Citation: 2011 TCC 357
Date: 20110824
Docket: 2010-1756(IT)G
BETWEEN:
DENIS HAMEL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1]
This is an appeal from
an assessment based on the assumption that the appellant was a resident of Canada during the 2007 taxation year and subsequent years.
The issue was presented in the Reply to the Notice of Appeal as follows:
[translation]
Did the appellant cease to be a resident of Canada on January 13, 2007?
[2]
To issue and confirm
the assessment presently under appeal, the respondent relied on the following
presumptions of fact:
[translation]
(a) The appellant left Canada in January 2007 to work in Qatar under a contract of employment with an American company (Rust
Resources Inc.) (no reply)
(b) The appellant did not obtain a resident's permit in Qatar. (denied)
(c)
The appellant obtained a work permit in Qatar, valid until August 13, 2010.
(admitted)
(d)
After his work permit expired, the appellant had
to leave Qatar. (admitted)
(e)
In December 2007, the appellant obtained a
driver's licence in Qatar,
valid until December 11, 2012. (admitted)
(f)
The appellant kept a bank account, a credit card
and investments (RRSP and others) in Canada. (admitted)
(g)
The appellant held a Canadian passport.
(admitted)
(h)
The appellant has two sons of full age who
remained in Canada and whom he
visited in 2007 and 2008. (admitted)
(i)
In 2007, the appellant returned to Canada four times for around two weeks each
time. (admitted)
(j)
In 2008, the appellant came back to Canada three times. (admitted)
(k)
The appellant filed his income tax return for
the 2007 taxation year as a resident of Canada. (admitted)
(l)
At no time relevant to the case, did the
appellant become a resident of a country other than Canada. (denied)
[3]
The facts listed in
these paragraphs were all admitted, except for paragraph (a), to which the
appellant did not reply, and paragraphs (b) and (l), which were denied.
[4]
The evidence consisted
mainly of the appellant's testimony. His son also testified.
[5]
The appellant gave a
lengthy testimony and provided many details about his career, his family, one
of his sons' many health problems, and issues with his wife, which led to a
divorce in early 2008.
[6]
Because of the appellant's
skills, he had a very good reputation, earned by working for companies in the
paper, electricity and nuclear energy industries. These companies handled very
dangerous products, and operated laboratories that manufactured peroxide, among
other things.
[7]
I find, on the
preponderance of evidence, that the appellant's departure from Canada was not spontaneous, impulsive or motivated only by
the lure of profit.
[8]
The appellant had a
very good reputation, and it is easy to say that he had no problem finding
good, well-paying jobs in Canada. Indeed, he was sought out. He often lived
far from his family, in particular in Montreal when his family lived in the
Trois‑Rivières region; moreover, he also had a very long stay in China, and had always dreamed of leaving Canada for good.
[9]
He hesitated mainly
because of the health problems of one of his sons. At one point, his son told
him he had to think of himself and live his dream with no regrets.
[10]
The appellant stated
that after his son had encouraged him to fulfil his dream of leaving Canada, there was no longer anything holding him back. He commenced
a process that would lead to a definitive break; he gave his share of the
residence to his wife, whom he divorced in early 2008.
[11]
He disposed of his
property without exception, other than two accounts in a caisse populaire,
which he used to carry out his transactions. His driver's licence was suspended
and he did not renew it; he did this many months before leaving for Qatar.
[12]
He returned for short
stays in Canada only to see his two sons—one of whom had
serious health problems—his mother and a few friends.
[13]
During these short
stays, the appellant rented a car, stayed at a hotel and split his time between
Montréal, Trois‑Rivières and Québec.
[14]
Through the years, this
and other courts have heard many cases in which the issue was the country or
place of residence of a physical person. In spite of a rich case law, there is
still no magic formula that leads to a definitive answer.
[15]
Many decisions have,
however, explained the appropriate reasoning to come to a conclusion on the
issue.
