there were no set hours of
work for the students and postdoctoral fellows, whereas employees did have a
work schedule. During her testimony, Professor Moulin indicated that she
allowed students and postdoctoral fellows to conduct their reading and research
work outside the laboratory. However, she did need to know where the students
and postdoctoral fellows were.
[65]
Professor Moulin described
as follows the type of training Mr. Chabaud received at LOEX: he learned to
better manage students and to draft research grant applications, and he learned
project management.
Mr. Chabaud's position
[66]
Mr. Chabaud feels
that the remuneration he received from Professor Moulin was in the nature of a
bursary. He feels that if the CIHR gave Professor Moulin a grant to pursue
scientific research, there was an educational goal when Professor Moulin hired
him. This educational objective was similar to the one sought in the case of
master's or doctoral students participating in research projects. What we have
here is not a salary but rather a scholarship in his opinion. He was considered
a student by the Université Laval because he was issued a T2202A, which
indicates he is considered a full-time student. He feels he qualifies for the
scholarship exemption provided for in paragraph 56(3)(a) of the Act, and
submits that he should therefore be treated as master's and doctoral students
are.
[67]
The article quoted at
the beginning of these reasons describes the situation of postdoctoral fellows
as follows:
Some of Canada’s
postdocs are categorized as associates with benefits, others are
fellows with no employee status and, until recently, some had a tax-exempt
status on a par with students. “We fall into this no-man’s land,” says
Marianne Stanford, chair of the Canadian Association of Postdoctoral Scholars
(CAPS) and a postdoctoral fellow at the Ottawa Hospital Research Institute in Ontario.
Earlier this year, the federal government put an end to the tax-free
wages that some postdocs had been enjoying since 2006. “Now there’s a two-tier
system in labs where some of the people earning the degrees are getting
more than those who already have them,” says Stanford. The move was a blow
to postdocs, some of whom were recruited with the promise of tax-free earnings,
and who put up with the wages because they were tax-free – although many feel
they’re underpaid relative to their level of education.
The tax-free wage came about in 2006 when the federal
government introduced tax exemption for fellowships and awards. But as the
government made clear in March, the exemption was only intended to apply to
students enrolled in an educational programme. In a 2009 CAPS survey of
1,200 postdocs, 23% were not paying taxes on their fellowships. Many of
those were in Quebec, where the
provincial government considers postdocs to be stagières [sic],
or trainees, lumping them in with students.
[Emphasis added.]
Analysis
[68]
Mr. Chabaud contends
that he did not have to include the amounts received from the Université Laval
for his work with LOEX in his income: he was not subject to tax under the Act
because they were bursaries or fellowships that entitled him to the exemption
under subsection 56(3) of the Act. For Mr. Chabaud to benefit from that
exemption, the amounts must, under subparagraph 56(1)(n)(i), be included
in income as a bursary or fellowship. However, close review of paragraph 56(1)(n)
indicates that amounts are not to be included under this paragraph if they are
amounts received from employment. As a result, it must first be determined
whether the amounts Mr. Chabaud received constitute income from employment.
Because the Act has a definition of the word "employment" that does
not enable one to clearly ascertain its scope,
under article 8.1 of the Interpretation Act, we must turn to Quebec law to do so. According to the Civil Code of
Québec (C.C.Q. or Civil Code), a person is
considered an employee if he or she provides work under a contract of
employment. Under article 2085 C.C.Q., "[a] contract of
employment is a contract by which a person, the employee, undertakes for a
limited period to do work for remuneration, according to the instructions and
under the direction or control of another person, the employer." Article
2086 states that "[a] contract of employment is for a fixed term or an
indeterminate term." According to the definition of contract for
employment, the following three essential elements are required for a contract
of employment to exist:
1. a prestation, namely work to
be carried out;
2. remuneration;
3. a relationship of subordination.
[69]
Were these three
essential elements for the existence of a contract of employment present in
this case? In my opinion, the most important document for determining the
nature of the contractual relationship between Mr. Chabaud and LOEX is the letter submitted as
Exhibit I-2, most of which is reproduced above. The relevant parts are the
following: "LOEX is offering you a postdoctoral researcher position . . .
. Your remuneration is guaranteed for a minimum of two years . . . ." And
it concludes with: "I am happy to consider you as one of the postdoctoral fellows
at LOEX."
[70]
This letter appears
very much to be an offer of employment. In fact, in the letter, LOEX hired
Mr. Chabaud as a researcher (as provided for in the operating budget for
the grant) to carry out research work for remuneration that, in 2008, was
$36,601. Moreover, Mr. Chabaud used the term "salary" more than
once to describe the compensation he received. As the respondent stated in her
Reply to the Notice of Appeal, the work was to be done under the supervision of
Véronique Moulin, a research professor at LOEX (subparagraph 6(d)), and Mr.
