Rowe D.J.T.C.C.:—The appellant appeals from an assessment of income tax for his 1982, 1983, and 1984 taxation years whereby the respondent assessed him for tax on the basis that he was, in each of those years, a resident of Canada. In a separate appeal — 89-1254(IT)O —— by agreement heard together with this appeal, the appellant appeals from an assessment for his 1985 and 1986 taxation years, again issued by the respondent on the basis the appellant was a resident of Canada. The position of the appellant is that for all of the years covered by the two appeals, 1982 to 1986, inclusive, he was not a resident of Canada.
The appellant testified he was born in 1951 at Nelson, British Columbia and currently resides at Trout Lake, British Columbia. After completing highschool at Nelson, he took vocational training in Nelson, Kelowna and Kamloops and then went to Los Angeles to study for certification in deep-sea helium-oxygen diving, including hyperbaric welding done at depths to 600 feet. By completing that course of study, the appellant stated he became part of a mere handful of individuals who were specialists in that field and was then qualified to work in the North Sea offshore oil exploration project. In 1981, he was employed as a diver in the Arctic by CANDIVE and upon completing that assignment looked for work in the field of underwater pipeline construction but was unable to locate any such work within Canada. In September, 1981, he packed his equipment and personal belongings into boxes and went to Aberdeen, Scotland. He was unmarried and his assets at the time were made up of a piece of recreational property at Trout Lake, a motorcycle, an old truck, together having a value of approximately $5,000. In Scotland he began working for Solus Ocean Systems which later merged with Wharton-Williams, a large firm engaged in underwater pipeline construction. He obtained lodging at a bed and breakfast in Aberdeen and made arrangements to leave his equipment there which he used in the course of his offshore work. He stayed in those rooms for nearly five years before moving to another place in Aberdeen. In the bed and breakfast premises, he had a small suite on the second floor, exclusively for his use, and he rented it on an annual basis, keeping there all of his personal belongings and diving equipment. When onshore, he had to attend at his employer's office in Aberdeen. His work in offshore oilfield construction would require him to be gone for a period of six weeks to two and one-half months, after which he would return to his suite in Aberdeen for two weeks and the work cycle would be repeated. While working offshore, the appellant stated he lived on barges or diving ships and, depending on the depths at which he was working, in decompression chambers. The working season in the North Sea was from the first part of May to the end of October. Other slack periods would arise from time to time owing to lack of construction projects available to his employer. His employer bid on contracts in Holland, Norway and Spain. He stated he spent nearly one year working in Spain but would return to Aberdeen from time to time. In Spain, he rented an apartment for a one-year term. During this period he maintained his suite in Aberdeen. He also worked on projects in the Gulf of Mexico, India, at various spots in the Middle East, and along the Ivory Coast. Between 1982 and 1986, he returned to Canada for vacations or to visit relatives. One year he worked for three weeks in the Canadian Arctic but cannot recall the specific period involved. During visits to Canada, he would stay with friends or relatives. When not working out of his location in Aberdeen, he would also travel to Hawaii, San Francisco, Los Angeles and Mexico. He estimated that during the years under appeal he was in Canada, each year, between 75-100 days, but not consecutively. While in Canada or on holidays elsewhere, he would keep in touch by telephone with his employer in Scotland in the event he was to be dispatched on sudden notice to travel to a particular work location. Between 1981 and 1991, he held a Canadian passport and from 1982 to 1986, had bank accounts at Nelson, British Columbia, Aberdeen, Scotland, in Spain, in the Isle of Man and Jersey. His pay cheques were sent by his employer to the appellant’s account at a bank in Aberdeen. He maintained a British Columbia driver's license, with Trout Lake as his residential address. In his experience, an international driver's license was not required as the British Columbia license was satisfactory to permit him to rent vehicles at locations all over the world. He maintained medical insurance coverage with the British Columbia medical services plan and also had a National Health Service medical card in the United Kingdom. In 1986, while diving off the southwest coast of England, he sustained injuries, requiring a stay of one month in hospital, subsequent to which he travelled to Nelson, British Columbia for further recuperation and treatment by a local physician. In obtaining medical treatment he used his British Columbia medical card instead of his United Kingdom medical coverage in order to avoid the "mountain of paperwork" involved in obtaining reimbursement.
