Citation: 2007TCC741
Date: 20071213
Docket: 2007-2600(IT)I
BETWEEN:
KARYN MARIE WISE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Little J.
A. Facts
[1] The Appellant is
the mother of Vanessa Marie Panton (“Vanessa”).
[2] Vanessa was an
international student at the New South Wales Technical and Further Education School (“TAFE”) in Sydney, Australia.
[3] TAFE is a school located
in Sydney, Australia that
provides education in a variety of subjects. During the hearing, Vanessa said
that TAFE was somewhat similar to the British Columbia Institute of Technology.
[4] The course that was
taken by Vanessa provided her with a Diploma in Events Management. The Diploma
was awarded to Vanessa in December 2005 (Exhibit A-3).
[5] The Appellant testified that she paid the amount of
$8,922.05 (AUD$) in tuition fees for Vanessa in 2004. The Appellant also said
that she paid a further $3,012.00 (AUD$) in tuition fees for Vanessa in 2005.
[6] When the Appellant
filed her income tax return for the 2005 taxation year, she deducted tuition
fees in the amount of $5,000.00 (Cdn) that she had paid for Vanessa.
[7] On August 21, 2006
the Minister of National Revenue (the “Minister”) issued a Notice of
Reassessment. In the said Reassessment, the Minister denied the tuition credits
transferred from Vanessa to the Appellant.
[8] The Appellant filed
a Notice of Objection to the Reassessment and by Notification dated December
13, 2006 the Minister confirmed the Reassessment.
B. Issue
[9] The issue is
whether the Appellant is allowed to claim tuition fees of $5,000.00 that were transferred
to the Appellant by Vanessa in determining the Appellant’s income for the 2005
taxation year.
C. Analysis and Decision
[10] Subsection 118.5(1)
of the Income Tax Act (the “Act”) reads as follows:
118.5(1) For the purpose of computing
the tax payable under this Part by an individual for a taxation year, there my
be deducted,
(a) where the individual was during the
year a student enrolled at an educational institution in Canada that is
(i)
a university, college
or other educational institution providing courses at a post-secondary school
level, or
(emphasis added)
…
Subsection 118.5(1)
reads as follows:
(b) where the individual was during the year
a student in full-time attendance at a university outside Canada in a
course leading to a degree, an amount equal to the product obtained when the
appropriate percentage for the year is multiplied by the amount of any fees for
the individual’s tuition paid in respect of the year to the university, except
any such fees …
(Note: The exceptions
that are referred to are not relevant to this appeal).
(emphasis added)
(In this situation the Appellant
paid the tuition fee for Vanessa and Vanessa transferred a portion of the fee
to the Appellant. The Minister does not dispute that Vanessa may transfer the
fee (or a portion thereof) to the Appellant.)
[11] It will be noted
that subsection 118.5(1) of the Act provides for certain conditions:
If the person is
attending an educational institution in Canada, that institution may be a
university or a college or another educational institution, i.e. the educational
institution does not have to be a university if it is located in Canada.
However, if a person is
attending an educational institution outside Canada, it is clear from
the legislation that the person must be in full-time attendance at a university
outside Canada in a course leading to
a degree.
Support for this conclusion can
be found in a number of Court decisions. I refer to a decision of Justice Mogan
of the Tax Court in Gilbert v. Canada, [1998] T.C.J. No. 1091.
In Gilbert, Justice Mogan said at paragraph 21:
21. Parliament has created a broader spectrum of
institutions which a person can attend at the post-secondary level within
Canada and still get the tuition credit, but Parliament has restricted the
number of institutions outside Canada for which a tuition credit can be achieved. I have
already given what I regard as the generally accepted definition of a
university being one to grant a degree. I speculate that the distinction is to
place some control on the kind of post-secondary institutions which may exist
in countries outside of Canada where it would be impossible to determine whether
they were truly of an educational nature in that they grant a degree. I think
the legislation is more confining in paragraph (b) 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. For these two reasons, the
interpretation of the word “university” on a stand-alone basis and the
comparison of paragraphs 118.5(1)(a) and (b) lead me to the
conclusion that this appeal must be dismissed.
[12] Following the
hearing, counsel for the Respondent, Mr. Max Matas, provided the Appellant and
the Court with a copy of a recent decision of the Federal Court of Appeal in Klassen
v. Canada, [2007] F.C.J. No. 1442. In that case, Justice Noël said at
paragraph 17:
17. The expression “university
outside Canada” must be read in context, according to
its ordinary sense, harmoniously with the scheme of the ITA, its object and the
intention of Parliament. At the same time, it is important to pay particular
attention to the textual meaning of the words when attempting to construe
detailed provisions of the ITA such as the ones here in issue (A.Y.S.A.
Amateur Youth Soccer Association v. Canada (Revenue Agency), [2007] S.C.J.
No. 42, 2007 SCC 42, at para. 16).
18. The common feature which runs
through the above quoted definitions is that a university is an institution of
higher learning which confers degrees attesting to some definite proficiency. A
bachelor degree is generally recognized as a minimum requirement for the
pursuit of higher studies (usually referred to as “graduate” studies) leading
to masters and doctorate degrees.
19. It is significant that in the
case of educational institutions located in Canada, and in the case of cross-border commuters (i.e., those who commute daily
to an educational institution in the United States), the benefit of the credits
extends not only to those enrolled in a university, but also in a “college or
other educational institution providing courses at a post-secondary school
level, …” (see subparagraphs 118.5(1)(a)(i), 118.5(1)(c)(i) and
paragraph 118.6(i)(c)). It seems clear that Parliament, in extending the
benefit of the credits in those two instances, drew a distinction between a
“university” on the one hand, and the other educational institutions referred
to in that phrase, on the other.
20. I agree with the statement made
by Mogan J. in Gilbert supra, (at para. 21) and adopted by McArthur J.
in Cleveland supra (at para. 16) that Parliament in limiting the
application of paragraphs 118.5(1)(b) and 118.6(1)(b) to a
“university outside Canada” opted for a more restrictive approach with respect
to foreign institutions. This was done in order to allow the Minister to
exercise some measure of control over the type and level of education supported
by the credits. In giving effect to the distinction drawn by Parliament, the
most salient feature which distinguishes a “university” is the type of degree
which a university grants and in particular the baccalaureate degree, which is
the threshold requirement imposed by universities for the pursuit of graduate
studies. I can think of no other reliable or objectively ascertainable criteria
on which the distinction drawn by Parliament could rest.
21. I therefore conclude that the
expression “university outside Canada” refers to an
educational institution which confers degrees usually granted by universities,
that is a doctorate degree, a master degree or at minimum degrees at the
baccalaureate level or its equivalent. The degree granted by MSU-Bottineau in
this case (i.e., the “associate degree”) attests to the successful completion
of a two year undergraduate program. As this is the highest degree which
MSU-Bottineau can confer, it does not qualify as a “university outside Canada”. The fact that MSU-Bottineau calls itself a
university cannot alter this conclusion.
[13] Based on the
evidence before me, I have concluded that TAFE was not a university and that
Vanessa received a diploma and not a degree from TAFE. It follows that Vanessa
was not a student in attendance at a university outside Canada in a course leading to
a degree and therefore she does not come within the words contained in
paragraph 118.5(1)(b) of the Act.
[14] The appeal is
dismissed without costs.
[15] Before closing I
wish to note that it is my responsibility to interpret the words contained in
the Income Tax Act. I do not have the authority to amend the Act.
Signed at Vancouver, British Columbia, this 13th day of December 2007.
“L.M. Little”
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