[16]
I feel it is useful to
reproduce certain excerpts from these decisions; Thomson v. M.N.R., [1946] S.C.R. 209 is a key decision on the
determination of the place of residence of a person who has left Canada.
[17]
In Guo v. Canada,
2004 FCA 390, the Federal Court of Appeal stated, at paragraph 2, that
"[t]he determination of a person's residence is a complex question which
requires the judge to weigh many factors." And, "[i]t is clear that
residence is not simply a matter of a person's status under the Immigration
Act, R.S.C. 1985, c. I‑2, though a person's status may be some
evidence of residence."
[18]
In Thomson, supra,
we learn that the issue is determining the place the taxpayer regularly,
normally or customarily lives in his usual mode of life. The degree to which a
person in mind and fact settles into a place and maintains and centralizes his
ordinary mode of living, including social relations, interests and conveniences
must be examined. Rand J. made the following comments at pages 224 and
225:
The gradation of degrees of time, object,
intention, continuity and other relevant circumstances, shows, I think, that in
common parlance "residing" is not a term of invariable elements, all
of which must be satisfied in each instance. It is quite impossible to give it
a precise and inclusive definition. It is highly flexible, and its many shades
of meaning vary not only in the contexts of different matters, but also in
different aspects of the same matter. In one case it is satisfied by certain
elements, in another by others, some common, some new.
The expression "ordinarily resident"
carries a restricted signification, and although the first impression seems to
be that of preponderance in time, the decisions on the English Act reject that
view. It is held to mean residence in the course of the customary mode of life
of the per-con concerned, and it is contrasted with special or occasional or
casual residence. The general mode of life is, therefore, relevant to a
question of its application.
For the purposes of income tax legislation, it
must be assumed that every person has at all times a residence. It is not
necessary to this that he should have a home or a particular place of abode or
even a shelter. He may sleep in' the open. It is important only to ascertain
the spatial bounds within which he spends his life or to which his ordered or
customary living is related. Ordinary residence can best be appreciated by
considering its antithesis, occasional or casual or deviatory residence. The
latter would seem clearly to be not only temporary in time and exceptional in
circumstance, but also accompanied by a sense of transitoriness and of return.
But in the different situations of so-called
"permanent residence", "temporary residence",
"ordinary residence", "principal residence" and the like,
the adjectives do not affect the fact that there is in all cases residence; and
that quality is chiefly a matter of the degree to which a person in mind and
fact settles into or maintains or centralizes his ordinary mode of living with
its accessories in social relations, interests and conveniences at or in the
place in question. It may be limited in time from the outset, or it may be
indefinite, or so far as it is thought of, unlimited. On the lower level, the
expressions involving residence should be distinguished, as I think they are
in ordinary speech, from the field of "stay" or "visit".
Reeder
factors
[19]
In The Queen
v. Reeder, [1975] C.T.C. 256 (F.C.T.D.) the Federal Court set out
the factors the Court must consider when determining a person's residence. In Gaudreau
v. The Queen, 2004 TCC 840, affirmed in 2005 FCA 388,
Lamarre J. restated these factors:
24 Accordingly, as suggested by counsel for the appellant, the question
is to determine where, during the period at issue, the appellant, in his
settled routine of life, regularly, normally or customarily lived. One must
examine the degree to which the appellant in mind and fact settled into,
maintained or centralized his ordinary mode of living, with its accessories in
social relations, interests and conveniences, at or in the place in question.
25 This is mainly a
question of fact. In The Queen v. Reeder, 75 DTC 5160 (F.C.T.D.), referred to
by the appellant, the court listed some factors considered to be material in
determining the question of fiscal residence, at page 5163:
... While the
list does not purport to be exhaustive, material factors include:
a. past and present habits
of life;
b. regularity and length
of visits in the jurisdiction asserting residence;
c. ties within that
jurisdiction;
d. ties elsewhere;
e. permanence or otherwise
of purposes of stay abroad.
