Citation: 2010 TCC 593
Date: 20101118
Docket: 2009-404(IT)I
2009-2858(IT)I
2010-671(IT)I
BETWEEN:
EDWARD A. FERRE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Paris J.
[1] These appeals are from a reassessment of the
Appellant’s 2006 taxation year and from assessments of his 2007 and 2008
taxation years. In those years, the Appellant claimed the following education
and tuition credits in respect of an online MBA program he took from the
University of Liverpool (the University), located in Amsterdam, in the Netherlands:
|
|
Tuition credit
|
Education credit
|
|
2006
|
$10,818
|
$1680
|
|
2007
|
10,252
|
5,580
|
|
2008
|
10,168
|
5,580
|
The Minister of
National Revenue (Minister) disallowed the credits entirely for 2006 and 2007,
and allowed an education credit of $1,690 for 2008.
[2] The
issue in these appeals is whether the Appellant met the conditions for the
tuition and education credits set out in sections 118.5(1) and 118.6(2) of the Income
Tax Act (the “Act”), and, in particular, whether he was in
“full-time attendance” at the University in 2006, 2007 and 2008, and whether
the courses he took at the University in 2006 and 2007 were at least 13 weeks
in duration.
Facts
[3] In
the years under appeal, Mr. Ferre worked full-time as an Organ Donation
Specialist with the BC Transplant Society. His regular office hours were from
8:00 a.m. to 4:00 p.m. daily from Monday to Friday, and he was on call part of the
remainder of his time. In 2008, he said that he was on call 65% of the time he
was not at the office.
[4] In
April 2006, in order to further his career, he enrolled in the online MBA
program offered by the University of Liverpool. He chose an online program of studies because he said
that his work schedule was “inconsistent” and, therefore, he needed a flexible
study arrangement.
[5] The
online MBA program consisted of a series of what the University referred to as
“modules”, followed by a written dissertation. The University provided the
following description of a module:
Modules contain a
variety of components. At the beginning of each class, you will be provided
with a syllabus outlining what you are required to do. Tasks include:
responding to ‘discussion question’; participating in class discussions;
reading lectures; writing personal assignments; conducting research; group
work; etc.
The
initial module lasted a little over seven weeks, and seven subsequent modules, each
lasting six weeks, were taken consecutively. The initial module was longer
because it included orientation material. Five of the modules were core modules
and three were electives.
[6] The
Appellant said he completed four modules per year in 2006 and 2007, with one
week off between modules. He wrote his dissertation in 2008, completing it in
September of that year, and was awarded his MBA in December 2009. No reason was
given for the delay in being awarded his degree.
[7] Two
Tuition, Education and Textbook Amounts Certificates (Form TL11A) were
filed by the Appellant with his tax returns for 2006, 2007 and 2008. The University of Liverpool certified on the forms
that the Appellant was registered in a university course for part-time credit
at the University during nine months in 2006 and during 12 months in each of
2007 and 2008. The Appellant stated that when he enquired about the information
provided, an unspecified person at the University told him that the program was
marked as part-time because it was offered online.
[8] The
Appellant testified that he worked 40 hours per week on the modules and his
dissertation and that it was necessary to spend this amount of time in order to
do a good job. The Appellant also said that during the one-week breaks between
modules, he read, planned and did research in preparation for his dissertation.
The Respondent did not challenge this evidence.
[9] The
Appellant produced a letter he had received from the University, addressed to prospective
students, which set out some of the fundamental
points about the program. The letter stated that students would be required to
spend an average of 20 hours per week to complete the work in the program. Paragraph
4 of the letter reads as follows:
Average of 20
hours per week - As this is
a challenging programme, you will be expected to contribute, read, answer discussion
questions, liaise with other students and undertake projects that will require
an average of 20 hours a week to complete, The time you will need to spend per
week in each module depends partly on your previous experience in that subject
area. Again, there are no set times to be online for the work and you can fit
your study and your schedule, but you should plan your academic, professional
and personal commitments in order to meet the criteria for participation and
achieve the deadlines.
[10] The
University also sent the Appellant an information sheet entitled “A week in the
life of an MBA student” with a schedule of the required work, by day of the
week. According
to that material, the program required about 20 to 25 hours of study each week,
[11] The
Appellant paid fees of $2,384US for each module, and a total of $9,538US for
the dissertation. He paid in advance for each module, and paid the dissertation
fees in four installments in 2008.
[12] Legislation
Tuition Credit
118.5(1) For the purpose of computing the
tax payable under this Part by an individual for a taxation year, there may be deducted,
(a) .
. .
(b)
where the individual was during the year a student in full-time
attendance at a university outside Canada in a course leading to a degree, an
amount equal to the product obtained when the appropriate percentage for the
year is multiplied by the amount of any fees for the individual’s tuition paid
in respect of the year to the university, except any such fees
(i)
paid in respect of a course of less than 13 consecutive weeks duration,
. . .
