Citation: 2007TCC382
Date: 20070626
Docket: 2006-1608(IT)I
BETWEEN:
SYED JALALUDDIN AHMAD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb J.
[1]
The
Appellant was unemployed in 2001. He attended the Canadian Transportation Specialist School (“CTS”) to learn
to be a truck driver and to obtain his Class AZ license to permit him to drive
large transport trucks. The tuition cost to attend the school was $4,200. The
Appellant paid $200 of this amount and Human Resources Development Canada paid
the balance of the $4,000.
[2]
The
Appellant initially claimed the $4,200 referred to above as an employment
expense but the issue before this Court was whether the Appellant was entitled
to claim a tax credit pursuant to subsection 118.5 of the Income Tax Act
(“Act”) in 2001 based on tuition fees of $4,200.
[3]
In
the Reply filed by the Respondent, paragraph 1 provides as follows:
1.
He admits to the
following allegation of facts contained in the Notice of appeal:
a)
the Minister of
National Revenue (the “Minister”) denied the tuition fee credit;
b)
the Appellant paid
the tuition fee to the CTS Truck
Driving School (the “CTS”)
c)
the Minister of Human
Resources Development Canada (the “HRDC”) did not certify CTS as an educational
institution;
d)
CTS was a provincial
registered school; and
e)
HRDC approved the
funding of the Appellant to go to CTS.
[4]
The
Appellant did not, in the Notice of Appeal, allege that “the Minister of Human
Resources Development Canada (the “HRDC”) did not certify CTS as an educational
institution”.
[5]
Paragraph
8 of the Reply provides as follows:
8. In so reassessing and
confirming the tax liability of the Appellant for the 2001 taxation year, the
Minister made the following assumptions of fact:
Tuition fees:
a)
at all material
times, the Appellant attended the CTS from March 24, 2001 to April 24,
2001;
b)
during the 2001
taxation year, the Appellant paid CTS an amount of $4,200 in tuition fees;
c)
the amount referred
to in subparagraph 8 b), herein, was initially claimed as an employment expense
by the Appellant;
d)
during the 2001
taxation year, the Appellant received $4,000 reimbursement through a
job-training program from HRDC; and
e)
CTS was not certified
by HRDC to be an educational institution providing courses that furnish a
person with skills for an occupation;
Employment expenses
f) the
Appellant did not provide the Minister with receipts for the rest of the
claimed employment expenses in the amount of $450.
[6]
The
$450 claimed as employment expenses was not raised as an issue by the Appellant
in his Notice of Appeal. As noted above, the only issue in this appeal is
whether the Appellant was entitled to claim, in 2001, a tax credit pursuant to
subsection 118.5 of the Act based on tuition fees of $4,200.
[7]
From
the assumptions of fact made by the Respondent in the Reply and as stated in
paragraph 11 of the Reply, it is clear that the Respondent denied the claim for
a tuition fee credit on the basis that the educational institution did not
satisfy the requirements of subparagraph 118.5(1)(a)(ii) of the Act.
Paragraphs 10 and 11 of the Reply provide as follows:
10.
He relies on sections
118 and 118.5 of the Act.
11.
He submits that the
Appellant is not entitled to an amount of $4,200 for tuition and education
amounts in computing his non-refundable tax credits and tax payable for the
2001 taxation year pursuant to subparagraph 118.5(1)(a)(ii) of the Act,
as CTS was not certified by HRDC to be an educational institution providing
courses that furnish a person with skills for an occupation:
[8]
Therefore
the only issue raised by the Respondent in the Reply in relation to sections
118 and 118.5 of the Act is whether CTS was “certified by the Minister
of Human Resources Development to be an educational institution providing
courses ... that furnish a person with skills for, or improve a person's skills
in, an occupation”. The Respondent did not lead any evidence in relation to
this issue and assumed that the Appellant had the onus of proving this.
[9]
In
the recent decision of the Federal Court of Appeal in Anchor Pointe Energy
Ltd. 2007 FCA 188 Létourneau J.A. stated
that:
[35] It is trite law that,
barring exceptions, the initial onus of proof with respect to assumptions of
fact made by the Minister in assessing a taxpayer’s liability and quantum rests
with the taxpayer. ...
[36] I agree with Bowman
A.C.J.T.C., as he then was, that there may be instances where the pleaded
assumptions of facts are exclusively or peculiarly within the Minister’s
knowledge and that the rule as to the onus of proof may work so unfairly as to
require a corrective measure: see Holm et al. v. The Queen, supra, at
paragraph 20.
