HER MAJESTY THE QUEEN,
REASONS FOR JUDGMENT
 The principal issue in these appeals
against assessments for the 1993 and 1994 taxation years is whether the
appellant, Salomon Revah, was a resident of Canada during the years in dispute. In the event that he was resident in Canada, his income would be taxable under
section 2(1) of the Income Tax Act (the “Act”).
 If I find that the appellant was resident
in Canada in the 1993 and 1994
taxation years, I must then determine whether there was income in the amounts
of $62,067 and $49,637 that he did not report in his Canadian income tax
returns for the 1993 and 1994 taxation years respectively.
 The third issue is whether the penalties
provided for in subsection 163(2) of the Act, imposed by the Minister of
National Revenue (the “Minister”) on the appellant with respect to the
1993 and 1994 years, namely the sums of $8,855.44 and $6,522.28 respectively,
 The last issue was based on the
assumption that the appellant was resident in Canada. Under such circumstances, will the appellant be eligible for tax
credits paid in the United States?
 The appellant believes that he was
resident in the United States during 1993 and 1994 and that he accordingly
ceased to be resident in Canada
 On September 27, 1992, the appellant sold
his residence on rue Nantel in Ville Saint-Laurent, a suburb of Montreal, and moved to the United States. The residence on
rue Nantel was the only immovable property he owned in Canada. He lived in a leased apartment and
with his daughter in Florida during his first six months in the United States, awaiting completion of the
construction of the house in Boca Raton, Florida, that he owned. The appellant and his wife, his daughter
with her three children and her husband moved to the house in Boca Raton in 1993. Since 1993, he has
changed his residence in Florida four times. When he sold a house, he paid off the mortgage on the
house and took out a new mortgage on the next house he purchased.
 Before leaving Canada, he sold his car and cancelled his Quebec driver’s licence. He leased several cars in the United States and
obtained a Florida driver’s
licence. Furthermore, Mr. Revah, who was 77 years of age at the time of the
hearing, cancelled his Quebec
health insurance card and replaced it with a card from an American insurance
plan. Mr. Revah also cancelled his credit cards from Canadian banks and other
financial institutions and replaced them, with credit cards from American
 Mr. Revah is not a member of any
club or association in Canada,
even though he made charitable donations to religious organizations located in Canada. During the years in dispute he had
and still has two bank accounts in Canada, which, as he testified, were
generally used solely for his pension payments, that is to say payments from
the Canada and Quebec pension plans and from his
registered retirement savings plan (“RRSP”).
 On September 10, 1992, Mr. Revah obtained
a United States visa that allowed him to work temporarily in the United States until September 9, 1995, for
Basatchi Uomo Inc. of Champlain,
New York. Mr. Revah was the principal shareholder of this
corporation. He applied for an American work permit (“green card”) on
September 25, 1992. The appellant obtained this permit, which was valid for
five years, on January 5, 1995. The appellant was not able to file his
American work permit (“green card”) because that document was taken away from
him when he received his American citizenship and his American passport on
April 1, 2003. He retained his Canadian citizenship.
 The appellant admitted that he paid
visits from time to time, [TRANSLATION] “maybe once a year” to Canada to visit his family in the Montreal area.
 On his tax returns for 1993 and 1994
submitted to the Canada Customs and Revenue Agency (the “CCRA”), the appellant
gave as his residential address 351 Tait in Ville Saint-Laurent, which is
the address of his brother David. The appellant, the son of the appellant
David Revah and the accountant Léon Levy all testified that the indication
of 351 Tait in Ville Saint-Laurent as the address of the appellant’s
residence in Canada was an
error made by the accounting firm responsible for preparing the appellant’s
income tax returns. Furthermore, in the appellant’s Canadian tax return for
1993, we find that he ceased to be a resident of Canada in 1993. In the same return, however, Mrs. Revah’s province of
residence as of December 31, 1993 was given as Quebec. In the 1992 tax return, it is stated that the appellant’s province
of residence as of December 31, 1992 was Quebec. In the same return, we find that he ceased to be resident in Canada in 1992. Daniel Revah
explained that he signed the tax returns on behalf of his father and did not
check his father’s residence: [TRANSLATION] “To say that I checked the location
of his residence and everything -- I did not do it; I apologize and that, in my
view, was my mistake”. The appeal stated that he left Canada in the month of September 1992.