118.6(1) For the purposes of sections 63 and
64 and this subdivision,
“designated
educational institution” means
(b) a
university outside Canada at which the individual referred to in subsection
118.6(2) was enrolled in a course, of not less than 13 consecutive weeks
duration, leading to a degree
Education
Credit
118.6(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)
$4001 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) $1202 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.
Position
of the parties
[13] The
Respondent takes the position that the information provided by the University
on the TL11A forms and in the program description shows that the online MBA program
at the University was a part-time course, and that he was therefore enrolled in
and attended the University on a part-time basis. The Respondent said that the
evidence showed that the Appellant was “enrolled on a part-time basis but
worked on a full-time basis.
[14] The
Appellant’s counsel submitted that, although the University considered the
online MBA program a part-time program, this was not determinative. Counsel
said that based on the evidence of the Appellant as to the number of hours he
devoted to his studies, the Court should accept that he was in full-time attendance
at the University, and enrolled as a full-time student.
Analysis
[15] A credit for tuition paid by an individual to a
university outside Canada is available when the conditions set out in paragraph 118.5(1)(b)
of the Act are met. The conditions relevant to this appeal are, firstly,
that the individual be in full‑time attendance at the university, and,
secondly, that the courses in respect of which the tuition is paid be at least
13 consecutive weeks in duration.
[16] An education credit is available under subsection
118.6(2) of the Act. Paragraph 118.6(1)(a) provides that an
individual is entitled to a credit based on a monthly amount of $400 for every
month in which he or she is enrolled as a full‑time student in a
“qualifying educational program” at a “designated educational institution”. I
will refer to this as the “full-time education credit”. Paragraph 118.6(2)(b)
provides for a credit based on a monthly amount of $120 for every month in
which an individual is enrolled at a “designated educational institution” in a
“specified educational program” requiring at least 12 hours per month of work
on courses. I will refer to this as the “part-time education credit”.
[17] A university outside of Canada will qualify as a
“designated educational institution” if the individual claiming the education
credit was enrolled at the university in a course, of not less than 13 weeks
duration, leading to a degree.
[18] I
will deal firstly with the question of whether the courses taken by the Appellant
in 2006 and 2007 were less than 13 consecutive weeks duration. As set out
above, a tuition credit and a full-time education credit are only available if
the courses taken by the individual are at least 13 weeks long.
[19] Counsel
for the Appellant argued that the meaning of the word “course” in the phrase
“except any such fees paid in respect of a course of less than 13 consecutive
weeks duration” in paragraph 118.5(1)(b) is ambiguous. He said it is
unclear whether “course” should be taken to mean a course of studies or a
single course within a larger course of studies. He asked that the ambiguity be
resolved in favour of the Appellant by “applying the legislation in a fair and
liberal fashion as required.” He said that the MBA program at the University
was of almost three years duration.
[20] The
Respondent’s position was that the word “course” in paragraph 118.5(1)(b)
refers to a single course, and that in this case, each module was a course
since the modules were all less than 13 weeks duration, the Appellant would not
be entitled to the credit.
[21] It
appears that there is some basis for the Appellant’s contention that the
meaning of the word “course” in paragraph 118.5(1)(b) is ambiguous.
According to Webster’s Ninth New Collegiate Dictionary the word “course” may
mean either “a number of lectures or other matters dealing with a subject” or
“a series of such courses constituting a curriculum.” Therefore, it is arguable
that “course” could in this case refer either to the individual modules taken
by the Appellant, or his entire MBA program. I note, though, that the relevant
portion of the definition of the word “course” in the Canadian Oxford
Dictionary (2001) offers only the following meaning: “a series of lectures,
lessons, etc., in a particular subject.” This definition does not appear to
encompass the notion of a program of studies such as the Appellant’s MBA
course.
[22] Any
ambiguity, however, is resolved by reference to the French version of paragraph
118.5(1)(b). The relevant parts of the French version read as follows:
118.5 (1) Les montants suivants sont déductibles dans le calcul de l'impôt payable
par un particulier en vertu de la présente partie pour une année
d'imposition :
[…]
b) si, au
cours de l'année, le particulier fréquente comme étudiant à plein temps une
université située à l'étranger, où il suit des cours conduisant à un
diplôme, le produit de la multiplication du taux de base pour l'année par
le total des frais de scolarité payés à l'université pour l'année, à
l'exception des frais qui ont été :
(i)
soit payés pour
des cours d'une durée inférieure à 13 semaines consécutives,
(emphasis added)
[23] The French version uses the
wording “des cours conduisant à un diplôme” to translate the English
wording “a course leading to a degree” and the wording “des cours d’une
durée inférieure à 13 semaines consécutives” to translate the English wording
“a course of less than 13 consecutive weeks duration”. The use of the plural
form of the word “cours” in the French version demonstrates that Parliament
intended to refer to the individual courses within a program of studies, rather
than to the entire program itself, since an entire program of study would only
be referred to in the singular. In my view, the French version is free from the
ambiguity present in the English version, and the meaning common to both
versions must be applied.
