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Citation: 2005TCC209
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Date: 20050329
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Docket: 2004-272(IT)I,
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BETWEEN:
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BARRY DUFF,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
For the Appellant: The Appellant himself
Counsel for the Respondent: John-Paul Hargrove
____________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally from the Bench at
Edmonton, Alberta, on June 7,
2004)
Miller J.
[1] This is an informal procedure
appeal in which Mr. Barry Duff seeks to obtain an overseas
employment tax credit (OETC), which was denied by Canada Revenue
Agency (CRA), for the 2000 taxation year. This is an unfortunate
situation where an individual performs support work for the
federal government in Bosnia under representations from an
employer that he would be entitled to a tax break, but does not
as it turns out qualify for such a break.
[2] Mr. Duff accepted a job
opportunity with ATCO Frontec to provide logistical support to
Canadian troops in Bosnia in 2000 and 2001. Mr. Duff had a
military background and was consequently a very suitable
candidate. The federal government, according to Mr. Duff, was
supplying troops to Bosnia under its commitment to NATO. Mr.
Duff's work included ensuring supplies got from the main
Canadian camp to other Canadian camps throughout the country. He
testified that his contract with ATCO Frontec stipulated his
remuneration would be $50,000 a year, tax exempt. When he
received his first pay, it was clear tax was deducted. This was
confirmed when he filed his 2000 tax return. His wife contacted
CRA and was advised that a T1 Adjustment Request could be made;
the Duff's did this, and in September 2001 were granted the
OETC by CRA for the 2000 taxation year.
[3] In 2001, ATCO Frontec advised Mr.
Duff they were working with CRA to obtain a blanket tax credit
which they did not get, for two years later, in September 2003,
Mr. Duff was reassessed denying the OETC for 2000 and charging
almost two thousand dollars of interest. That is the assessment
Mr. Duff is appealing from.
[4] The OETC is found in subsection
122.3(1). I will not read all of it, but I will read parts of
it.
122.3(1) If an individual is resident in Canada in a taxation
year and, throughout any period of more than six consecutive
months ...
(a) was employed
by a person who was a specified employer, ... and
(b)
performed all or substantially all the duties of the
individual's employment outside Canada:
(i) in connection
with a contract under which the specified employer carried on
business outside Canada with respect to;
(A) the exploration for
... petroleum, ...
(B) any construction,
installation, agricultural or
engineering activity, or
(C) any prescribed activity
...
there may be deducted...
And then it goes on to quantify how the credit works.
Prescribed activity is found in Regulation 6000 which says
simply, for the purpose of the clause I just read:
... a prescribed activity is an activity performed under
contract with the United Nations.
[5] There was no evidence that this
work was in connection with a contract with the United Nations.
Also, there was no evidence this work involved construction,
installation, agricultural or engineering activity. There was no
argument as to what installation might entail, and it is not for
me to guess whether any ATCO Frontec work might have fallen under
the generic category of installation. From the description
offered by Mr. Duff, I see no opening for a finding that the work
could fall under the category of installation. I limit those
comments to this particular case however.
[6] Mr. Duff's circumstances
simply do not qualify him for the OETC. One might imagine that
work under the auspices of NATO could be considered similar to
work under the auspices of the United Nations, yet it is not my
role, to make a legislative change. I cannot read into a very
clear regulation that refers only to the UN, some implication
that that must also mean NATO. It does not and I cannot bend the
law. I cannot write legislation. I simply have to do my best to
interpret it. You just do not qualify for the credit under the
current language of the Act.
[7] There are two disturbing concerns
in this matter: first, Mr. Duff appears to have been misled by
his employer. He did not receive his $50,000 tax free, but that
is not an issue for this Court and it is not an issue for CRA; it
is an issue between Mr. Duff and ATCO Frontec. Mr. Duff, you will
have to consider where you want to go with that.
[8] The second concern is that CRA
allowed this credit for two years, then reassessed and denied it,
which, as I have found, I believe is a correct interpretation of
the law based on the facts that I have heard. They then charge
Mr. Duff interest on the denied credit. This Court deals with
your tax liability; whether you do or you do not owe tax.
Interest simply follows automatically and I do not have authority
to change that. Mr. Hargrove has pointed out subsection 220(3.1),
which is a provision that gives the Minister the discretion to
waive interest. I cannot tell the Minister to do that. But
nothing prevents me from expressing an opinion that I cannot
imagine a more appropriate situation where waiving interest would
be the right thing to do.
[9] Canada is known for committing to
assist countries such as Bosnia, ravaged by tragedy of war. Men
such as Mr. Duff are essential to Canada being capable of
fulfilling their obligations. To be treated both by an employer
and then by the Government for whom he is providing this valuable
service in such a fashion is to Mr. Duff, I am sure, an outrage.
I can only begin to imagine how he must feel, having done
absolutely nothing wrong in this situation.
[10] Mr. Duff, I know you approach any more
dealings with CRA with some apprehension, but I do encourage you
to submit your request for the waiver of interest. ATCO Frontec
made a commitment they presumably believed they could keep, but
they could not. CRA allowed a credit but after two years, during
which I can only presume that ATCO Frontec and CRA were trying to
sort this out, CRA determined the credit was not available. Mr.
Duff was the unfortunate pawn in this game.
[11] I wish you well in obtaining the
waiver, but with regret, I must dismiss your appeal.
Signed at Ottawa, Canada, this 29th day of March, 2005.
Miller J.
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