Citation: 2007TCC295
Date: 20070528
Docket: 2006-1383(IT)I
BETWEEN:
SUSAN McGRATH,
Appellant,
and
HER MAJESTY THE QUEEN,
For the Appellant: The Appellant herself
Counsel for the
Respondent: Gatien Fournier
REASONS FOR JUDGMENT
(Delivered
orally from the bench on
November 7, 2006, in Belleville, Ontario.)
McArthur J.
[1] The issue is whether the Appellant is
entitled to deduct the tuition fee of $3,933 in the computation of her non‑refundable
tax credits in her 2004 taxation year. The Minister of National Revenue states
that the Appellant was not in full‑time attendance at a university
outside of Canada within the meaning of paragraph 118.5(1)(b)
of the Income Tax Act while she was taking a distant‑learning
program via the internet or online.
[2] The 54‑year‑old Appellant has
been teaching elementary school for over 30 years and earns about $75,000
annually. She is a single mother of three boys, all over the age of 20. She
completed her Master's Degree at Walden University, a recognized institution in Chicago, Illinois, and a member of the North Central Association of Colleges. All
courses were on line. She did not set foot on a traditional campus with lecture
rooms, libraries and the like. Her involvement included what she described as
the face‑to‑face format where she worked with two or three other
students, including two teachers under the same school board she works for. Her
teaching duties were from 8:00 a.m. to 4:30 p.m. five days a week. Her studies
occupied 25 hours per week, including two to two‑and‑a‑half
hours each evening, all Saturday afternoon and all day Sunday. Much of her
university work was done in concert with the two other teachers on her team. She
succeeded in obtaining her Master's Degree which is recognized by her school
board, and indeed recognized under the Income Tax Act. She stated it was
a huge undertaking, but she is a much better teacher because of it.
[3] She was motivated to commence this appeal
after reading Krause v. The Queen,
a decision of Chief Justice Bowman from which she quoted the following
paragraph:
It is obvious therefore that the matter is by no means
clear-cut. Although I need not decide the point since the appeal must be
dismissed in any event because it is from a nil assessment, I think it is
strongly arguable that full-time attendance at a foreign university can include
full‑time attendance through the internet or on-line as is the case here.
That view conforms to common sense and to the reality of modern technology. If
there continues to be doubt on the point Parliament should move to resolve that
doubt.
I should point out that a copy of Krause was
fairly given to her by an officer of CRA, and by Mr. Fournier, the Respondent's
counsel at this appeal.
[4] This raises an important issue that is
answered with reference to paragraph 118.5(1)(b) of the Act which
reads:
For the purpose
of computing the tax payable under this Part by an individual for a taxation
year, there may be deducted,
…
(b) where the individual was
during the year a student in full‑time attendance at a university outside
of Canada in a course leading
to a degree, an amount equal to the product obtained when the appropriate
percentage of the year is multiplied by the amount of fees for the individual's
tuition paid in respect of the year to the university.
[5] It should be noted that the Minister has
conceded that the Appellant is entitled to the $750 education amount she
claimed under section 118.6. There are two parts to section 118.5 in deciding
whether the Appellant was a student in full‑time attendance at Walden --
Walden advertises itself as America's premier online university -- (a) was she
in attendance at Walden; and (b) if yes, then was her attendance full time?
[6] I will first deal with (b). If following
courses online is attendance, then I find she met the full‑time
requirement. Minister's counsel submitted that the present facts could be
distinguished from Krause in that Mr. Krause spent between 22 and
36 hours per week on his course while working 30 hours or less at a McDonald's
Restaurant. The Appellant spent 20 to 25 hours weekly on her course and worked
40 hours weekly teaching school. I do not think these differences in hours have
an appreciable effect on whether she was full time.
[7] I accept her evidence that she was
considered by Walden as in full‑time attendance. She received the
following letter from the Elementary Teacher's Federation of Ontario. It is
dated June 30, 2005 and reads in part:
On behalf of the executive of the Elementary Teacher's Federation of
Ontario, I wish to extend my personal congratulations to you for having been
selected as a recipient of the Master's Scholarship Women's Program. Enclosed
is a cheque for $1,500.
Obviously, the
Elementary Teacher's Federation of Ontario recognized Walden and the degree for
which she was studying.
[8] I find the Appellant is very deserving of
the modest tax relief she seeks. After considerable effort and sacrifice, she
completed studies that made her a better school teacher. She could not have
left her family and her teaching salary to relocate on the campus of, for
instance, Queen's University, or any other in or outside of a Canadian
university. As stated, I find that she meets the full‑time requirement.
