Benson v. MNR, 92 DTC 2145, [1992] 2 CTC 2631 (TCC)

Mogan, T.C.C.J.:—The appeals of G. Robert Benson (Court No. 89-1512) and Peter A. Johnston (Court No. 90-1702) were heard together on common evidence. The appellants are appealing from their assessments for the 1987 taxation year in which the respondent disallowed their claims for the Northern Residents Deduction permitted in section 110.7 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"). The appellants reside within 200 feet of each other about four kilometres from Wabigoon, Ontario, although their postal address is Dryden. Wabigoon is a village of approximately 1,000 persons located 20 kilometres east of Dryden, Ontario on Highway 17. A legal description of their residence is Block 9, Concession IV, Zealand Township, District of Kenora. Section 110.7 of the Act provides in part as follows:

110.7(1) In computing the taxable income for a taxation year of an individual who . . . resided in an area that was a prescribed area for the year or for one of the two preceding taxation years and who files a claim in prescribed form . . . there may be deducted. . . .

There follows a formula within subsection 110.7(1) which is not relevant to the issue herein. To be eligible for the deduction permitted in subsection 110.7(1), the appellants must establish that they resided in a“ prescribed area" as defined in Regulation 7303, the relevant portion of which provides:

7303(1) An area is a prescribed area for a taxation year for the purposes of section 110.7 of the Act where it is

(c) an area in Canada south of the 55th parallel of north latitude other than an area that is situated in grassland south of the 50th parallel of north latitude, that, in the preceding taxation year, met the following requirements:

(i) it had a population of less than 10,000,

(ii) it was entitled to a total of 50 points or more determined under subsec- tion (7),

(iii) where there was no all-weather road providing access to the area, it was more than 80 kilometres in a straight line from the administrative centre of the nearest urban centre with a population of 50,000 or more, and

(iv) where there was an all-weather road providing access to the area, it was more than 320 kilometres by all-weather road from the administrative centre of the urban centre with a population of 50,000 or more that was nearest to the area by all-weather road and was more than 160 kilometres by all- weather road from the administrative centre of the urban centre that was nearest to the area;

The Wabigoon/Dryden area of Ontario is south of the 55th parallel of north latitude and the respondent concedes that the appellants residences meet all of the criteria set out in paragraph 7303(1)(c) with the exception of subparagraph 7303(1)(c)(iv). If Kenora-Keewatin is an "urban centre”, then the appellants' residences are not "more than 160 kilometres by all-weather road from the administrative centre of the urban centre that was nearest to the area”; and the appellants would not be entitled to the Northern Residents Deduction. The issue in this appeal is whether Kenora-Keewatin is an "urban centre" within the meaning assigned by Regulation 7302. Subsection 7302(1) provides the following definition:

7302(1) In this section and sections 7303 and 7304,

“urban centre" means an urban area within the meaning assigned by the 1986 Census Dictionary published under the authority of the Minister of Supply and Services in January 1987, catalogue 99-101E, south of the 60th parallel of north latitude that has a population of 10,000 or more as shown in Table 14 of the publications entitled Population and Dwelling Counts — Provinces and Territories published under the authority of the Minister of Supply and Services in September 1987, catalogues 92-109 to 92-118.

An "urban area” within the meaning assigned by the 1986 Census Dictionary is described at page 143:

URBAN AREA

Refers to a continuously built-up area having a population concentration of 1,000 or more and a population density of 400 or more per square kilometre, based on the previous census. To be considered as continuous, the built-up area must not have a discontinuity exceeding two kilometres.

In addition to the above, many other commercial, industrial and institutional land uses may be considered as urban even though they do not meet the population and density requirements. Examples include commercial and industrial areas, railway yards, airports, parks, golf courses, cemeteries, etc.

The Population and Dwelling Counts—Provinces and Territories for the 1986 Census contains the following information:

Table 2 — Census Divisions and Subdivisions Table 14—Urban Areas with Census Subdivisions

		Area in	Population
	Population	Sq. Kms.	Density Per Sq.
			Km.
Keewatin	1,954	7.87	248.3
Kenora	9,621	15.33	627.6

	Population
Kenora	11,575
Keewatin	1,954
Kenora	9,621

The appellants do not dispute the fact that they live 157.9 kilometres from the administrative centre of Kenora. They argue that Kenora and Keewatin should not be joined as in Table 14 to become an“ urban area". According to Table 2 of the Population and Dwelling Counts—Provinces and Territories (Exhibit R-1), the population density per square kilometre for Keewatin and Kenora is 248.3 and 627.6 respectively. Kenora meets the population density requirement to be an “urban area—within the meaning assigned by the 1986 Census Dictionary because it exceeds the 400 per square kilometre minimum requirement. The population of Kenora is only 9,621, however, and therefore it does not meet the requirement that it have a population of 10,000 in order to be an "urban centre" within the meaning of Regulation 7302. Obviously, Keewatin falls short of the required population density of 400 per square kilometre; and its population (1,954) is also insufficient to meet the required 10,000. The appellants argue that Keewatin cannot be joined with Kenora in order to achieve the minimum 10,000 required by Regulation 7302(1) because Keewatin does not have the population density requirement to be an urban area within the Census Dictionary definition.