Chabaud admitted this fact. At first glance, it seems that all the elements
required for a contract of employment existed. Although Mr. Chabaud gave a
different reply, Professor Moulin confirmed that LOEX had the final word about
the way the research would be conducted: LOEX had the right of control and
direction over Mr. Chabaud's work. It must also be noted that Mr. Chabaud had
to join the team of LOEX researchers. Mr. Chabaud was required to respect
certain rules of conduct, including not prejudicing the research conducted by
other LOEX researchers. Also, he had to keep confidential the research
conducted, until the date of publication of an article reporting on the results
of the research.
[71]
According to Professor
Moulin, the relationship between her and Mr. Chabaud was one of student
and professor. I do not share this opinion. A professor does not pay a student
when the student "studies". In fact, the opposite is true: it is the
student who pays tuition fees! Mr. Chabaud paid none. When a professor
hires a student for summer work, this student is in the same situation as all
the other students who must earn money to pay for their studies or to support
themselves, although the work may be more relevant for his or her future
career. If the student receives a salary, it must be included in his or her
income tax return (which must be filed if tax is payable). As a result,
Mr. Chabaud would not be treated any differently than the summer student
mentioned in the operating budget whom Professor Moulin was to hire for her
research project at a salary of $5,252, or than the master's student, who was
to receive remuneration of $17,850 (Exhibit I-11). Therefore, a student
can provide services under a contract of employment. In such a situation, the
student is an employee.
[72]
According to Professor
Moulin, the distinction between a project leader and a fellow is that the former
does what he or she is told to do while the latter may have greater
independence. However, when there is a difference of opinion and the fellow's
argument is not accepted, she testified, the fellow's participation in the
research project is terminated if he or she does not conform. Even if the fellows
are largely independent when it comes to their work schedules, Professor Moulin
makes sure she knows where her fellows are. She did, however, admit that she
gave fellows with 6 or 7 years' experience more independence than a master's
student. Having more independence does not necessarily mean there is no
relationship of subordination. The existence of a relationship of subordination
does not depend on the right of direction and control being exercised,
but on the existence of the right to exercise such control. The best
example of this is the considerable autonomy Professor Moulin has, as have the
other professors and researchers at the Université Laval. The university still
treats her as an employee, and rightly so. It should be noted as well that the fellow
here has a Ph.D. and, during his doctoral studies, he developed his knowledge
so as to be able to conduct research and achieve a higher level of autonomy.
[73]
In this case, I have no
doubt that LOEX had such a right of control and direction over Mr. Chabaud's
work. Clearly, the situation might have been different if Mr. Chabaud had
obtained his grant directly from the CIHR and had not been subject to any right
of control or direction that LOEX, the CHA or the Université Laval could
exercise.
[74]
Since Mr. Chabaud
held the position of researcher with LOEX, it is not surprising to learn that
if his research had led to an invention of some sort, the economic value of
that outcome would have been shared, with 50% going to the Université Laval and
the other 50% being split among all the researchers, including the postdoctoral
fellows and the students. In my opinion this situation is entirely compatible
with the existence of a contract of employment.
[75]
It must also be noted
that when Mr. Chabaud asked the Université Laval's Financial Services for
payment of his compensation, he used the document entitled "Request for Remuneration".
He also submitted to the CHA "Professional Fees Claim—Research Projects"
forms for the payment of his compensation. It is true that on these forms,
Mr. Chabaud requested the payment of a [translation]
"CIHR bursary, postdoctoral level" or simply "bursary".
However, the case law has consistently held that the terms used by the parties
to describe the nature of their contractual relationship or of the payment one
of them receives, although relevant, are not determinative. First, the term
"bursary" is inconsistent with the terms used in the documents
provided to the CIHR describing the way LOEX would use the grant it had applied
for. At page 4 of Exhibit I-11, "Operating Budget Module", under
"research staff and fellows" the amount to be paid to the
postdoctoral fellow is indicated. Moreover, in his own testimony,
Mr. Chabaud used the word "salary" to describe the amounts
received from LOEX.
[76]
Does the term "bursary"
used in the requests for remuneration submitted to the Université Laval and the
CHA truly correspond to a bursary, scholarship or fellowship referred to in paragraph
56(1)(n) of the Act? The courts have had a number of opportunities to
consider the concept of bursary in the context of this paragraph. In her Book
of Legislation and Jurisprudence, the respondent presented certain decisions
including that rendered by the Federal Court of Appeal in Simser v. Canada,
2004 FCA 414, [2006] 1 F.C.R. 253, [2004] F.C.J. No. 2075 (QL). At
paragraph 34 of his reasons, after noting the definition of "bursary"
("bourse" in French) in various dictionaries, Nadon J. wrote:
These definitions of the word "bursary" highlight the fact
that bursaries are grants given to students in need of financial help
so as to allow them to continue their studies.