[24] In this case, the individual
courses or “modules” taken by the Appellant in 2006 and 2007 were less than 13
weeks in length, and therefore, the fees paid in respect of those modules are
not eligible for the tuition credit. Since the Appellant was not enrolled in a
course at least 13 weeks in duration, the University was not a “designated
educational institution” and the Appellant would not be entitled to an
education credit for those years either. This finding is sufficient to dispose
of the appeal for 2006 and 2007.
[25] For the 2008 taxation year, it
was not disputed that the dissertation course in which the Appellant was
enrolled was more than 13 weeks in duration. The tuition credit was denied on
the basis that the Appellant was not in full-time attendance at the university
during 2008 and the full-time education credit for 2008 was denied on the basis
that the Appellant was not enrolled as a full-time student at the University.
[26] It seems to me that the
question of whether an individual is enrolled as a full-time student and is in
full-time attendance is a matter that is determined by the institution the
individual is attending. The institution controls its enrollment and determines
the status of its students as either full or part-time according to the course
load that is undertaken. Here, the University certified on the TL11A form that
the Appellant was registered for part-time credit during 2008, and the
Appellant has not shown that this information is incorrect. I place no weight
on his testimony that an unnamed person at the University told him that his
courses were treated as part-time courses by the University only because they
were taken online. This is hearsay, and furthermore it was not established what
position the unnamed person occupied at the University or how he or she would
have knowledge of why the Appellant’s courses were treated as part-time. Also,
the written materials from the University show that the course work was
expected to take between 20 and 25 hours per week, which is consistent with
part-time status.
[27] The meaning of the phrase
“full-time attendance” in paragraph 118.5(1)(b) and previous versions of
that provision has been the subject of several Court decisions. In R. v.
Gaudet,
the Federal Court of Appeal said that the phrase “full-time” was “a difficult
expression and one which it may be impossible to define exactly.” However, the
Court went on to find that the taxpayer’s wife, who had taken a night course which involved seven
hours of classes and 10 hours of study per week was not a student in full-time
attendance for the purpose of what was then paragraph 110(1)(h) of the Act.
[28] In Reddam v. The Minister of
National Revenue,
the Tax Appeal Board held that it was only possible to have one full-time job
or “full-time attendance” and therefore a taxpayer who was employed full-time
and had taken university courses in the evening and on weekends was not in
full-time attendance at the university. Assistant Chairman Fordham said, at
paragraph 5:
What is the meaning of "in full-time attendance"?
First of all, there are no degrees of "fullness". "Full",
without more, signifies filled to the utmost capacity and the employment of
such terms as "fuller" and "fullest" is a misuse of the
English language. I fancy that reference to any school text-book on English
grammar would make the truth of this proposition clear. Strictly speaking,
there are no such words. If something is full, that is the end of it and there
can be room for nothing more while the state of being full prevails. Hence,
when a person is a full-time employee somewhere, how can he also be a full-time
student elsewhere within the same twenty-four hours? To my mind, such a
position is not supportable and when an individual has full-time status in
respect of one regular activity throughout a working day, as in the present instance,
any other activity indulged in during that same twenty-four hour day must
necessarily be only a part-time activity, or so I venture to believe.
This
interpretation of the phrase “full-time attendance” was accepted by the Federal
Court in M.N.R. v. Ritchie.
[29] However, in Hunt v. M.N.R,
the Tax Review Board held that even though the taxpayer worked full-time as a
high school vice principal, he was also in full-time attendance in a doctoral
program. He based this conclusion on the evidence given by the Appellant that
he worked 10 hours a day on his courses and thesis and that his studies were
his primary preoccupation. The Board stated that there was no reasonable way
his attendance could have been more full-time.
[30] While I agree with the Tax
Review Board that it may be possible for a person to carry on more than one
full-time activity at a time, I do not think that the question of whether a
student is in full-time attendance at a university can be answered simply by
looking at the time spent by a taxpayer on courses or other related activities.
If so, a person who took only one course but spent the equivalent of a full
work week on course work could be said to be in full-time attendance, while a
person who took a full course load but only spent a few hours a day on them
would not be. I do not believe that this is the intent of the tuition and
education credit provisions of the Act since it would make it extremely
difficult to administer. It is necessary in my view to look at objective
criteria in determining full-time attendance. The best indicator would be the university’s
expectation of the student and the amount of time the program is designed to
take. The evidence in this case shows that the University expected the online
MBA program to take between 20 and 25 hours per week to complete. It is not
clear whether this was applicable to the Appellant’s work on his dissertation,
but the fact that that the TL11A form showed that he was registered for
part-time credit in 2008 would suggest that the time requirements of the
dissertation was similar to what was required for his course work. Therefore, I
find that the Appellant was not in full-time attendance and was not enrolled as
a full-time student at the University in 2008, and is not eligible for the
tuition or full-time education credit.
[31] For these reasons, the appeals
are dismissed.
Signed at Ottawa, Canada, this 18th
day of November, 2010.
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