The matter of ties within
the jurisdiction asserting residence and elsewhere runs the gamut of an
individual's connections and commitments: property and investment, employment,
family, business, cultural and social are examples, again not purporting to be
exhaustive. Not all factors will necessarily be material to every case. They
must be considered in the light of the basic premises that everyone must have a
fiscal residence somewhere and that it is quite possible for an individual to
be simultaneously resident in more than one place for tax purposes.
[20]
Lamarre J. then cited
Rip J. in Snow v. The Queen, 2004 TCC 381:
30 As Rip J. said in his recent decision in Snow v. Canada,
[2004] T.C.J. No. 267 (Q.L.), at paragraph 18:
18 A person may be resident of more than one country for tax purposes.
The nature of a person's life and the frequency he or she comes to Canada are important matters to consider in
determining one's residence. The words "ordinarily resident" in s.s.
250(3) refer to the place where, in the person's settled routine of life, the
person normally or customarily lives. The intention of a taxpayer, while
obviously relevant in determining the "settled routine" of a
taxpayer's life, is not determinative. A person's temporary absence from Canada
does not necessarily lead to a loss of Canadian residence if a family household
remains in Canada, or possibly
even if close personal and business ties are maintained in Canada.
…
32 It is clear from the employment agreement that the appellant was
given an assignment in Egypt
for which he was even paid an expatriation premium for the duration thereof.
The agreement provided for air transportation back and forth between the
appellant's home location and his work location. The appellant kept all his
assets in Canada and before leaving Canada made all the necessary arrangements to have someone look after
those assets. His purpose in accepting the contract in Egypt was not to give up his ties with Canada but mainly to earn a living. The appellant agreed to go there on a
contractual basis and did not sever his attachments to, or his links with, Canada. The appellant did not in mind and
fact abandon his general mode of life in Canada. As a matter of fact, the house in Timmins was available at all times as a place in which he could customarily
live. To use the words of Rand J. in the Thomson case, he and his wife
maintained their ordinary mode of living, with its accessories in social
relations, interests and conveniences, in Canada. If I may distinguish the present case from the Boston case,
the duration of the contract here was a lot shorter and the appellant did not
demonstrate that he became active in the community in which he lived in Egypt. He was only there to do his work.
Finally, the Boston case
was considered but not followed in the McFadyen case, which was affirmed
by the Federal Court of Appeal.
[21]
In Mahmood v. The Queen, 2009 TCC89, the Court concluded that
a resident of Guyana who came to Canada regularly but was not a permanent
resident was a non-resident, even though he seemed to operate a business in
Canada.
[22]
In Filipek v. The
Queen, 2008 TCC 351, Miller J. summarized the significant
residence concepts at paragraph 2:
2 Case law has provided some considerable guidance as to what the
Court is to consider in determining residence. The Income Tax Act itself
stipulates in subsection 250(3) that a person resident in Canada includes a person who was at the
relevant time ordinarily resident in Canada. There are many judicial pronouncements on the meaning of
ordinarily resident (see for example Thomson v. Minister of National Revenue,
Her Majesty the Queen v. Reeder, and Reed v. The Minister of
National Revenue). What do these cases tell us?
(i) Every person has
a residence.
(ii) A person may
have more than one residence and can be simultaneously resident in more than
one place for tax purposes.
(iii) Residence is
determined by ascertaining the spatial bounds within which an individual spends
his life or where in the settled routine of his life he regularly, normally and
continuously lives.
(iv) Factors to
consider in determining residency are connections in Canada regarding
property, investments, employment, family, business, cultural, social – a
non-exhaustive list.
Interpretation
Bulletin IT‑221R3
Severing
ties with the country
[23]
The courts have
established that residents of Canada must generally sever their ties with
the country to become non-residents. Further to the former Canada Revenue
Agency policy, a taxpayer who leaves Canada must intend on
staying abroad for a period of at least two years to be considered a
non-resident.
In Peel v. Canada, [1995] 2 C.T.C. 2888 (TCC), the Tax Court of
Canada held that the two-year rule was not sound legally. Since 2002, this
"rule" no longer appears in Bulletin IT‑221R3.