[Emphasis added.]
At paragraph 45, he adds:
The word "bursary" is not qualified in any
way. The wording of paragraph 56(1)(n) leads me to the conclusion that
it must receive a liberal interpretation. The words "bourse d'études,"
used in the French version of paragraph 56(1)(n), makes it clear that a
"bourse" is linked to the status of student. Further,
the dictionary definitions which the Judge cited and those that I have added to
his list evoke the notion of financial assistance for needy students.
This criteria is found in the SOGD, which makes the grant available to needy
students who have achieved a minimum standard of success in their studies.
[Emphasis added.]
And at paragraph 49, he adds:
Many of the dictionary definitions of the word
"bursary" refer to the notion of financial need when
delineating a bursary or grant. This is also what differentiates scholarships
from bursaries. The former is often awarded to recognize excellence
in the academic field, while the latter is usually awarded to provide financial
assistance to a student. Both words are used in paragraph 56(1)(n).
[Emphasis added.]
[77]
In The Queen v.
Amyot, [1977] 1 F.C. 43, [1976] F.C.J. No. 92 (QL), 76 DTC 6217, and [1976]
C.T.C. 352, Mahoney J. had occasion to address the concept of fellowship, or in
French, "bourse de perfectionnement". We will first state the
facts. A doctoral student had received $4,500 from the Canada Council for the
Arts to help him obtain his doctorate. Mahoney J. found that this amount was a fellowship. Having
consulted a number of dictionaries, Mahoney J. found, at paragraph 12 (QL),
that the best dictionary definition was from the Webster’s Third New
International Dictionary that defined "fellowship" as:
a sum of money offered or granted by an educational institution,
a public or private agency, or organization, or foundation for advanced
study or research or for creative writing.
[Emphasis added.]
[78]
While the dictionary
recognizes that "fellowship" has a meaning that includes grants for
studies and for research, it still had to be determined whether that definition
applied for the purposes of the Act. Having noted that research grants were covered
by paragraph 56(1)(o), Mahoney J. held that a narrower definition of
"fellowship" was to be preferred and that its meaning should be limited
to that of a grant made for the purpose of allowing the taxpayer to advance his
academic career. In such a case, the grant is in the nature of a bursary,
scholarship or fellowship under paragraph 56(1)(n). Mahoney J. held that
it was a fellowship because he had accepted the evidence before him that, in
the North American academic community, the term "fellowship"
designates a bursary granted to students at the doctoral level, whereas the
term "bursary" applies to the undergraduate level and
"scholarship" to the master's level. At paragraph 16 (QL), Mahoney J.
wrote:
. . . the object of the grant was not the defendant's contribution
to the general body of knowledge on the Italian Communist Party; it was to
assist the defendant toward his doctorate. Having regard to the defendant's
level of academic attainment in 1972, the grant was a fellowship and the
amounts received by him on its account fell within paragraph 56(1)(n) of
the Act.
[Emphasis added.]
[79]
What I retain from
these pronouncements is that a bursary is an amount granted either as financial
aid, or in recognition of the student's excellence. It is not an amount paid as
consideration for services rendered. The grantor of the bursary does not grant it
in return for a consideration from which the grantor will benefit directly. The
grantor does so in the general interest of society.
[80]
In this case, the
amounts could not have been bursaries for Mr. Chabaud for two reasons. First—and
most importantly—the money Mr. Chabaud was paid was for the services he rendered
as a researcher, or more specifically, as a postdoctoral research fellow, at
LOEX. As a result, the amounts paid cannot be considered financial aid or the recognition
of excellence. Second, Mr. Chabaud was no longer a student in 2008. He had
already obtained his Ph.D. in 2004. In 2008, Mr. Chabaud worked as a
researcher, even though the university gave him student status.
[81]
It is important to note
that in the letter of offer of employment, LOEX states that Mr. Chabaud’s remuneration (and not bursary)
is guaranteed for a minimum of two years. It must also be noted that the letter
makes a distinction between remuneration and a postdoctoral bursary because it is
suggested that Mr. Chabaud take all necessary steps to obtain a
postdoctoral bursary from provincial or national organizations.
[82]
In my opinion, there is
no relevant difference between the work Mr. Chabaud did as a postdoctoral
research fellow and that of an articling law student, a medical resident, an
accounting trainee or an apprentice. All must acquire more experience before moving
on to the next stage of their careers. Judicial notice is taken of the fact
that medical residents and articling law students must work for a number of
months under the supervision of an "attending staff physician" or
"articling principal" before being eligible for admission to their
respective professional bodies. During this period, they receive remuneration
for their work while acquiring more experience in their field.
