Citation: 2011 TCC 260
Date: 20110511
Docket: 2009-2230(IT)I
BETWEEN:
CAROL-ANNE FAINT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Margeson J.
[1]
In the 2007 taxation
year, the Appellant claimed a tuition fee tax credit of $14,023.26, an
education amount tax credit of $3,960 and a post-secondary textbook tax credit
of $645. These were disallowed by the Minister of National Revenue (the
“Minister”). From this decision, the taxpayer filed this appeal.
Evidence
[2]
The Appellant while
giving testimony confirmed all of the facts presumed by the Minister as set out
in the Reply to the Notice of Appeal with the exception of paragraph 8(f). She
took the position that the University of Phoenix
(“Phoenix”) and Northcentral University
(“Northcentral”) were “designated educational institutions” as defined in
subsection 118.6(1) of the Income Tax Act (the “Act”).
[3]
During the 2007
taxation year, the Appellant enrolled in courses through the on-line arms of
these two universities located in the United States of America (“U.S.”). Northcentral does not have a campus in Canada. Phoenix did have a campus in Vancouver, British Columbia, in 2007 but it did not offer the courses
that the Appellant wished to take.
[4]
The Appellant confirmed
that all of the courses that she took were less than thirteen weeks in
duration. She said that no universities in Canada
have courses that are thirteen weeks in duration. Further, the degrees that she
was pursuing were not available in Canada. She could not
go to university for two to three years at a time.
[5]
In cross-examination,
she said that she resided in Canada and that all of the courses that she took
were “on-line” courses. If she needed on-line support, it was obtained through
the U.S. campuses. She graduated from the Phoenix campus.
Argument on behalf of the Respondent
[6]
Counsel for the
Respondent argued that there is only one issue in this case and that is whether
the Appellant is entitled to claim the tuition credit, the education amount credit
and the textbook amount credit. Her conclusion was that she was not entitled to
claim any of these amounts.
[7]
The first consideration
is whether or not Phoenix is an educational institution in Canada by
virtue of having had a campus in Canada during the year in issue. One must
consider the provisions of paragraph 118.5(1)(a) of the Act in
that regard.
[8]
Phoenix is not an educational institution in
Canada under this provision and therefore would be subject to the criteria set
out in paragraph 118.5(1)(b) and be classified as a university
outside Canada.
[9]
If Phoenix is an educational institution in Canada, it is not a designated educational institution for
the purposes of subsection 118.6(2) and (2.1) of the Act and therefore
the Appellant is not eligible for the education or textbook credits.
[10]
Counsel referred to the
case of Cammidge v. Her Majesty the Queen, 2011 TCC 172, [2011]
T.C.J. No. 132 (QL), where the Court found that the University of Phoenix was
an educational institution in Canada on the basis that the university had
campuses in Canada that were subject to Canadian law and that the courses taken
by the Appellant were attended in Canada and were obtained through an
institution which had locations in “Canada” at the relevant time.
[11]
Counsel opined that
this did not amount to a sufficient connection to the Canadian campuses of the
University of Phoenix, to be able to say that the Appellant was
enrolled at an educational institution in Canada.
[12]
In the case at bar, the
Appellant had no connection whatsoever to the Canadian campus of the University of Phoenix. The courses which she took were not
offered at the Canadian campus. She enrolled through the Phoenix campus. She paid her fees in U.S. dollars to the
Phoenix campus. Her exams were marked by
professors in the United
States and she graduated from
the campus of the University of Phoenix.
[13]
Counsel also referred
to and relied upon the decision of Mogan J. in Gilbert v. Canada,
[1999] 2 C.T.C. 2127, where he indicated that the legislation is more confining
in paragraph 118.5(1)(b) than it is in paragraph 118.5(1)(a) of
the Act and he speculated that the reason for this difference was “to
give some measure of control as to the kinds of tuition paid to institutions
outside Canada which will give the payer or parent a tax credit.”
[14]
Counsel argued that the
University of Phoenix was not a designated educational institution for the
purposes of subsections 118.6(2) and 118.6(2.1) and therefore the Appellant is
not eligible for the education or textbook tax credits that she seeks. The University of Phoenix is not designated by the provinces under
either the Canada Student Loans Act or the Canada Student Financial
Assistance Act, and is therefore not a designated educational institution
for that section.
[15]
In order to receive the
tuition credit for attendance at a university outside of Canada, the individual must be in full-time studies at a
university in a course of no less than thirteen weeks in duration.