Significant
and secondary ties
[24]
The new Bulletin IT‑221R3
(2002) states that the following are "significant" in determining
residence status:
(a) dwelling
place (or places),
(b) spouse
or common-law partner,
(c) dependants.
But
the following are secondary ties:
(a) personal property in Canada (such
as furniture, clothing, automobiles and recreational vehicles),
(b) social ties with Canada (such
as memberships in Canadian recreational and religious organizations),
(c) economic ties with Canada (such
as employment, bank accounts, RRSPs, credit cards and securities accounts),
(d) landed immigrant status or work permits in Canada,
(e) provincial medical insurance coverage,
(f) a Canadian driver's licence,
(g) a vehicle registered in Canada,
(h) a seasonal dwelling place or leased dwelling place
in Canada,
(i) a Canadian passport, and
(j) memberships in a Canadian union or professional
organization.
[25]
The other residential
ties, generally of "limited importance" except when taken together
with others, include a Canadian mailing address, a safety deposit box, business
cards, a phone number and subscriptions to Canadian newspapers and magazines.
Recent cases
[26]
In Perlman v. The Queen, 2010 TCC 658, Boyle J. held
that if a taxpayer did not sever his ties with Canada, studying abroad, even
for 16 years, was of no relevance.
[27]
In Snow, supra,
Rip J. found that the residential ties were not severed because:
19 In the case at bar the taxpayer took an assignment for a two-year
period in Belize. She may not
have believed that she would return to Canada once the assignment terminated. She maintained a home in Vancouver where her son and his family
resided. All of her banking and other financial interests were in Canada. Her pension cheques were paid to
her Canadian bank account. Her mail continued to be sent to her in Vancouver. Simply, she did not trust the
Belize banking or postal systems and had no intention to reside on any
permanent basis in Belize. She
felt the comfort of having these matters remain in Canada.
20 In Belize Mrs. Snow
lived in a "quite modest" apartment that included two bedrooms and
"basic furnishings". She remarked that she "could not live in Belize" for an extended time.
[28]
In Revah v. The
Queen, 2004 TCC 312, Rip J. concluded that the ties had been
sufficiently severed for the taxpayer to become a non-resident:
28 In this case, the appellant was resident in the United States and spent time in Montreal only to visit his family once or
twice a year. In his testimony, however, the appellant did not indicate
the duration of his visits to Canada in the 1993 and 1994 taxation years. The appellant did not
have a residence in Canada.
In effect, the appellant cut the great majority of his ties with Canada. He has two bank accounts in Canada and they contain the sums he
accumulated as pension and RRSP benefits. He made charitable donations to
organizations located in Canada.
The fact that the appellant had several links with Canada did not make the appellant a Canadian resident indefinitely.
The links that Mr. Revah had with the United States were even more substantial
than those he had with Canada.
He usually lived in the United States, which is where most of his property was located. In 1992,
the appellant intended to leave Canada permanently and he actually left this country.
29 The appellant was not therefore resident in Canada during the 1993 and 1994 taxation years. The appeal is
allowed with costs.
[29]
In Barton v. The
Queen, 2007 TCC 222, Lamarre J. concluded that the taxpayer still
had family, social relations, interests and conveniences in Canada:
20 I
am of the view that the appellant maintained his ordinary mode of living, with
his family and social relations, interests and conveniences, in Canada. His children and his wife were all
living in Canada; he had a home
available to him in Canada; and
he came back very often, despite the long drive, in order to live, as far as
possible, a normal family life. His habits of life continued to be centered on Canada. As soon as he found an opportunity
to work in Canada, he accepted it, although this meant leaving a secure
employment in the USA. Apart
from his retirement plan in the USA, most of his savings were in Canada. He never gave up his Canadian health card or his Canadian driver’s
licence. He maintained close personal and economic ties with Canada throughout. I therefore find that
the appellant never ceased to reside in Canada during the period at issue. The same conclusion by this Court in a
similar situation was accepted by the Federal Court of Appeal in Gaudreau v.