[83]
The concept of stage
(internship) or stagiaire (intern) is not found in the Civil Code.
However, in practice, an intern is recognized as being a person who must
acquire complementary experience in order to be able to exercise a profession
such as teacher or researcher. During the internship, a person acquires
experience and sometimes even receives training. But receiving training is not
reserved solely for interns. Indeed, in any employment a person might have,
especially at the beginning of a career, it is normal to have a learning and
training period to enable the person to perform the work properly. Moreover,
throughout a career, particularly in technical and professional fields, it is common
practice for people to be required to keep their knowledge up to date.
[84]
The fact that under a
contract of employment a person may receive, in addition to remuneration, training
provided by his or her employer does not change the nature of the contract of
employment. The Civil Code does not require that an employee receive
only remuneration. The concept of a contract of apprenticeship is also
something that does not exist in the Civil Code. It is a concept that
does seem to exist in common law, however, because reference to such a contract
can be found in the Employment Insurance Act, at paragraph 5(1)(a). Moreover, the
Act makes reference to being "employed as an apprentice mechanic"
(subsection 8(6)) and to "eligible salary . . . payable . . . to an
eligible apprentice" (subsection 127(9) at subparagraph (e.1)(vi) of
the definition of "investment tax credit") and also to "salary .
. . payable . . . to an eligible apprentice" (subsection 127(9), definition
of "eligible salary and wages"). The Act therefore recognizes
apprentices as employees when they receive remuneration.
[85]
Furthermore, there was
no evidence regarding specific training Mr. Chabaud would have received
during the year 2008, other than the fact that he may have participated in
workshops or conferences.
[86]
I must also add that,
even if Mr. Chabaud may have received some training in the context of his
duties, I believe the most important benefit (aside from money) to him from the
performance of those duties was acquiring experience. Moreover, when Professor Moulin
described the positive elements Mr. Chabaud's training had brought him, she
mentioned the experience gained in drafting grant applications and in project
management, including supervising the work of students.
[87]
It is also important to
note that some internships are paid and others are not. In order for a
contract of employment to exist, at least in Quebec,
there must be remuneration. Therefore, a paid intern may be bound by a contract
of employment and therefore earn employment income.
[88]
It is true that an intern—and
this is true in Quebec and elsewhere in Canada—cannot
expect to hold a position for an indeterminate period. Generally, an internship
is for a fixed period, and does not guarantee the intern a permanent position
at the business or department where the internship takes place. This is
nonetheless in accordance with the provisions of the Civil Code, which
states that a contract of employment may be for a fixed term or an
indeterminate term. Whether an internship is for a fixed term of one year, six
months or five years, there is still a contract of employment. A contract of
employment can exist for much shorter periods of time, as is the case for, among
others, audio-visual freelancers (see Bernier v. Canada (Minister of National Revenue), 2011 TCC 99, [2011] T.C.J. No. 81 (QL)).
[89]
I was not presented
with any evidence in Mr. Chabaud's appeal that would allow me to find that the
distinction regarding bursaries made in Amyot corresponds to reality,
namely the distinction based on the academic level of the bursary recipients.
However, for the purposes of this appeal, I find without hesitation that a
fellowship represents assistance or a grant given to a person to enable that
person to acquire new knowledge. In the case at bar, Mr. Chabaud received
remuneration for the services he rendered and the amounts he received were not
assistance or a subsidy to enable him to acquire new knowledge, nor were they recognition
of the excellence of his academic results. Mr. Chabaud obviously acquired new
knowledge while carrying out his duties at LOEX, but LOEX's goal in giving him
the amounts in question was to remunerate him for the services he rendered to
LOEX. Quite clearly, if Mr. Chabaud had received from the provincial or
federal government or from a public organization a bursary intended to help him
acquire knowledge, with no immediate consideration for the government or the
public organization, needless to say, the amount of this bursary could not have
been salary or remuneration for services rendered. In my opinion, this is the
distinction between the amounts Mr. Chabaud received from LOEX and amounts he
could have received from another public organization.
[90]
This distinction seems to
me to be in accordance with a fair and reasonable interpretation of the
provisions of the Act. It is also in accordance with the approach that should
guide the courts in interpreting tax legislation, in particular as described by
Gonthier J. of the Supreme Court of Canada in Québec (Communauté urbaine) v.
Corp. Notre-Dame de
Bon-Secours, [1994] 3 S.C.R.
3, at page 17, [1994] S.C.J. No. 78 (QL), at paragraph 22:
In light of this passage there is no longer any doubt
that the interpretation of tax legislation should be subject to the ordinary
rules of construction. At page 87 of his text Construction of
Statutes (2nd ed. 1983), Driedger fittingly summarizes the basic principles: ".