[16]
Subsections 118.6(2)
and 118.6(2.1) require that where the university is outside Canada, the course must be for no less than thirteen
consecutive weeks. Counsel relied upon the decision in Ferre v. Canada,
2010 TCC 593, 2011 DTC 1405, to support her position that the courses
themselves must be at least thirteen weeks in duration and not the whole
program. Likewise, she quoted with approval the decision of Bowie J. in Fayle
v. Canada, 2005 TCC 71, [2005] 1 C.T.C. 2840, to support her
position.
[17]
The appeal should be
dismissed.
Argument on behalf of the Appellant
[18]
The Appellant said that
the reason that she took the courses in the U.S.
was that they were not offered in Canada. She relied
upon Robinson v. Canada, 2006 TCC 664, 2007 DTC 348, in support of her
position that she should be entitled to the tuition credit even where her
courses were less than thirteen weeks in duration.
[19]
She said that she
attended at the Chan Centre in Canada at the University of British Columbia for her graduation from the University of Phoenix, which also has a campus in Canada. She was “part of that family of graduates from Canada, so we are strongly linked to Canada.”
[20]
She also argued that it
was a designated educational institution. It was a continuous program that she
was in. There was no break in her education, “it was a constant flow of class.”
She signed up for the degree program and not just one course.
[21]
The appeal should be
allowed.
Analysis and Decision
[22]
The Court is satisfied
that counsel for the Respondent has properly characterized the issues in this
case and they are also properly referred to in the Reply to the Notice of
Appeal.
[23]
At the heart of the
issue is whether or not either of the two universities here in question were
universities inside Canada or outside Canada. There is no
real dispute as to the facts relevant to this question. It is set out in the
Reply that Northcentral is located in the United States and does not have a campus in Canada. This was not rebutted by any evidence before the
Court. There was no evidence connecting this university to Canada in any way. The Court is satisfied that Northcentral
was a university outside Canada.
[24]
During the year in
question, with respect to this university, the Appellant did not attend an
educational institution as described in subsection 118.5(1) of the Act
and is not entitled to the tuition credit under subsection 118.5(1) of the Act.
[25]
With respect to Phoenix,
the only connection to Canada was the evidence that this university had
a campus in Canada during the year in question. However, the
Appellant did not take any courses at that campus, did not have any exams set
or marked by that campus, did not pay fees to that campus, did not attend any
classes at that campus, did not receive any instructions from that campus or
receive any technical support from that campus.
[26]
Under these
circumstances, the Court cannot conclude that there were any connecting factors
established to allow it to conclude that Phoenix was an institution in Canada under paragraph 118.5(1)(a) of the Act.
[27]
The factors referred to
by the Appellant in her argument do not disclose any sufficient connection to
the Vancouver campus which would convince the Court to
decide otherwise.
[28]
The Appellant took the
position that the decision in Robinson above was on all fours with the
case at bar and is determinative of the issue here. This Court believes
otherwise.
[29]
This brings the Court
to a consideration of paragraph 118.5(1)(b) and subsections 118.6(1),
118.6(2) and 118.6(2.1) of the Act.
[30]
Paragraph 118.5(1)(b)
requires that the student be enrolled at a university outside of Canada in a course not less than thirteen weeks in duration.
[31]
Subsection 118.6(1)
defines a designated educational institution for the purposes of the deduction
under subsections 118.6(2) and 118.6(2.1). These provisions require the
individual to be enrolled in a course of not less than thirteen weeks in duration.
[32]
The Appellant argues
that this requirement is related to the length of her whole program and not
just the courses within a whole program. Unfortunately for the Appellant, this
is not the state of the law at this time.
[33]
This matter was dealt
with by Paris J. in Ferre above where he determined that the intent of
Parliament was “to refer to the individual courses within a program of studies,
rather than to the entire program itself, . . .”.
[34]
Likewise, Bowie J. in Ali v. Canada, 2004 TCC 726, [2005] 1 C.T.C.
2230, came to the same conclusion even though he agreed that the Appellant in
that case, like other students may be placed at a disadvantage that may not
have been intended.
[35]
In light of the
decision above that Phoenix is not an educational institution in Canada, it is
not necessary for the Court to consider the provisions of subsection 118.6(1)
of the Act, but it does so and concludes that Phoenix is not a
designated educational institution for the purposes of subsections 118.6(2) and
118.6(2.1) of the Act and therefore the Appellant is not eligible for
the education or textbook credits.
[36]
In the end result, the
Court finds that the Appellant is not entitled to any of the amounts claimed.
[37]
The appeal is dismissed
and the Minister’s assessment is confirmed.
[38]
The Court appreciates
the difficulties that the Appellant faced in trying to further her university
education and why she believes that the system is unfair to students like her.
However, as Bowie J. opined in Ali above, “That,
however, is a matter for the executive, not the Court, to decide.”
Signed
at Ottawa, Canada, this 11th day of May 2011.
“T.E. Margeson”
Email this Content