The Queen, 2005 FCA 388.
[30]
In Hauser v. The
Queen, 2005 TCC 492, affirmed 2006 FCA 216, Rip J. concluded that
an Air Canada pilot did not truly "divorce" from Canada after he
moved to the Bahamas, for the following reasons stated at paragraph 58:
Canada was a magnet that attracted the Hausers. After they set up residence
in the Bahamas both of Mr. and Mrs. Hauser, and particularly Mr. Hauser,
continued to have a presence in Canada. Mr. Hauser spent over a third of a year in Canada in each year. Air Canada required Mr. Hauser to be in Canada
to fly airplanes; he reported to work at Pearson Airport and other airports in Canada. Most of his flights left from and returned to Pearson; much
of his training was at Pearson. Pearson Airport was part of the routine of
life. Mr. Hauser’s presence in Canada during the years in appeal was not occasional, casual, deviatory,
intermittent or transitory. He was in Canada in great part because he had to be, to earn a living.
[31]
In Yoon v. The Queen,
2005 TCC 366, O’Connor J. found that the taxpayer had closer ties to
Korea, even though her husband still lived in Canada.
The tie‑breaker rules in the tax convention between Canada and Korea state that in case of doubt as to a
person's "centre of vital interests," that person is deemed to be a
resident of the country in which he stays more frequently. O’Connor J. found
that:
41 The evidence shows that Mrs. Yoon spent more time in Korea than in Canada in 2001. Therefore, her habitual
abode was in Korea and not Canada. If her centre of vital interests
cannot be determined, then this tie-breaker definitely provides that Mrs. Yoon
was a resident of Korea in
2001.
[32]
In Laurin v. The
Queen,
2006 TCC 634, affirmed 2008 FCA 58, Chief Justice Bowman
(as he was then) concluded that the taxpayer, an Air Canada pilot, became a
resident of the Turks and Caicos Islands. He stated:
32 …For one thing, he did [sever his residential ties with Canada]. He broke up with his girlfriend,
he got rid of his house, his car, his licence and his health insurance. When he
came to Canada he stayed with
friends but it was at their sufferance. Moreover, to say that one has not
severed residential ties with a country is not tantamount to saying that one is
resident there. Residual friendships and employment connections do not create
residency...
[33]
In Johnson v. The Queen, 2007 TCC 288, Paris J. concluded
that the appellant had not severed his residential ties to Canada when he went
to work in the United Arab Emirates with his wife under a three-month contract
because he maintained his ties to Canada, in particular his houses, which he
rented, his RRSPs, his driver's licence, his credit cards and his investments
composed of Canadian shares. He stated:
42 Although the Appellant stated that he intended to work in the UAE
for at least 5 years, the assignment was only set up for a three year term
and was ended at the earliest possible date, after two years and three months.
It is also material that the assignment provided that at the conclusion of the
assignment Mitel was required to bring the Appellant and his spouse back to
Canada, and was obligated to make best efforts to find a position for the
Appellant in its Canadian operations.
43 Throughout the time the Appellant and his spouse were in the UAE,
they retained ownership their house on Parkmount
Crescent, which had been their family home for 20
years. Even after accepting the UAE assignment, the Appellant and his spouse
purchased a second house in Ottawa, which they designated as their principal residence.
…
47 Further ties that the Appellant maintained with Canada in this case
included his RRSPs, his Ontario
driver’s license some Canadian credit cards and investments in Canadian stocks.
48 While I agree with counsel for the appellant that the Appellant’s
employment by a Canadian employer is not sufficient in itself to create
residency, the terms and conditions of that employment are relevant. In this
case, Mitel was obliged to return the Appellant and his spouse to Canada at the end of the assignment and was
also obliged to try to find an equivalent position for the Appellant within
Mitel’s Canadian operations.