The appellant stated that for the years 1982-86, inclusive, he did not file tax returns in the United Kingdom but did so thereafter. At the outset of his employment he thought his employer was going to take care of tax matters but discovered that was not so. The taxation authorities in the United Kingdom began paying closer attention to foreign corporations and introduced measures to render these employers liable for unpaid taxes of employees. In order to settle accounts with the formidable and legendary Inland Revenue Commissioners, he paid tax on his earnings at the rate of 30 per cent for the years 1981 to 1989, inclusive. He retained the services of an accountant on the Isle of Man and the arrangement with the United Kingdom tax authorities was on the basis that he was a nonresident in the United Kingdom, which was not material to him as the rate was nearly the same as for residents. Since 1990, the appellant has been living in a common-law relationship with his “highschool sweetheart" but during his working career offshore he had other romantic liaisons of varying duration. In 1993, at age 42, he retired from offshore underwater construction as time had taken its toll on his system. The appellant stated that in 1981, at age 30, he left Canada with the expectation he would work as a diver for eight years. There was no opportunity to work at his hyperbaric welding specialty within Canada so he was well aware that he would be employed offshore at various locations in Europe and elsewhere.
In cross-examination, he stated that he has a residence in Nelson, British Columbia where his parents have also lived since 1990. He has a sister in Kelowna and brothers in Creston and Revelstoke. He is the father of a two year old girl, born of the common-law union which he currently maintains. He stated the cabin on the lot at Trout Lake is worth $11,000 and is about one kilometre from the lot he previously owned. He identified a document, filed as Exhibit R-1, as being a transfer of two lots into his name on September 12, 1980. He also identified documents, filed as Exhibit R-3, as pertaining to an application by him, in July, 1984, to the Ministry of Lands, Parks and Housing of British Columbia, for a Crown grant allowing him to obtain title to another lot at Trout Lake. He hired a contractor to construct a road into the property and intended to use the property for placer mining during his trips to Canada. In 1982 or 1983, he held a prospector's license, issued by the British Columbia government. The appellant agreed that the statement in his notice of appeal that “at times material he lived in Spain” is incorrect. The appellant agreed that he purchased property at Trout Lake from his father in 1983, which he held until selling the land in 1992. On September 30, 1985 pursuant to a transfer of land (Exhibit R-7), for which the consideration was the sum of $68,000 a Certificate of Title (Exhibit R-8) was issued in the names of Richard George Wassick and Sharon Anne Ferguson — now his common-law wife and the mother of his child — as joint tenants to certain property in Nelson. This is the same property which was the subject of a transfer of land (Exhibit R-9) , dated December 16, 1986 from the appellant and Sharon Ferguson as joint tenants to Sharon Ferguson, in consideration of the sum of one dollar. Subsequent to the transfer into Ms. Ferguson's name, he still remained as a guarantor of the mortgage on the property. The appellant stated that during the years under appeal he owned four different parcels of land in British Columbia and that mortgage payments, where applicable, were made from one of a number of joint bank accounts he held with Sharon Ferguson at the Canadian Imperial Bank of Commerce and at the Credit Union in Nelson. For purposes of going to Spokane, Washington for shopping, they maintained a joint bank account there. He paid his British Columbia medicare premiums out of a British Columbia bank account, maintained his membership in the Plumbers’ Union —— AFL-CIO — which included practitioners of his welding specialty. On December 14, 1983, the appellant agreed that he and Sharon Ferguson jointly purchased a Subaru vehicle in Nelson and in 1985 purchased a GMC pickup truck. A photocopy of the appellant’s passport, valid from July 20, 1982 to July 20, 1987, (Exhibit R-10) was shown to him indicating that he returned to Canada seven times per year, on average, between 1982 and 1986. In travelling to Nelson from Aberdeen he would often fly to Seattle, then to Spokane, where Pe would rent a car and drive to Nelson. However, there were also numerous occasions which would find him flying from Europe to different cities in North America and then continuing to Nelson. A letter from his employer (Exhibit R-11 ) containing a statement of his earnings for the financial year January 1983-January 1984, was directed to a post office box at Nelson, British Columbia and his pay stubs bore the same address in June, 1985, which he stated were forwarded to him at his address in Aberdeen. His “payslips”, which is the name of an Inland Revenue remittance form, indicated nis address at Nelson, British Columbia, Canada (Exhibit R-14) . The appellant was shown his Arrival in the United Kingdom Inland Revenue Income Tax form, (Exhibit R-16) dated February 24, 1986, in which he responded, "No", to the question regarding whether he had any accommodation for his use in the United Kingdom since he arrived and also wrote, "No" in answer to the question: do you intend to stay permanently in the United Kingdom? It was clear at the top of the form that the information was required "to decide your (the appellant's) residence status for United Kingdom tax purposes". However, the appellant pointed out that he answered the question: how long do you intend to stay?, by writing, “indefinitely”. He indicated that he would transfer funds from his bank in Aberdeen to a bank in Nelson, British Columbia as needed. In 1985, he installed a wood stove in his cabin at Trout Lake and obtained a rebate on part of the installation costs under a federal government program regarding conversion to alternate forms of energy. The appellant was shown a T4 1984, which he identified, as pertaining to his employment in Canada with earnings in the sum of $3,436.36. He had been issued certain charge cards such as Visa and MasterCard before leaving Canada and he maintained them but did obtain additional charge cards from the Royal Scotland Bank and Chase Manhattan in the United States. He stated that he transferred his interest in the Nelson property into the sole name of Sharon Ferguson as he was concerned that Revenue Canada was going to treat him as a resident of Canada for income taxation. He agreed that in 1981 he had stored some belongings at his parents' home in Kaslo, British Columbia, prior to them moving to Creston.