The respondent disallowed the northern residents deduction for both appellants on the basis that they did not reside more than 160 kilometres from the administrative centre of the urban centre that was nearest to their homes within the meaning of Regulation 7303(1) and, therefore, they did not reside in a prescribed area within the meaning of subsection 110.7(1) of the Act. Counsel for the respondent argued that the listing of Kenora as an urban area comprising Kenora and Keewatin in Table 14 of the Population and Dwelling Counts supports the Minister's position that it is an urban area for the purpose of the definition of “urban centre" but counsel conceded that the joining of Kenora and Keewatin in Table 14 is not necessarily conclusive that the discontinuity of built-up area between the two is less than two kilometres as required by the definition of" urban area" in the 1986 Census Dictionary. After submitting that Statistics Canada would be violating its own definition if it joined areas that did not satisfy the continuity requirement, counsel admitted that Statistics Canada may in certain circumstances depart from its own rules. At the hearing of these appeals, no evidence was adduced regarding the discontinuity of built-up area between Kenora and Keewatin. The onus of proof being on the appellants, I regard the absence of that evidence as significant.

The respondent's position is that once Statistics Canada has determined that a particular area is an urban area and listed in Table 14, the respondent is entitled to go to Table 14 to verify whether the minimum 10,000 population requirement is met. I was required to consider these provisions in Hutter v. M.N.R., [1992] 2 C.T.C. 2088, 92 D.T.C. 1750 and, at page 2093 (D.T.C. 1754), I stated:

I cannot accept the respondent's submission that in determining whether an area is an “urban centre" within the meaning of Regulation 7302, I must adopt the methodology used by Statistics Canada to determine whether an area is an“ urban area” within the meaning assigned by the 1986 Census Dictionary. If I were to accept such a submission, then in order to determine whether a particular area satisfies the criteria for an" urban centre” as defined in Regulation 7302(1), I would need to look only at Table 14 which lists all urban areas with their population counts to see if the particular area is an urban area with a population of 10,000 or more, and I would not need to refer to the 1986 Census Dictionary to determine whether the particular area is an "urban area". Had the legislative draftsman wanted to achieve such a result, he could have defined an urban centre in

Regulation 7302(1) as an urban area south of the 60th parallel of north latitude that has a population of 10,000 or more as shown in Table 14. The draftsman did not follow that easier route when, in the definition of “ urban centre” in Regulation

7302(1), he chose to incorporate by reference the meaning assigned to “ urban area" in the 7986 Census Dictionary.

In answer to the appellant's argument concerning the joining of Kenora and Keewatin to form an urban area that meets the population count of 10,000 or

more, the respondent's counsel argued that the definition did not require that the population density be 400 per square kilometre throughout because the second paragraph of the definition (as quoted above) states:

In addition to the above, many other commercial, industrial and institutional land

uses may be considered as urban even though they do not meet the population

and density requirements. Examples include commercial and industrial areas, railway yards, airports, parks, golf course, cemeteries, etc.

In my view, this second paragraph was added to the definition to permit the density to fall below the required 400 per square kilometre when the shortfall

is occasioned by commercial, industrial and institutional land uses. It does not do away with the requirement that the urban area of Kenora-Keewatin have a population density of 400 per square kilometre but the relevant provisions do not require that Keewatin meet the population density and population count

requirements before it can be joined with another community.

In Hutter, supra, I held that the area which is examined to determine

whether the 10,000 population requirement is satisfied must be the same area which is examined to determine whether the population density requirement is satisfied. That conclusion is equally applicable to these appeals. According

to Table 2, the Kenora-Keewatin area has a total population of 11,575 and a total area of 23.2 square kilometres. This results in a consolidated population density of 498.9 per square kilometre. I find that Kenora-Keewatin is an "urban centre” within the meaning of Regulation 7302. Therefore, the appellants do not reside more than 160 kilometres by all-weather road from the administrative centre of the urban centre nearest to their residence. Administrative centre is defined in Regulation 7302 in the following manner:

7302(1) In this section and sections 7303 and 7304, "administrative centre”, in

respect of an urban centre, means the city or town hall of the city or town, all or part of which is within the urban centre, that has the largest population of all the cities and towns in the urban centre.

More specifically, the appellants reside less than 160 kilometres from the town hall of Kenora which is the town that has the largest population of the towns in the urban centre. The appellants are not entitled to the northern residents deduction provided for in section 110.7 of the Act. The appeals are dismissed.

Appeals dismissed.