[10]
In
this case, certainly the Respondent would be in a better position to prove whether
or not the CTS was certified by the Minister of Human Resources Development
than would the Appellant. This was acknowledged by Bowie J. in Edwards, [1998]
4 C.T.C. 2906, where he stated as follows:
5 The only
fact here in issue is whether the School was, at the relevant time, certified
by the appropriate Minister. That, of course, is not in any way a matter as to
which knowledge of the true facts lies with the taxpayer. To the contrary, it
is a matter as to which the knowledge lies entirely with the Crown, and, as
appeared from the evidence, that knowledge is not readily available to
taxpayers from any primary source that they may themselves consult. Access to
it is apparently available, as a practical matter, only by making an oral
request to a Revenue Canada office, in person or by telephone, and then
accepting the response given as being accurate.
6 Counsel
for the Respondent called Mr. Chiarotto, a Revenue Canada Appeals Officer, to
give evidence as to the matter of certification. Mr. Chiarotto produced a
photocopy of a printout which he had obtained from the computer system in the Toronto office of Revenue Canada. His evidence was that he made an inquiry of the computer system as to
whether or not the School was certified by the Minister of HRD and the printout
indicates that it was not, by the fact that the name of the School is not
included. The printout does show a number of other institutions with similar
names which, according to the witness, are certified. There are a number of
problems with this evidence, quite apart from the usual difficulties involved
in establishing the accuracy of computer records, which this witness did not
address at all.
7 First, it
is not established that the computer was ever furnished with an accurate and
complete list of certified institutions. Mr. Chiarotto was frank to acknowledge
that although he uses the computer, and the data which it contains, from time
to time to ascertain if institutions are certified, he simply takes it as a
matter of faith that the data bank is accurate. He has no idea who put the data
in, or when. He did not address the question of maintenance of the list, which
certainly changes from time to time. He did give some hearsay evidence about
having verified the information which he had obtained through the printout by
telephoning a Ms. Thibodeau at the Department of Human Resources Development
(DHRD) in preparation for giving his evidence. He knew nothing at all about who
she is, or what she does in DHRD. He explained that he could not offer the
complete list in evidence, because in order to do so it would have been
necessary to fax the list, some hundreds of pages, from Ottawa. The only copy of the list in the Revenue Canada
offices in Toronto, he said, is out of date. A taxpayer
outside the National Capital Region wishing to check whether the institution is
certified or not before enrolling for a course could inquire by telephone of
Revenue Canada, and would be given the results of a
computer search of the same kind that he made for the purpose of testifying.
Such a person would not, however, be able to see an accurate list of the certified
institutions at the Revenue Canada office.
8 This
evidence falls far short of satisfying me on a balance of probabilities that
the School was not, during 1995, certified by the Minister of E & I. Mr.
Chiarroto was imprecise about the form of the question which he input to the
computer. My impression from his testimony is that he inquired and the computer
responded as to certification at the time of making the inquiry, which I gather
was this week. He made reference in his evidence to certification by the
Minister of HRD, an office which came into existence in 1996. I do not believe
that he purported to address the situation in 1995, which of course is the
relevant time. The Crown's Reply refers to certification by the Minister of E
& I, not the Minister of HRD. Apart from all the other frailties of his
evidence, it is entirely possible that the School was certified by the Minister
of E & I at the time Mr. Edwards attended it in 1995, and has since been
decertified for some reason.
9 I should
add that no attempt was made by counsel for the Crown to invoke the provisions
of the Canada Evidence Act in this case, and that my comments with respect to
the evidence should be read in that light.
10 The Crown
has failed to discharge the onus of establishing that the School was not,
during 1995, certified by the Minister of E & I for the purposes of
subparagraph 118.5(1)(a)(ii). The appeal is therefore allowed, and the
reassessment is referred back to the Minister of National Revenue for reconsideration
and reassessment on the basis that the Appellant is entitled to the tuition
credit claimed.
[11]
There
was no evidence before the Court with respect to the availability of the list
of certified schools in 2001 and therefore, based on the decision of
Bowie J. in Edwards, I find that the Respondent had the onus of
proving that the School was not certified and since the Respondent did not adduce
any evidence in relation to this matter, the Respondent has failed to satisfy
this onus of proof.
[12]
The
Appellant submitted, as an Exhibit, a copy of the “Skills Development
Employment Benefit” agreement entered into between Canada Employment Insurance
Commission and the Appellant as of March 24, 2001. This was the
agreement pursuant to which HRDC paid $4,000 towards the tuition costs for the
school. In the upper left hand corner of the first page of the agreement and in
the schedules there is a reference to Human Resources Development Canada
which certainly suggests that this agreement has been approved by Human
Resources Development Canada.