In re-examination, the appellant stated that he also belonged to the Seamans' Union in Scotland and the Allied Offshore Workers in the United Kingdom but maintained his membership in the union local in Burnaby, British Columbia, which he could use to obtain a travel card for purposes of working on jobs in the United States.
Joy Harrison testified she has been employed at Revenue Canada since 1970 and in 1989 worked in the Identification and Compliance Section. She began inquiries concerning the appellant and travelled to 2918, 6 Mile Road, at Nelson to interview the appellant but, finding no one there, she left a note for the appellant together with tax returns and her business card. She also visited Mr. McCabe, a chartered accountant, and obtained from him three boxes of records belonging to the appellant, some of which were filed as respondent's exhibits in these appeals. She examined other documents and records and made notes of their contents. She discovered information pertaining to registration and insurance on vehicles in British Columbia, in which the appellant held a joint interest, and a membership in the British Columbia Automobile Association. She also found information relating to the appellant’s membership in the British Columbia Medical Services Plan and a cheque issued on a Nelson bank account for payment of premiums. She also found documents relating to transfer of funds from the Isle of Man Bank to the CIBC in Nelson, a total of six transfers in 1983, totalling nearly $16,000 in U.S. funds. In 1984, she examined records indicating the appellant had transferred over $14,300 in U.S. funds to his Nelson bank account. She made notes of transactions on the joint chequing account the appellant had with Ms. Ferguson at the CIBC in Nelson. Cheques had been written in 1985 to purchase a small tractor and to pay insurance and certain loan payments to the Credit Union in Nelson and to West Coast Securities in Vancouver. She found other cheques payable to the Bank of Montreal. While the majority of cheques were written by Sharon Ferguson, the activity in the account, including deposits and withdrawals, was between $5,000 and $20,000 per month. She also found various credit cards slips for travel in the Nelson area and in Idaho, Washington and Montana. For the 1983 year, she found airline ticket information indicating the appellant had taken 17 flights, none of which departed from Canada but showing five flights leaving from Seattle and two from Spokane.
In cross-examination, Ms. Harrison agreed that she had decided the appellant was a resident in Canada prior to attending at the office of the appellant's accountant and that she prepared tax returns for the appellant covering the years under appeal on that basis.
Counsel for the appellant submitted that many of the indicia tending to point to residence in Canada were merely cosmetic in nature and not of great significance. In counsel’s submission, it was apparent the appellant would have to remain out of Canada for an extended period of time in order to find employment in his rather narrow specialty and that there was a substantial connection with Aberdeen, Scotland throughout the years under appeal.
Counsel for the respondent submitted that the issue is not whether the appellant had to leave Canada in order to find work and it is not alleged that he was sojourning in Canada. Rather, on all of the evidence, he was a resident of Canada for the years under appeal, having regard to all of the facts adduced in evidence.
In Lee V. M.N.R., [1990] 1 C.T.C. 2082, 90 D.T.C. 1014 (T.C.C.), the Honourable Judge Teskey, Tax Court of Canada, considered the issue of residence of the taxpayer who had been employed full time by a non-resident corporation performing work outside of Canada. In the course of his judgment, Judge Teskey referred to the leading authority on the issue of residence and went on to set forth a number of factors that are to be considered when deciding the question of residency, which is one of fact. At pages 2084-86 (D.T.C. 1016-17), Judge Teskey stated:
The relevant provisions of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") are:
2(1) An income tax shall be paid as hereinafter required upon the taxable income for each taxation year of every person resident in Canada at any time in the year.