49 I agree as well that the Appellant had no substantial ties with any
location other than Canada and
the UAE in 2001 and 2002, and that the Appellant’s ties to the UAE were only
temporary in nature. The properties in which the Appellant resided in the UAE
were rented under one year leases, his vehicle was leased, his work assignment
was for 36 months and he chose not to bring the bulk of his belongings with
him. Although the Appellant said that he had joined certain clubs in the UAE,
there was no evidence to suggest that the Appellant had paid any permanent
membership fees to join these organisations
50 I agree with the Respondent that the Appellant’s ties to the UAE
were similar in nature to those established by the taxpayer in Gaudreau v.
The Queen in Egypt, which
were described by Lamarre, J. as ties undertaken during the term of the
taxpayer’s absence which were necessary to permit him and his wife to enjoy an
acceptable and expected lifestyle while in Egypt and abandoned on his return to
Canada. As in Gaudreau,
the Appellant’s ties to the UAE were abandoned completely upon his return to Canada.
51 The Appellant’s ties to Canada were also similar in nature and extent to those maintained by the
taxpayer in the case of McFadyen v. The Queen, 2000 DTC 2473 during
three years the taxpayer lived in Japan. In McFadyen, the Court said:
103 I have concluded that the Appellant's ties with Canada during the three-year period were
significant.
104 n my view of the evidence, the Appellant can be considered to have
accompanied his spouse on a temporary, overseas posting. He returned to Canada on three occasions during his
spouse's assignment to Japan.
He maintained with his spouse two joint bank accounts in Canada, one was used for the mortgage in
connection with one of their properties and the other was used for everything
else including another mortgage. He owned two houses in Canada, one of which
was later occupied as his home on his return to Canada after giving two months notice. He maintained at his own expense
during the years in issue his professional membership in the Association of
Professional Engineers in Ontario. The transitory nature of his posting in Japan is reflected by the storage of items of furniture, which were large
and bulky, and appliances in Canada, the retaining of a safety deposit box and
the maintaining of a registered retirement savings plan, a credit card, and a
current Ontario driver's
license. These ties were largely economical but in part personal.
105 The evidence supports the contention that the Appellant left Canada for Japan with the intention that he may not return and I accept his evidence
that he made significant efforts not to return. However, the Appellant
maintained the Canadian connections with Canada in case he did return. He did in fact return and resumed his ties
to Canada.
52 As in the case before me, neither taxpayer in Gaudreau and McFadyen,
returned to Canada frequently in the years in issue yet both were held to be
ordinarily resident in Canada.
As well the taxpayers in both cases were away from Canada over 3 years,
longer than the Appellant in this case, and both cases, the finding that the
taxpayers were ordinarily resident in Canada in the years they were absent from
Canada was upheld by the Federal Court of Appeal.
[34]
In Mullen v. The
Queen, 2008 TCC 294, Sheridan J. concluded that, since the
taxpayer had retained a house that was in his son's name, a bank account, and
his Canadian medical insurance coverage, he did not sufficiently sever his
residential ties. She noted that "ending one's residency in Canada is no simple thing":
17 From these decisions it can be seen that ending one’s residency in Canada is no simple thing. Like the
unsuccessful taxpayers in McFadyen or Johnson, the Appellant also
divested himself of his principal residence and vehicles; he intended to remain
permanently employed outside of Canada; he made efforts to realize that intention; he organized his health
insurance to have suitable coverage outside of Ontario; with the exception of
1998, he made only infrequent trips to Canada. These efforts in themselves fall short of establishing that he had
severed his ties to Canada. In
my view, they are further weakened by the additional facts set out below.
18 On March 2, 1998, the Appellant’s employment in China ceased. Retired or not, the fact is
he did not obtain other employment in China or Thailand after
that time. There was no foreign employment to diminish whatever links he may
have had to Canada. He had bank
accounts at various times in New York, Malaysia and Singapore. He
never opened a bank account in Thailand, a deliberate choice based on his understanding of the attendant
tax consequences. He also had a range of credit cards from various foreign banks.