. . the words of an Act are to be read in their entire context and in their
grammatical and ordinary sense harmoniously with the scheme of the Act, the
object of the Act, and the intention of Parliament". The first
consideration should therefore be to determine the purpose of the legislation,
whether as a whole or as expressed in a particular provision.
[Emphasis
added.]
[91]
In my opinion, Mahoney J.
applied this rule very appropriately when he noted, in Amyot, supra,
that the term "fellowship" could include both a grant for study and a
research grant. He adopted a narrow interpretation of "fellowship"
considering that, at paragraph 56(1)(o), there was already a provision covering
research grants.
[92]
Similarly, I would add
that the terms "scholarship", “bursary”, “fellowship” and
"research grant" should be given meanings that are consistent with
the entire context of the provisions that deal with them. Section 56 and in
particular paragraphs 56(1)(n) and (o) are provisions in Subdivision
d, which concerns other sources of income and is found in Division B dealing
with the computation of income for the purposes of Part I of the Act. Subdivision
a includes provisions regarding the calculation of income from an office or
employment; Subdivision b includes provisions regarding income from a business
or property. It must be presumed that by adding Subdivision d, Parliament wanted
to include in income amounts that would not otherwise be included in income
under Subdivisions a and b, or under section 3. Examples of this type of income
are support payments and social assistance benefits. In my opinion, scholarships
and bursaries would not have been included in a taxpayer's income under Subdivisions
a and b or under section 3 either. Therefore, if not for its inclusion pursuant
to Subdivision d, such a scholarship or bursary would not have been included at
all. It is clear that Parliament's intention in taxing scholarships and
bursaries in Subdivision d was not to modify the method of calculating
employment income. This interpretation becomes even clearer when one considers the
amendment to paragraph 56(1)(n) of the Act made following the Supreme
Court of Canada decision in Savage, in which it was held that the $300
the employer had paid as a benefit to its employee could be subject to the $500
exemption provided for in section 56 even if the exemption was not provided for
in the calculation of employment income under Subdivision a.
[93]
In Bergeron v.
Canada, [1999] T.C.J. No. 510 (QL), 99 DTC 1265, I defended a similar position
regarding the distinction between various sources of income in the context of the
deduction of legal fees incurred to challenge support payments. In Nadeau v.
M.N.R., 2003 FCA 400, [2004] 1 F.C.R. 587, 2003 DTC 5736, the Federal Court
of Appeal rejected this interpretation. Among the reasons set out by the court was
the fact that the interpretation to which I was opposed had been applied for
more than 40 years and that subsequent amendments to the Act had sanctioned
this interpretation. It was from this perspective that Noël J.A. stated, "[w]ere
it not for this well-established jurisprudence, the thesis developed by
Archambault T.C.J. would be quite tenable" (paragraph 29). For the type of
situation involved in the present case, contrary to what it did regarding the
treatment of legal fees incurred to obtain support payments, Parliament took
action to counter the Supreme Court’s interpretation in Savage. By
adding the text in parenthesis found in paragraph 56(1)(n), Parliament
ensured that the treatment provided for in the provisions regarding the
calculation of income from employment or from a business or property takes
precedence over the treatment provided for at paragraph 56(1)(n). Since
this amendment was adopted, it has been clear that scholarships and bursaries
paid by an employer to its employee are entirely taxable whereas scholarships
and bursaries received from someone other than an employer (or a person not
operating a business) could be subject to a partial or total tax exemption.
[94]
It should also be noted
that Mr. Chabaud's remuneration, although likely inadequate considering the
number of diplomas he holds and the significant number of his years of
education, is higher than that of certain teachers at the elementary level.
There could be tax inequities in such circumstances if one had to pay taxes and
the other did not. A clear provision in the Act would be required in order for
Mr. Chabaud to benefit from a tax exemption.
[95]
Postdoctoral fellows
have the right, as have all other Canadians, to arrange things so that they pay
the least taxes possible. Universities have the right to help them achieve this
end, especially if it allows them to attract excellent young researchers without
having to pay the remuneration that would otherwise be justified for holders of
doctorates and without having to provide certain benefits required by law (in
particular participation in the employment insurance plan). However, the mere
fact that a university decides to treat a postdoctoral fellow as a student does
not mean that the fellow is a student and not an employee. This determination
is to be made by the courts, taking into consideration the facts and, in
particular, the parties' behaviour.
[96]
It goes without saying
that the reasoning adopted above in finding that the amounts paid to Mr. Chabaud
cannot be bursaries also applies to research grants under paragraph 56(1)(o)
of the Act. The concept of grant has also been the subject of case law
commentary, in particular in the Federal Court of Appeal decision in Ghali v. Canada,
[2004] FCA 60, [2004] F.C.J. No. 265 (QL), 2005 DTC 5472, [2005] 4 C.T.C.