 In assessing Mr. Revah, the Minister
presumed that the appellant had not filed his American income tax returns
(form 1040K) for 1993 and 1994. The appellant submitted copies of these
American returns, which he filed with the Internal Revenue Service of the United States for 1993 and 1994.
 From 1993 to 1997, the appellant’s spouse
was registered as the owner of a residence located at 840, Place Stewart
in Ville Saint‑Laurent, even though she spent most of her time in the United States in the company of the
appellant. This residence had been purchased by Mrs. Revah in 1993 from her
son Daniel Revah. The appellant and the son explained that Mrs. Revah had
served as a front for Daniel Revah during the latter’s divorce. From 1993
to 1997, Daniel Revah lived in the residence in question without paying any
 The appellant owns one-half of the shares
of an American company, MJ Apparel Inc. He received a salary from MJ
Apparel Inc. The other half of the shares of this American company are owned
by Cécile Revah, the appellant’s daughter. The appellant was registered
as the owner of all the shares of two Canadian corporations (2754380 Canada
Inc. and 2757800 Canada Inc.). He explained, however, that he held these
shares solely because he acted as a front for his son Daniel. Daniel is
resident in Canada.
Léon Levy, the accountant for both Canadian corporations, who prepared the
appellant’s tax returns, also testified. He admitted making an error in Mr.
Revah’s tax returns; the computer in his office did not record the data in 1992
when the appellant left Canada.
 CCRA auditor Pierre Thibodeau
testified that since the appellant was resident in Canada for the purposes of his income tax returns, it was possible to
consider the two corporations of which he held one-half of the shares to be
treated as Canadian-controlled private corporations. Consequently, these two
corporations were eligible for the small business deduction under section 125
of the Act. As 2754380 Canada Inc — a Canadian corporation of which the
appellant holds one-half of the shares — recorded a profit during the 1993
taxation year, it was granted the small business deduction. It should be noted
that Mr. Thibodeau did not consider the fact that the corporation would be
granted this deduction even though Daniel was registered as a shareholder. In
fact, Daniel was the usufructuary of the shares in both corporations.
 The appellant argued that an individual’s
residence was a question of fact and that he was an American resident during
the taxation years in dispute because his principal residence was in the United
States and the preponderance of his social and economic ties were with that
country. If Mr. Revah was found to have been a resident of both Canada and the
United States, the appellant felt that the tie-breaker rules in article 4
of the Convention between Canada and the United States of America with
Respect to Taxes on Income and on Capital (hereinafter the “Convention”)
made him an American resident during the years in dispute.
 Counsel for the respondent felt that form
was important in tax law and that the secret agreement between the appellant,
the appellant’s spouse and the appellant’s son could not be relied upon against
third parties, including the CCRA. The respondent also felt that if the rules
in article 4 of the Convention must be applied, the appellant was a Canadian
and not an American resident under those rules.
 Residence of a taxpayer is a question
 The "facts in each case", Noel,
J. explained in Schujahn:
... must be examined closely to see whether they are
covered by the very diverse and varying elements of the terms and words
"ordinary resident" or "resident" ... A change of residence
depends on facts external to [the individuals] will or desires. The length of
stay or the time present within the jurisdiction, although an element, is not
always conclusive. Personal presence, at sometime during the year, either by
the husband or by the wife and family, may be essential to establish residence
within it. A residence elsewhere may be of no importance as a man may have
several residences from a taxation point of view and mode of life, the length
of stay and reason for being in the jurisdiction might counteract his residence
outside the jurisdiction.