3. The income of a taxpayer for a taxation year for the purposes of this Part is his income for the year determined by the following rules:
(a) determine the aggregate of amounts each of which is the taxpayer’s income for the year (other than a taxable capital gain from the disposition of a property) from a source inside or outside Canada, including, without restricting the generality of the foregoing, his income for the year from each office, employment, business and property.
250(1) For the purposes of this Act, a person shall, subject to subsection (2) , be deemed to have been resident in Canada throughout a taxation year if
(a) he sojourned in Canada in the year for a period of, or periods the aggregate of which is, 183 days or more.
250(3) In this Act, a reference to a person resident in Canada includes a person who was at the relevant time ordinarily resident in Canada.
JUDICIAL AUTHORITIES
The leading authority on the question of residence is Thomson v. M.N.R., [1946] S.C.R. 209, [1946] C.T.C. 51, 2 D.T.C. 812, a decision of the Supreme Court of Canada.
Estey J. said on page 70 of C.T.C. (D.T.C. 813):
. . . one is “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. The difference cannot be stated in precise and definite terms, out 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.
On the same page he says:
. . . a person may have more than one residence.
Mr. Justice Rand at pages 63-64 (D.T.C. 815-16):
The graduation 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.
For the purpose 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 circumstances, 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 certralizes 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".
Reed v. M.N.R., [1989] 1 C.T.C. 2070, 89 D.T.C. 34 (T.C.C.), a decision of my brother Judge Bonner establishes the principle that residence must be on shore and cannot be on the high seas.
The question of residency is one of fact and depends on the specific facts of each case. The following is a list of some of the indicia relevant in determining whether an individual is resident in Canada for Canadian income tax purposes. It should be noted that no one or any group of two or three items will in themselves establish that the individual is resident in Canada. However, a number of factors considered together could establish that the individual is a resident of Canada for Canadian income tax purposes:
— past and present habits of life;
— regularity and length of visits in the jurisdiction asserting residence;
— ties within the jurisdiction;
— ties elsewhere;
-— permanence or otherwise of purposes of stay;
— ownership of a dwelling in Canada or rental of a dwelling on a long-term basis
(for example, a lease for one or more years) ;
— residence of spouse, children and other dependent family members in a dwelling
maintained by the individual in Canada;
— memberships with Canadian churches or synagogues, recreational and social
clubs, unions and professional organizations;
— registration and maintenance of automobiles, boats and airplanes in Canada;
— holding credit cards issued by Canadian financial institutions and other commercial
entities including stores, car rental agencies, etc.;
— local newspaper subscriptions sent to a Canadian address;
—— rental of Canadian safe deposit box or post office box;
-— subscriptions for life or general insurance including health insurance through a
Canadian insurance company;
— mailing address in Canada;
— telephone listing in Canada;
— stationery including business cards showing a Canadian address;
— magazine and other periodical subscriptions sent to a Canadian address;
-— Canadian bank accounts other than a non-resident bank account;
—— active securities accounts with Canadian brokers;
— Canadian driver's licence;
— membership in a Canadian pension plan;
— holding directorship of Canadian corporations;
-— membership in Canadian partnerships;
— frequent visits to Canada for social or business purposes;
— burial plot in Canada;
— will prepared in Canada;
— legal documentation indicating Canadian residence;
— filing a Canadian income tax return as a Canadian resident;
— ownership of a Canadian vacation property;
-—- active involvement in business activities in Canada;
— employment in Canada;
— maintenance or storage in Canada of personal belongings including clothing, furniture, family pets, etc.;
— obtaining landed immigrant status or appropriate work permits in Canada;
— severing substantially all ties with former country of residence.
The appellant claims that he did not want to be a resident of Canada during the years in question. Intention, or free choice is an essential element in domicile, but is entirely absent in residence.
In the present appeal, the statutory provisions of the Income Tax Act remain unchanged from those applicable in the Lee decision, supra.