177. Nadon J.A. wrote the following at paragraphs 33, 34 and 37:
33 The word
"grant" is not defined. Since it is not a term of art, it must be
given its ordinary meaning. The dictionary Le Petit Robert
defines "subvention" ("grant") as follows:
"[TRANSLATION] A subsidy asked for or required by
the government to meet an unexpected expense (loan, tax). Assistance
granted to a group, a person, by the government or an association (public or
private)." The dictionary Le Petit Larousse defines "subvention"
as follows: "[TRANSLATION] Financial aid paid by
the government or a public entity to a private person with the aim of promoting
an activity of general interest in which that person is engaged."
Finally, the Termium Plus electronic terminology bank cites the
following definition of "subvention": "[TRANSLATION]
An amount paid occasionally or regularly to an individual or a group as
assistance, aid or a subvention in payment for certain services, etc."
34 Clearly, the word
"grant" is very broadly defined. It includes any form of
financial assistance paid to a person by a public agency in order to achieve an
objective of public interest. That was the interpretation arrived at by Mr.
Justice Cattanach, in the context of paragraph 20(6)(h) of the Act, in G.T.E.
Sylvania Canada Ltd. v. The Queen, (1974)
74 DTC 6315 (F.C.). After reviewing a series of definitions contained in
English dictionaries, which were similar to those I reproduced above, Cattanach
J. stated, at page 6320:
Again referring to the dictionary meanings of the words
"grant" and "subsidy" there is one common thread
throughout, that is a gift or assignment of money by government or public
authority out of public funds to a private or individual or commercial
enterprise deemed to be beneficial to the public interest. Subject to
minor refinements the words "grant" and "subsidy" appear
from their dictionary meanings to be almost synonymous.
...
As I have said before the constant and dominating feature in the
words "grant" and "subsidy" is that each contemplates
the gift of money from a fund by government to a person for the public weal.
Something concrete and tangible is to be bestowed …
37 Accordingly, I think,
with respect, that the learned judge erred in concluding as he did. The
dictionary definitions and the cases clearly indicate that a
"grant" consists of financial assistance paid by an agency to a
person or a group. In this case, therefore, the funds received by the
appellant may without any difficulty be characterized as a "grant".
[Emphasis added.]
[97]
It is clear that the
amounts LOEX paid to Mr. Chabaud do not constitute financial aid in the nature
of a gift, to use the term of Cattanach J. in G.T.E. Sylvania Canada Ltd.
When a person is paid a salary, the salary is not financial aid, but
consideration for services rendered by that person. Here, the amount of $104,546 was
paid by a public organization (CIHR) to LOEX (a component of the Université Laval)
for the achievement of an objective of public interest, namely, assisting in
health research. It is therefore clear that this amount represented a research
grant for LOEX. However, when LOEX uses such an amount to compensate employees
it hires and to acquire material, supplies and services as described in its
operating budget referred to above, this amount loses its grant status and becomes,
for the providers of those services, supplies and material, consideration for
the services rendered or the goods sold. When LOEX purchases $10,000 worth
of dosage kits, the amount paid by LOEX or the Université Laval constitutes the
purchase price for these dosage kits. It is the same for the employees LOEX
recruited and hired. The amounts paid to the employees constitute salaries,
namely, consideration for services rendered by these employees in the laboratory.
[98]
Nothing in the evidence
shows that LOEX or the Université Laval acted as agents for the CIHR or that
they were mandated to pay scholarships, bursaries or research grants to other
people. On the contrary, the evidence before me showed that the amounts paid by
the CIHR were intended to be used to pay the salaries of the research staff (including
the postdoctoral fellow), to purchase materials, supplies and services, and to
pay travel costs (see operating budget reproduced above).
[99]
Counsel for the
respondent asked the Court to be allowed to provide written submissions
regarding the existence of a contract of employment. Since this issue was not
raised in the pleadings, I granted the parties all the time required to
adequately address the issue. Counsel for the respondent sent me her written submissions
on June 22, 2011, and Mr. Chabaud's are dated July 29, 2011. Mr. Chabaud expressed
no disagreement with the respondent's position on the existence of a contract
of employment.
I reproduce hereunder the following excerpt from counsel's letter:
[translation]
(1) INTENT OF THE PARTIES TO THE CONTRACT
In 2005, Ms. Moulin, professor at the Université Laval and
researcher at the Experimental Organogenesis Lab of the St-Sacrement Hospital (LOEX),
submitted a research grant application to the Canadian Institutes of Health
Research (CIHR) (Exhibit I-11). In this document, Ms. Moulin indicated an
amount of remuneration for a postdoctoral fellow, as opposed to a salary to
be paid to research staff.