[13]
In
the recitals to this agreement it is stated that:
Whereas the COMMISSION, pursuant
to section 59 of the Employment Insurance Act, has established an employment
benefit (i.e. program) known as the “Skills Development Employment Benefit”
under which financial assistance may be provided to help persons who qualify as
“insured participants” within the meaning of the Act obtain skills for
employment;
Whereas the PARTICIPANT is an
insured participant and has requested assistance from the COMMISSION to
attend a course of training that will help the PARTICIPANT obtain skills
for employment;
(emphasis added)
[14]
In
2001 subsection 118.5(1)(a)(ii) of the Act provided, in part, as
follows:
118.5 (1) For the purpose of computing
the tax payable under this Part by an individual for a taxation year, there may
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
(ii) certified by the Minister of Human
Resources Development to be an educational institution providing courses, other
than courses designed for university credit, that furnish a person with skills
for, or improve a person's skills in, an occupation,
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
educational institution if the total of those fees exceeds $100, except to the
extent that those fees
...
[15]
In
Black’s Law Dictionary, 7th ed., the word “certify” is defined as
follows:
To authenticate or verify in writing.
[16]
By
signing the agreement dated March 24, 2001, the Commission was clearly
verifying in writing that the course of training that the Appellant would
receive at CTS (which is the school listed in Schedule A to this agreement)
would allow the Appellant to obtain skills for employment and hence an
occupation. Since this agreement was executed on paper that clearly identified
Human Resources Development Canada, I find that if the onus of proof were on
the Appellant to establish that CTS was certified by the Minister of
Human Resources Development as required by subparagraph 118.5(1)(a)(ii),
he has satisfied this onus on the balance of probabilities. The Appellant
should be able to assume that if the agreement has been approved by the
Department of Human Resources Canada, it has been approved by persons acting on
behalf of the Minister of that Department and therefore approved by the
Minister of that Department.
[17]
Counsel
for the Respondent, after all of the evidence had been adduced, informed the
Court that an additional issue was being raised. Counsel for the Respondent
indicated that he had talked to the Appellant before the hearing about the
additional issue and the Appellant had agreed that he could raise it. However, as
noted by the Federal Court of Appeal in Burton 2006 FCA 67, it is not
appropriate for counsel for the Respondent to spring new issues upon a self‑represented
Appellant in a case governed by the Informal Procedure at the eleventh hour.
[18]
The
additional issue that Counsel for the Respondent wanted to raise was that the
claim for the tuition credit should be denied as a result of the application of
subparagraph 118.5(1)(a)(iii.1) which provides that a tuition credit
cannot be claimed for tuition fees if those fees:
(iii.1) are fees in respect of which the
individual is or was entitled to receive a reimbursement or any form of
assistance under a program of Her Majesty in right of Canada or a province
designed to facilitate the entry or re-entry of workers into the labour force, where
the amount of the reimbursement or assistance is not included in computing the
individual's income,
(emphasis added)
[19]
This
paragraph would only apply if the amount of the assistance received by the
Appellant was not included in computing the Appellant’s income. There was no
evidence with respect to whether the amount of $4,000 paid under the agreement
referred to above was included in the Appellant’s income. Counsel for the
Respondent candidly stated this in his argument as if the Appellant had the
onus of proving that the amount had been included in his income.
[20]
In Pollock
v. The Queen, [1994] 1 C.T.C. 3, 94 DTC 6050, Hugessen J.A., on
behalf of the Federal Court of Appeal, made the following comments:
Where, however, the Minister has pleaded
no assumptions, or where some or all of the pleaded assumptions have been
successfully rebutted, it remains open to the Minister, as defendant, to
establish the correctness of his assessment if he can. In undertaking this
task, the Minister bears the ordinary burden of any party to a lawsuit, namely
to prove the facts which support his position unless those facts have already
been put in evidence by his opponent. This is settled law.
[21]
In Loewen
2004 FCA 146, Sharlow J.A., on behalf of the Federal Court of Appeal, made the
following comments:
11 The
constraints on the Minister that apply to the pleading of assumptions do not
preclude the Crown from asserting, elsewhere in the reply, factual allegations
and legal arguments that are not consistent with the basis of the assessment. If
the Crown alleges a fact that is not among the facts assumed by the Minister,
the onus of proof lies with the Crown. This is well explained in
Schultz v. R. (1995), [1996] 1 F.C. 423, [1996] 2 C.T.C. 127, 95 D.T.C.
5657 (Fed. C.A.) (leave to appeal refused, [1996]
S.C.C.A. No. 4 (S.C.C.)).
(emphasis added)
[22]
Leave
to appeal the decision of the Federal Court of Appeal in Loewen to the
Supreme Court of Canada was refused (338 N.R. 195 (note)).
[23]
Since
the Respondent did not make any assumption of fact in relation to the inclusion
of the amount referred to in subparagraph 118.5(1)(a)(iii.1) in the
income of the Appellant, if the Respondent could have raised this issue, the
onus of proving that such amount was not included in the income of the
Appellant would have rested with the Respondent and since there was no evidence
with respect to whether this amount had been included in the income of the
Appellant, the Respondent would have failed to satisfy this onus of proof.
[24]
As a
result the Appellant's appeal is allowed.
Signed at Halifax, Nova Scotia, this 26th day of June 2007.
“Wyman W. Webb”
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