[9] The more difficult question is whether she
was in attendance at Walden. Mr. Fournier provided two cases with facts
similar to the present situation where it was decided in favour of the
Minister's position, and with these cases I will deal with the interpretation
of the word "attendance" within the meaning of full‑time
attendance as contained in subsection 118.5(1).
[10] In Hlopina v. The Queen, Bowie J
considered the meaning of full‑time attendance. He concluded that taking
a correspondence course was not attendance. He said in paragraph 12 of his
decision:
The ambiguity in the English text is resolved by
reference to the French version of the Act. The
expression "... le particulier fréquente comme étudiant à plein temps une
université..." used in paragraph 118.5(1)(b) is in contrast to
the expression "… université située à l'étranger, oừ le
particulier ... est inscrit ..." used in paragraph 118.6(1)(b). Clearly, the former requires physical presence at the university,
while the latter does not.
And continuing on
with the quotation from Judge Bowie's decision:
… Where, as here, one version of the statute is clear and
unambiguous, while the other might bear the same or a different meaning, I am
bound to apply the meaning which is common to both versions. While the verb 'to
attend' in English might connote something other than physical presence, the
same cannot be said of the French verb 'fréquenter'. I must, therefore,
reluctantly conclude that the tuition credit under section 118.5 of the Act
is not available to a taxpayer who studies by way of correspondence courses
taken at a university outside of Canada. I share the sentiment expressed by Heald J. in Richie where
he said.
I said at the trial that I was
sympathetic to the respondent's position. He and others like him are to be
commended for their industry, their perseverance and their dedication to self‑improvement.
It may well be that the respondent and other taxpayers in a similar position
should be able to deduct tuition fees in these circumstances. However, it is
not the Court's function to legislate ‑‑ I can only interpret
the statute as it presently exists.
[11] The second case counsel provided was my own
decision in Cleveland v. The Queen where I agreed with Judge Bowie's above decision,
and stated the following in Cleveland:
… The Appellant took courses over the entire year. During 2001, he
had full‑time employment … earning $101,355 annually while living in Saskatchewan.
His courses were conducted online using course rooms, e‑mails,
telephone and virtual libraries. It was clearly distinguishable from
correspondence courses. He states, in effect, that he attended Capella in
Minnesota through modern technology without leaving his home in Saskatchewan.
The Respondent's
position was:
With
respect to the tuition tax credit claimed, while the MNR admits that Capella is
an online university, the Appellant was not in full‑time 'attendance' at
Capella which is mandatory …. The key word is 'attendance'.
and in paragraphs
7 and 8, I stated:
Paragraph 118.5(1)(a) provides for a tuition
credit for a student "enrolled" at an educational institution in Canada. In contrast, a university student
outside of Canada must be in
'full‑time attendance' under paragraph 118.5(1)(b) as opposed to
simply 'enrolled.'
The issue narrows down to whether the Appellant was in
'full‑time attendance' at Capella situated outside of Canada in Minneapolis, Minnesota. …
and in paragraph
12:
I
believe this is stretching the plain meaning of attendance too far. This
conclusion is strongly supported by reference to the French version...
and in paragraph
13:
I find that there must have been a physical presence by
the Appellant at Capella to benefit from section 118.5. If the legislature
wanted to have an 'online' university included … it would state so explicitly
and not leave the taxpayer to twist and turn and speculate to find an extended
meaning of 'attend'. I cannot rewrite the legislation.
[12] Justice Bowman obviously disagrees with
Bowie J.'s conclusion that attendance means physical attendance and does not
include online attendance. Bowman J. does not mention the Cleveland decision seven months before his Krause
judgment but he obviously is of the opposite view of it also. There stands my
dilemma. Both judges, Bowie and Bowman, are highly respected. Hlopina
was decided in 1998; Krause in 2004. Students are increasingly taking
courses online.
[13] It was not possible for Susan McGrath to
take this specialized Master Degree in Canada.
Her only option was to attend online. My thinking has evolved since the Cleveland case, and I accept the reasoning of our Chief
Justice. I agree that his opinion conforms with common sense and the reality of
modern technology. Parliament may have to resolve any doubt, but for the
reasons given, the appeal is allowed, with costs, if any.
Signed at Ottawa, Canada, this 28th day of May, 2007.
“C.H. McArthur”
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