The amount of the remuneration for the postdoctoral fellow was not
decided by Ms. Moulin but was predetermined by the CIHR.
After she obtained the research grant, Ms. Moulin recruited the
appellant to participate in her research work as a postdoctoral trainee (Exhibit
I-2). It was agreed at that time that the appellant would conduct his own
research project and that the results would be published. Obviously, the
appellant's research project had to be compatible with the project for which a
research grant was awarded by the CIHR.
It was stipulated that remuneration would be paid to the
appellant with no regard to the number of hours worked. It was also stipulated
that he would not have any fringe benefits such as a pension plan or
insurance. Moreover, his work would not be covered by the CSST.
It was agreed that the appellant would participate in conferences, science
days, seminars, etc., in order for him to round out his knowledge, acquire
experience as a lecturer and establish contacts.
Ms. Moulin's goal was to offer holders of doctorates the opportunity
to participate in postdoctoral training. She wanted to contribute to the learning
of young researchers while having the possibility of benefiting from the
results of their research.
The appellant's main objective in doing
the postdoctoral training was to increase the number scientific publications
he had to his credit. He also wanted to improve himself as a researcher
in order to be better equipped to eventually obtain a research position in his
field of research.
The appellant and Ms. Moulin indicated to the Court that they did
not enter into a contract of employment and distinguished their
relationship from that between Ms. Moulin and/or LOEX and the research
assistants, who were considered employees. They enjoyed all the fringe benefits
offered to the Univérsité Laval's employees. They had a set schedule and were remunerated
for their overtime. They were also subordinate to their employer.
Thus, in this particular case, we are of the opinion that the relationship
between the parties to the contract was not one of employer-employee.
(2) FACTUAL REALITY OF THE RELATIONSHIP BETWEEN THE PARTIES TO THE
CONTRACT
The parties' behaviour in executing the contract is consistent
with their common intent to not enter into a contract of employment.
The appellant's remuneration was paid with no regard to
the number of hours worked. No record of time worked was kept and Ms. Moulin
had no idea how many hours the appellant spent on his research. Ms. Moulin wanted
to be informed of days off, but this was also the case for all students and
fellows who worked on her research projects, and it seems to us that it was a
very informal arrangement, with no real relationship of subordination.
Ms. Moulin did not have any direct control over the execution
of the appellant's research. It was not a relationship of employer to employee,
but rather a relationship of guide, advisor or mentor to fellow.
Neither the place where the appellant conducted his research at LOEX
nor any of the furniture was Ms. Moulin's property, and the research grant the
CIHR awarded to Ms. Moulin paid the expenses for material and supplies,
and publication costs (Exhibit I-11).
As a result of all the above, we therefore find that the analysis of
the facts submitted in evidence, in light of article 2085 of the Civil Code
of Québec, 1991, c. 64, and the decisions Grimard v. Canada (2009 FCA
47) and NCJ Educational Services Ltd. v. Canada (2009 FCA 131), do not
lead to the conclusion that there was a contract of employment.
[Emphasis added.]
[100]
I would like to make a
few comments on some of the arguments presented by counsel for the respondent.
First, the fact that the amount of the remuneration for the postdoctoral fellow
was not determined by Professor Moulin but was predetermined by the CIHR has no
relevance, in my opinion. The CIHR could set certain standards of employee
remuneration as conditions for the grant,
but this has no impact on whether a contract of employment existed between LOEX
and Mr. Chabaud. Quebec's Act respecting Labour Standards imposes
certain labour standards on employers in Quebec,
but this does not prevent the existence of a contract of employment.
[101]
Even though, in the letter
of offer of employment, LOEX indicated that Mr. Chabaud could conduct his
research, I do not doubt that the research project was LOEX's and not Mr.
Chabaud's. He was not free to choose any research project; he had to become integrated
into the LOEX research team and, quite obviously, through his own research
work, he was to contribute to the progress of the project funded by the CIHR.
Professor Moulin clearly stated, moreover, that if Mr. Chabaud's research
had taken a direction that did not conform to LOEX's objectives, she would have
terminated his contract of employment.
[102]
Counsel for the
respondent wrote that the remuneration was paid "with no regard to the
number of hours worked." It must be noted that Mr. Chabaud was paid every two
weeks and that to obtain payment of his remuneration he had to submit the forms
provided by the Université Laval and the CHA. The fact there was no strict
control over the number of hours worked and the fact Mr. Chabaud could
even work at home do not mean a contract of employment could not exist. The
remuneration paid to Mr. Chabaud was based on an annual salary, payable
every two weeks. It is quite obvious that if Mr. Chabaud had not provided
his services, his contract would have been terminated. Moreover, the fact that
Mr. Chabaud could enjoy no fringe benefits such as a pension plan or insurance,
and the fact that he was not covered by the CSST are not determining factors as
to whether a contract of employment existed. As I mentioned above, the fact of
being able to contribute to the learning of young researchers does not prevent
the existence of contract of employment. This type of situation exists in many
cases where there is a contract of employment, whether it involves articling
law students, medical residents or apprentices.