By contrast, no matter where he was in the world, he always maintained his
Canadian bank account and his VISA credit card through the Royal Bank of Canada. I am not convinced by his assertion
that this was just to take advantage of the “points” attached to the card. His
entitlement to drive outside of Canada hinged on his proof of a valid Ontario driver’s licence. He used rented
vehicles in Thailand whereas in
Canada, he purchased a used car
for his use. Although he ultimately divested himself of that car, by
transferring it to the family’s holding company he maintained access to it.
Although he acquired additional private health insurance while abroad, he never
cancelled his Ontario medical
insurance. Having had private coverage does little to enhance the Appellant’s
position as even the most occasional traveller is likely to obtain additional
health insurance while outside Canada. While in China and Thailand, he and his spouse had only
personal effects with them; following the sale of his principal residence, all
items of any significance to them were housed in the Belleville dwelling.
[35]
In Filipek, supra,
Miller J. did not accept the Air Canada pilot's testimony and concluded that he
did not cease being a resident of Canada for the
following reasons, stated at paragraph 33:
…I
find his routine of life, as an Air Canada pilot working out of Vancouver, was
indeed centred in Vancouver.
His banking, his time spent in the area, his ongoing relationship with his
in-laws, his financial commitments to them and his own family, combined with
his evasive, contradictory evidence of what he was really doing while in
Vancouver for well over 100 days each year cause me to conclude that any
settled way of life was primarily in Vancouver. I recognize he does not have his
own home or physical residence in Canada, and while that is troubling, it is not fatal to a finding
that he can still be ordinarily resident in Canada. If such a physical space is required, I have no difficulty
concluding that he had ready access to his in-laws’ home, and did, in fact,
rely on that access.
[36]
In Song v. The Queen, No. 2008-733(IT)I, January 14, 2009
(TCC), affirmed 2009 FCA 278, application for leave to appeal
dismissed, [2009] S.C.C.A. No. 492 (QL) (SCC), Paris J. found that the
taxpayer's settled routine of life (namely her house, children, property and
social ties) were in Japan, even though her husband lived in Canada.
… It is true that
her husband remained in Canada
after April 3rd, 2006, and that his settled routine of living was here. While
this is a significant tie to Canada, it is outweighed, in my view, by the
permanence of the appellant's ties to Japan during the period. She had a year-round residence, and her
children attended school and daycare there. Almost all of her children and her
own belongings were in Japan,
her economic ties were almost exclusively with Japan, and her social
connections were either in Japan or China.
By contrast, she did not maintain a home for herself and her
children in Canada. Her
husband lived in a two-bedroom townhouse that he shared with roommates, who
were asked to leave to enable the appellant and the children to stay with her
husband when they visited. On all of the evidence I find that the appellant's
visits to Canada do not amount to her customarily or normally living in Canada in 2006 and 2007. She spent less
than 10 percent of her time in Canada, between April 2006 and September 2008, and cannot have been said
to have established any significant connections of her own to Canada apart from her husband's presence
here.
I do not accept that the appellant had stronger ties
with Canada than Japan during
the period in issue. While it is true that the appellant planned to leave Japan and come to live permanently in Canada, this was not planned to occur until
2008. In the meantime, her day-to-day routine was centered in Japan, carrying through with a course of
studies commenced in or about 2001, and caring for her three children. Her
trips to Canada were intermittent visits, approximately equal in number and
duration to her husband's trips to Japan in those years. This was not sufficient to establish a residence
in Canada for her.
[37]
In Bensouilah v. The
Queen, 2009 TCC 440, the appellant, a
resident of Saudi Arabia and Canada, worked in Saudi Arabia while his family remained in Canada.
He kept his house in Canada. Angers J. found that the ties had not
been severed.
[38]
In Denisov v. The
Queen,
2010 TCC 101, Angers J. found that the appellant resided in Canada,
not Russia, because he did not show that, for the purposes of Article 4 of
the tax treaty between Canada and Russia, he was subject to full Russian
taxation, because his wife, his house and personal property were in Canada.