 In Thomson, Rand, J. stated at pages 224-225:
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...
 Earlier, Rand, J. held that:
It is quite impossible to give [the word]
"residing" 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.
 In the appeal at bar what is important in
determining whether the appellant resided in Canada are the spatial bounds
within which Mr. Revah spent his life or to which his ordered or customary
living was related and the degree to which Mr. Revah in mind and in fact
settled into or maintained or centralized his ordinary mode of living with its
accessories and social relations, interests and conveniences.
 The appellant and his witnesses, his son
and accountant, were cross‑examined carefully and, on the whole, their
testimony on cross‑examination did not put in serious doubt their
evidence in chief. There are, however, two matters that disturb me and these
are that in filing his Canadian and United States income tax returns Mr. Revah
reported only the income he earned in the particular country, not his world
income, and that his province of residence in the relevant Canadian income tax
returns is Quebec and his address was 351 Tait in Ville Saint-Laurent.
 If I find that Mr. Revah was not resident
of Canada, the fact that he
reported only his United States income in his United
States income tax return is a matter for the Internal
Revenue Service and not for me or the Canadian Revenue Agency
("CRA"). The fact that his Canadian income tax returns for 1993 and
1994 show his province of residence as Quebec ought to be compared to his United States tax returns for the same
years which show his home address in Florida. Also, his Canadian tax return for 1993 states he ceased to be a
resident of Canada in 1993; his
Canadian tax return for 1994 states he ceased to be resident of Canada in 1994. While this is sloppy
reporting on behalf of the tax preparer, it does indicate to some degree that
Mr. Revah did not consider himself a resident of Canada in those years.
 Based on this information, Mr. Levy's
explanation that his office erred is not unreasonable. He stated that he never
made changes to Mr. Revah's address in the computer software he used to
prepare the tax returns of Mr. Revah. With respect to Mr. Revah's tax
returns for later years, he said he generally received information for the
returns in mid‑April of the following year and preparation of the returns
is done quickly with the same address error continuing year after year. Mr.
Levy has prepared Mr. Revah's tax returns since 1989.
 Respondent's counsel expressed concern
that Mrs. Revah was the registered owner of the house on Place Stewart where
Daniel Revah resided and that Mrs. Revah, his mother, was the registered owner
of that property. He also expressed concern that Mr. Revah was owner of shares
of the corporation that qualified as a Canadian‑controlled private
corporation. In both cases, witnesses testified that Daniel Revah was the
beneficial owner of the residential property on Place Stewart and of the
shares; his parents were his nominees during his divorce proceedings.
 Respondent's counsel submitted that by
virtue of Article 1212 of the Civil Code of Lower Canada, the appellant
could not rely, against the respondent, on the arrangements between Daniel
Revah and the appellant and Mrs. Revah. Counsel referred to Bolduc v. The
a judgment of the Federal Court of Appeal to support his submission. I do
not believe Article 1212 is relevant to the appeal at bar. In determining
residence of a taxpayer for tax purposes one looks at the totality of facts and
circumstances affecting the taxpayer. There is no question of any
counter-letters being proof against anyone. That the appellant and his wife may
have entered into certain arrangements, whether legitimate or not, to protect
their son's assets from his wife at the time cannot detract from my
consideration of facts determining Mr. Revah's country of residence. The
beneficial ownership of the properties is a factor I must consider. In these
cases, there is no evidence to contradict the testimony of the appellant or his
son that the son was the true owner of the residence on Place Stewart and of
the shares. Indeed, the corporation would have been classed as a Canadian‑controlled
private corporation even if Daniel Revah were the registered owner of these
shares since he was a resident of Canada.
 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
 The appellant was not therefore resident
in Canada during the 1993 and
1994 taxation years. The appeal is allowed with costs.
Signed at Ottawa, Canada, this 17th day of