The appellant, because of his specialty as a deep sea diver and hyperbaric welder specializing in underwater pipeline construction, possessed a special skill that required him to seek employment outside of Canada. Throughout the period of his employment offshore, he returned regularly (on average seven times a year) to Nelson, British Columbia, and spent between 75-100 days per year in Canada, mostly in the Nelson area. He owned various properties in British Columbia during the years under appeal and purchased a residence in joint title with Ms. Ferguson and the mortgage payments were made from a joint bank account in Nelson, which received regular infusions of funds from his employment income by means of transfers from Scotland or other bank accounts in Europe. After transferring the property into the sole name of Sharon Ferguson in December, 1986, admittedly for the purpose of forestalling a determination by Revenue Canada that he was a resident of Canada, he continued to be the guarantor on the mortgage. He owned two vehicles jointly with Ms. Ferguson and the insurance and registration reflected that ownership. He maintained a British Columbia driver's license together with medical coverage under the British Columbia Medical Services Plan, although he also had medical coverage at the same time through the National Health Service in the United Kingdom. He maintained credit cards issued by Canadian financial institutions. He obtained his mail at an address in Nelson, British Columbia, and this address was maintained for purposes of correspondence with his employer and on the remittance forms sent to Inland Revenue in the United Kingdom. He maintained a brokerage account with West Coast Securities and, although he stated during his testimony that the account was probably dormant throughout the years under appeal, in 1985, a cheque to that firm, in the sum of $850 was written on the CIBC account in Nelson. He also had other bank accounts in Nelson and loans to the Bank of Montreal. During 1984, he was able to find work in the Canadian Arctic for a brief period. When injured during the course of his employment, he returned to Nelson and sought medical treatment and recuperated in the presence of his parents, relatives and Ms. Ferguson. The appellant took the position with the United Kingdom taxation authorities that he was not a resident there. While that posturing does not operate by way of estoppel so as to preclude the appellant from establishing an alternate version of events relevant to this appeal, it cannot be ignored. It is indicative of the appellant's ties to Canada in that he did not wish to be regarded by the United Kingdom as a resident there. When finally called upon to pay tax to Inland Revenue, he did so on the basis of being a non-resident. The appellant maintained a relationship with Sharon Ferguson, which despite some ebbs and flows, had sufficient constancy to culminate in their present common-law union, from which a child was born. Not much is to be made of any particular factor in isolation and the appellant’s explanations for maintaining a British Columbia driver's license and membership in the union local in Burnaby are valid. I suppose an energy conversion grant may have been available to a non-resident who owned property in Canada and a non-resident would have had to take out the same prospector's license as would a resident. However, looking at all of the evidence, it is clear that the appellant did not wish to sever substantially all ties with Canada. In many respects, he tried to have it both ways — to be a Canadian resident for purposes of negotiations with Inland Revenue and a non-resident when dealing with Revenue Canada. Although he maintained a suite in Aberdeen throughout the years under appeal, including the period of nearly a year spent in Spain, it was for the purposes of his employment and to facilitate ready access to the diving equipment and personal belongings required for an extended stay in a foreign country. The time spent in Canada was not in the nature of a visit by an expatriate. The appellant was coming home to see his girlfriend, his parents, brothers and sister, and to undertake improvements to his real property or to buy and sell other property and otherwise to participate in many routine aspects of life done each day by one who is ordinarily resident in a country. He ensured that sufficient funds were routinely sent to the Nelson bank account so that his friend, Ms. Ferguson could pay the mortgage on the house, jointly owned with him until December 16, 1986. As well, he sent money for the purpose of paying insurance premiums on vehicles jointly owned by them and for a variety of other purposes, including payment on loans relating to the purchases of real property or equipment to be used in connection with said ownership. The cabin on the recreational property at Trout Lake was improved during the years under appeal and represented a continuing desire to hold property in that location, near the community of Nelson.
Having regard to all of the evidence, the appellant has not demonstrated that the respondent was in error in assessing the appellant on the basis that he was a person ordinarily resident in Canada. Clearly, based on an analysis of all of the factors evolving from the evidence, he was ordinarily resident throughout the period under appeal.
At the outset of the appeal, counsel for the appellant and the respondent advised that, regardless of whether the appellant was successful on the issue of residence, both of the appeals would be allowed as follows, and to give effect to this agreement, the assessments are referred back to the Minister for reconsideration and reassessment on this basis:
1(a) by reducing the taxable income on which the assessment of taxes is based as follows:
(i) for 1982 by $4,262 to $8,224.50;
(ii) for 1983 by $9,036.20 to $7,299.79;
(iii) for 1984 by $16,187.01 to $49,927.57;
(iv) for 1985 by $29,524.16 to $69,581.43;
(v) for 1986 by $58,275.82 to $22,779.61;
(b) by providing credit for United Kingdom taxes paid asfollows:
(i) for 1982 — $2,171.70;
(ii) for 1983 — $1,874.12;
(iii) for 1984 —$2,395.47;
(iv) for 1985 —— $10,734.95; and
(v) for 1986 — $6,837.41
(c) by providing credit for Norwegian taxes paid for 1983 in the sum of $653.05.3
There are no costs awarded to the appellant.
Appeal dismissed.