[39]
In the present case,
the evidence shows the tie with Canada was severed in January 2007. The evidence
also showed that this break followed a lengthy period of reflection that
started when the appellant first lived away from his family, when he worked in
Montreal for around a year, and then during a long stay in China.
Analysis
[40]
The respondent's main
argument is that every person must have a residence. Presuming the appellant
had not resided in Qatar, she found that he must necessarily have resided in Canada.
[41]
After arriving at this
conclusion, she relied on the following facts:
·
The appellant came to Canada a few times.
·
The appellant had two
bank accounts in Canada, which he used to make all his payments,
in particular for his credit cards, which were also issued in Canada.
·
The appellant had some
money in an RRSP.
·
The appellant had no
postal address in Qatar.
[42]
As for the other
elements, for example, not having a driver's licence, not having property such
as furniture, clothing, accommodations or vehicles, and not having a health
insurance card, the respondent claims that they have no impact one way or the
other.
[43]
The evidence clearly showed
that the appellant's decision came after a lengthy period of reflection. It
also showed that the appellant did not have any deep roots and did not hesitate
to leave when his son, who was ill, let him go with no regrets.
[44]
His relationship with
his wife was so tense that they tolerated one another only because of their
shared concern about their son who was ill.
[45]
The appellant had a
very good position. He did not want to run away from his responsibilies. He
gave all his property and agreed to pay generous support payments before
leaving; he has always complied with these commitments. He did not apply for a
new driver's licence when his was suspended, even though the evidence showed it
was important for him to be able to use a car if he wanted an international
driver's license or even a driver's licence from the country in which he was
living.
[46]
He specifically gave up
his health card in 2008.
[47]
Regarding the beginning
of the relevant period of the appeal, the beginning of 2007, it must be
considered that a reasonable person would be careful. The appellant stated he
could only get a work permit if a medical exam showed he was in good health,
otherwise he had to return to his country of origin. The same can be said for
the position, the duration of which generally depends on the employer, not the
employee.
[48]
In other words, there
is, normally, a reasonable delay before a permanent break.
[49]
This explains the time
between the beginning of the period in question and the time the appellant gave
up his health insurance.
[50]
As for the argument
that the appellant never had a residence in Qatar,
I do not believe it is cogent, because the appellant was employed and had a
residence. The appellant's strong interest in staying in Qatar was shown by the
intensive courses he took to get a driver's licence, when he could have
travelled with coworkers, even though he had cancelled his Canadian driver's
licence. When his employment ended in Qatar, the appellant
returned to the country to see the people with whom he had worked and the work
he had done.
[51]
In particular, in view
of the following facts, I find that, on the preponderance of the evidence, the
appellant's position must be accepted:
·
The family context was special
and conducive to a permanent departure.
·
The appellant left
after disposing of all his own property.
·
The appellant waived
his right to obtain a new driver's licence a few months before leaving Canada.
·
The appellant returned
to Canada a few times for very short stays that were
for the purpose of visiting his two sons, his mother and friends.
·
After leaving Qatar upon the expiry of his work contract, the appellant
returned to meet friends and business acquaintances, thereby showing he had
been happy there.
·
The break came after a
long period of thorough reflection.
·
The appellant has set
out all the facts showing his intention to sever ties with this country
permanently.
·
Although the relevance
of prior facts is limited, they tend to confirm that the appellant severed his
ties with Canada in mid-January 2007.
·
Lastly, I am of the
view that the cases I have cited support my conclusion, as does Interpretation
Bulletin IT‑221R3.
[52]
For these reasons, I conclude
that the appellant ceased being a resident of Canada
as of January 13, 2007; as a result, the appeal is allowed with costs in favour
of the appellant.
Signed at Ottawa, Canada, this
24th day of August 2011.
on this 7th day of
November 2011.
François Brunet,
Revisor
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