[103]
That postdoctoral fellows
may have worked more hours than regular researchers at LOEX is amply justified
by the fact that the fellows were allowed to participate in conferences,
science days, and seminars in order to round out their knowledge. Moreover, it
is common to spend more time on one's work when one is learning to work. Every
year, the Court hires law clerks for one-year terms to assist judges with legal
research. The clerks are also given training and they are allowed to
participate in conferences. These clerks have with the Court a contract of
employment. They are required to declare the remuneration paid by the Court as
employment income.
[104]
Counsel for the
respondent states that Mr. Chabaud's main goal was to increase the number of scientific
publications he had to his credit. He also wanted to improve himself as a
researcher in order to be better equipped to obtain a position as researcher in
his field of research. This corresponds to the usual goal of any internship.
However, when the internship is paid, and the intern provides his or her
services to the payor, there is a contract of employment. I also note that
certain university professors are required to publish or encouraged to produce
a certain number of publications. There is therefore nothing in particular that
could justify a finding that no contract of employment existed between a postdoctoral
fellow and LOEX.
[105]
Moreover, even if the
evidence had clearly shown that LOEX and Mr. Chabaud's intention was to
not enter into a contract of employment, but rather to create a relationship in
which Mr. Chabaud would receive the advice of a mentor or would benefit from
learning opportunities, this would not necessarily mean there was no contract
of employment within the meaning of the Civil Code as long as all the
required conditions were met, namely, the provision of services for
remuneration under the direction or control of the payor (employer). I do not
doubt that, here, Mr. Chabaud worked as a member of the LOEX staff, albeit
as a postdoctoral fellow, I admit. He was subject to the direction and control
of LOEX. Moreover, Professor Moulin stated that although the postdoctoral fellows
had considerable autonomy, she wanted to know where they were during working
hours, and if there were differences of opinion regarding the execution of the
work, she had the last word.
[106]
Obviously, the fact that
the Université Laval issued an ID card indicating Mr. Chabaud was a student is
certainly not a determining factor as to the nature of the contractual
relationship between him and LOEX. It is rather odd that the Université Laval considered
postdoctoral fellows as students when the MEQ does not. I would also add that
on its website and in the information provided to postdoctoral fellowship
candidates from abroad, the Université Laval asks foreign candidates to provide
a work permit and a copy of the contract of employment, and not a
permit to study in Canada.
[107]
I fully understand that
the Université Laval wanted to help Mr. Chabaud obtain his tax exemption
by giving him T2202A information forms indicating that the university
considered him to be a full-time student there. However, this was not justified
because he was an employee of LOEX and not a student.
[108]
It should be added that
postdoctoral fellows are considered to be neither full‑time nor part‑time
students under the university's internal management rules, since they are not
registered in a program that would lead to credits. It bears repeating that a
full-time student is one registered in learning activities that are worth 12
credits or more per session, and a part-time student is one registered in learning
activities worth fewer than 12 credits per session (see article 187 of the
Student Regulations of the Université Laval).
[109]
In my opinion, the
Report on Postdoctoral Fellows prepared for the MEQ, describing postdoctoral training
as an activity enabling the fellow to develop "expertise" in research
in a complementary or more specialized field, and according to which postdoctoral
fellows must be considered employees, seems much closer to reality than the
T2202A issued to postdoctoral fellows by the Université Laval and other
Canadian universities. It is possible that the decision rendered by Lamarre
Proulx J. of this Court in Bekhor v. Canada (Minister of National Revenue), 2005 TCC 443, [2005] T.C.J No. 314 (QL), encouraged
them to find that postdoctoral fellows were not employees. Considering the
numerous similarities between Mr. Chabaud's fellowship and that of Mr. Bekhor,
I do not think it is appropriate to make any factual distinctions in order to
come to a different conclusion than that in Bekhor. With
great respect for those who hold the opposite view, I cannot adopt here the
same reasoning as that adopted in Bekhor. It is unfortunate that Mr. Bekhor
did not see fit to appeal to the Federal Court of Appeal so that it could rule
on this issue. In keeping with the opinion I have just expressed, I encourage
Mr. Chabaud to do this in order to obtain a decision that will create a judicial
precedent, which my decision cannot be.
[110]
For all these reasons
Mr. Chabaud's appeal is dismissed, without costs.
Signed at Ottawa, Canada, this 20th day of September 2011.
"Pierre Archambault"
Translation
certified true
on this 26th day
of January 2012.
Erich Klein,
Revisor
Email this Content