Citation: 2013 TCC 183
ARCHIBALD C. BOWER,
HER MAJESTY THE QUEEN,
REASONS FOR JUDGMENT
For a Canadian taxpayer
to qualify for the Canadian Child Tax Benefits (“CCTBs”) and the Goods and
Services Tax Credits (“GSTCs”), among other things, a taxpayer must be a
resident of Canada. This is expressed, like many other provisions, in the Income
Tax Act (the “Act”) as a double negative definition. The definition
of “eligible individual” in subsection 122.5(1) provides that:
a person is not an eligible individual, […] if the person […]
(c) is at the beginning of the specified month a non-resident
The Minister disallow
the Appellant’s CCTBs from May 2009 to November 2010 and GSTCs for the period
of July 2009 to April 2011 (collectively the “relevant periods”), on the basis
that Mr. Bower ceased to be eligible because he became a non-resident of Canada.
I. Factual Background
In June 2007, the taxpayer
went to Indonesia where he presently lives with his common law spouse and her
child. Mr. Bower supports both of them and acts in loco parentis in
relation to his spouse’s daughter in what might be termed as a non-legal
adoptive parent relationship. He has purchased a house for them in Indonesia although his spouse alone holds legal title. By all accounts he provides for and assists
the spouse and her daughter as a dutiful husband and father.
On average the Appellant
has visited Canada not more than four times since 2007. He has done so each
time for a period of between six to eight weeks.
Mr. Bower is seized of
a life estate, shared with his sister in a family home located in Nova Scotia, where Mr. Bower’s brother is the holder in fee simple of the remainder
interest. Mr. Bower generally stays at the house for several weeks during his
travels to Canada.
As to investments, Mr.
Bower maintains a trading account at TD Waterhouse, a bank account at Royal
Bank, a bank account at the Estonian Credit Union and an accidental death and
extended health coverage policy. All of these investments are domiciled in Canada. The bank accounts do not have large cash balances and have been maintained at least
partially to assist with Mr. Bower’s daily living in Indonesia to the extent
that monthly pension benefits, credit card payments and any loan payments are
processed through these accounts.
The Appellant has three
children and several grandchildren in Canada. He has visited them during his
travels to Canada during the relevant period. His children and grandchildren
are not dependents. Certain larger possessions of Mr. Bower, owned prior to
2007, remain in Canada either in Nova Scotia or with his grown children.
Mr. Bower admitted that
all the accoutrements for daily life exist for him in Indonesia. He testified that he maintains an intention to return to Canada, but that would
likely be precipitated by his sickness or the breakdown of his spousal
relationship both of which events he admitted he wishes to avoid.
submitted that the Appellant was ordinarily resident in Indonesia through the examination of the substantial factual components of where and how
one’s life is lived. In short, nothing undertaken by the Appellant; whether
banking, visits to Canada, use or deployment of Canadian property, length of
travel, the regular and necessary use of assets in Indonesia and the titular
nature of any association memberships in Canada can lead to any conclusion
other than the fact that Mr. Bower is ordinarily resident in Indonesia with no
present intention to return Canada. Any plan to return is merely as an
The Appellant argued
that his stay in Indonesia has not extinguished his Canadian residency. The Appellant
directed the Court to the case of Perlman v. The Queen, 2010 TCC 658, 2011
DTC 1045, and referenced his present intention to return as sufficient to
defeat any presumption of non-residency.
The law regarding
residency has been stated clearly and consistently as having a substantial
factual component. Moreover, “residents”, “residency”, “ordinarily resident”
or, for that matter, “non-resident person” are not defined in the Act.
Although the inclusion of such a definition may have assisted at some point, Courts
have had little difficulty developing a test to be utilized by a Court in the
determination of residency. Beginning with the case of Thomson v. Canada,
 S.C.R. 209,  C.T.C. 51, 2 D.T.C. 812, Estey, J. stated at
paragraph 71 as follows;
“ordinarily resident” in the place where in the settled routine of his life he
regularly, normally or customarily lives. One “sojourns” at a place where he
unusually, casually or intermittently visits or stays. In the former the
element of permanence; in the latter that of the temporary predominates. […],
but each case must be determined after all of the relevant factors are taken
into consideration, but the foregoing indicates in a general way the essential
difference. It is not the length of the visit or stay that determines the
question. Even in this statute under section 9(b) the time of 183 days
does not determine whether the party sojourns or not but merely determines
whether the tax shall be payable or not by one who sojourns.
Similarly, a list of
useful factual criteria to be utilized in order to arrive at such a determination
was developed in the case of The Queen v. Reeder,  C.T.C. 256, 75
DTC 5160, where Mahoney J. states:
the Defendant here is far removed from the jet set, including any possible
imputation of a preconceived effort to avoid taxation, the factors which have
been found in those cases to be material in determining the pure question of
fact of fiscal residence are as valid in his case as in theirs. While the list
does not purport to be exhaustive, material factors include:
past and present habits of life;
regularity and length of visits in the jurisdiction asserting residence;
ties within that jurisdiction;
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.
As to past and present
life, the Appellant’s present life is in Indonesia where he lives, cohabits and
exists within a profound and substantive relationship with his spouse and her
child. He possesses there the artifacts and tools of everyday living. By
contrast, his heirlooms, inheritances and grown children are located in Canada, largely due to the relevant respective size, immobility and choice of each.
While his visits to Canada are almost annual, they bear the hallmarks of a vacation or holiday as to their
length, season and purpose. His sustained and active membership in Rotary International
in Indonesia when compared with his membership card status within certain
groups in Canada also bears witness to a clear difference in the intensity of
attachment as between the two countries.
Mr. Bower’s ties to Indonesia are by this own choice, whereas his familial ties to Canada are not. His choice of
maintaining bank accounts and credit cards domiciled in Canada are, by his own admission, for the purposes of assisting him with daily living in Indonesia where, again by his testimony, the banking system leaves something to be desired
at least to the extent of middle aged foreigners attempting to use that banking
Mr. Bower’s ties and
nexus to Indonesia are not to be underestimated in light of his present family,
economic and social interaction and obligations there. Furthermore, the
evidence of Mr. Bower’s spouse’s discontinuance of previous applications for
entry into Canada, the undesirable circumstance (either ill health or spousal
separation) which may give rise to a renewed intention to return to Canada and
Mr. Bower’s lack of comparatively important economic, commercial or social ties
to Canada leave the Court with no other conclusion other than Mr. Bower’s “fiscal
residence” is more factually and substantially situate in Indonesia rather than
This finding is
consistent with Perlman since the ratio in that much more equivocal case
was related to the clearly uninterrupted intention of the taxpayer to return to
Canada, not as a worst case scenario, but rather as a long-term consistently
expressed career goal and life plan. By contrast, although Mr. Bower says he
will return to Canada at some future date, the Court finds that this would require
him to alter his present intention, to sever or transplant his most meaningful
relationships and to transfer the trappings of daily living from Indonesia such that his ordinary and primary residence reverts to Canada. Until that time, Mr. Bower
remains a non-resident of Canada.
On the basis of the
foregoing, the appeal is dismissed.
Signed at Ottawa, Canada, this 11th day
of June 2013.