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Citation: 2003TCC476
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Date: 20030714
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Docket: 2000-2643(IT)G
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BETWEEN:
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PAMELA ALLCHIN,
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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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REASONS FOR JUDGMENT
Little, J.
A. FACTS
[1] The Appellant is a Canadian
citizen.
[2] The Appellant was a Registered
Nurse employed at the Metropolitan General Hospital in Windsor,
Ontario. Because of employment problems at the hospital in
Windsor, the Appellant submitted her resignation on April 28,
1991 and decided to seek employment in the United States.
[3] The Appellant enrolled at a school
in the State of Michigan to obtain further education.
[4] In September 1992 the Appellant
obtained a position with Repak Surgical Enterprises Inc. selling
hospital supplies in various locations throughout the United
States. In January 1996 the Appellant was hired by Johnson &
Johnson.
[5] The Appellant takes the position
that she gave up her residence in Canada in 1992. The Appellant
maintains that she is not required to pay tax under the Canadian
Income Tax Act for the 1993, 1994 and 1995 taxation
years.
[6] The Minister of National Revenue
(the "Minister") determined that the Appellant did not
sever her ties with Canada and therefore she must report her
worldwide income pursuant to the Canadian Income Tax Act
for the 1993, 1994 and 1995 taxation years.
B. ISSUE:
[7] Was the Appellant a resident of
Canada for tax purposes in the 1993, 1994 and 1995 taxation
years?
C. ANALYSIS:
[8] During the argument both counsel
stated that the determination of residence for tax purposes
depends upon an interpretation of the relevant facts. I
agree.
[9] In order to determine if the
Appellant was a resident of Canada in the 1993, 1994 and 1995
taxation years I will outline the Appellant's connections to
Canada and the Appellant's connections to the United
States.
Connections to Canada in the 1993, 1994 and 1995 Taxation
Years
(a) The Appellant was born in
Canada and is a Canadian citizen;
(b) The Appellant is married to Dennis
Allchin, a Canadian citizen who resided in Windsor, Ontario and
carried on business in the Windsor area; (The Appellant testified
that her husband also has business interests in the State of
Michigan.);
(c) In the relevant years the
Appellant continued to provide parental and financial support to
her two children who lived in the family home at
621 Tecumseh Road East, in the City of Windsor. (Note: In
the 1993-1995 period the Appellant's son, Jason, lived in the
family home and her daughter, Jackie, lived in the family home
for part of the time.);
(d) The Appellant retained her
coverage under the Ontario Medical Plan (OHIP). OHIP was
cancelled by the Appellant in November 1996;
(e) The Appellant retained her
Ontario driver's licence until May of 1995;
(f) In the 1993, 1994 and 1995
taxation years the Appellant continued to use the services of her
family doctor in Windsor and the dentist in Windsor;
(g) The Appellant and her husband
Dennis were active members of the Windsor Yacht Club. The Windsor
Yacht Club provides for an "out of town" membership but
the Appellant was listed in the Club's Annual Membership
Roster for 1995, 1996 and 1997 as an active member (Exhibit
R-1);
(h) When the Appellant's husband
purchased a home in the Windsor area in March 1995 he signed an
affidavit in which he stated that his wife was a resident of
Canada. In addition, the home that was purchased in 1995 was
registered in the name of Mr. and Mrs. Allchin (see Exhibit
R-4);
(i) While the Appellant was
working in the United States she sent substantial amounts of
money to her husband in Canada. The funds were deposited in the
husband's Canadian bank account;
(j) The Appellant visited her
husband and children in Canada on a regular and frequent basis
during the years under appeal.
Connection to the United States in 1993, 1994 and
1995
(a) During the years under
appeal the Appellant worked in the United States;
(b) The Appellant's job required
that she travel on a regular basis to different parts of the
United States;
(c) The Appellant testified that she
maintained a "residence" in the United States at all
relevant times. However, for a part of the time the
"residence" in the United States was a room in a
cousin's home with no lease and no evidence of any rent being
paid by the Appellant for the room. For part of the time the
Appellant lived in a back room of a friend's condominium at
St. Claire Shores, Michigan. The Appellant said that she did not
pay rent to her friends (the Wilsons) for the use of the room but
she claims that she purchased some of the groceries when she was
staying at the Wilson's condominium unit;
(d) The Appellant said that she lived
on her boat for part of the time. In connection with her
allegation that she lived on her boat I note that Tab 3 of
Exhibit A-1 contains a copy of a lease dated January 20,
1996 between the Appellant and the Shore Club Marina. In this
lease the Appellant lists her residence as 621 Tecumseh E.,
Windsor, Ontario. (Note: This is the family home address in
Windsor.) (see page 132 of Exhibit A-1);
(e) On various documents that
were filed as exhibits the Appellant showed P.O. Box numbers in
the United States. For example, the address shown on the Renewal
Declarations for the insurance on the boat is "Pamela P.
Allchin, P.O. Box 0408, Allen Park, Michigan" (Note:
The insurance renewal was from June 9, 1995 to June 9, 1996)
(see page 121 of Exhibit A-1). In another insurance renewal
declaration from June 9, 1995 to June 9, 1996 the
Appellant's address is shown as P.O. Box 43738,
Detroit, Michigan (see page 122 of Exhibit A-1);
(f) The Appellant held a green
card issued by U.S. authorities which enabled her to work in the
United States;
(g) The Appellant retained the
services of a Canadian immigration lawyer to assist her and
members of her family to move to the United States. Significant
delays resulted with the plan to move members of her family to
the United States. In 1997 the Appellant eventually decided to
give up on her plans to move with her family to the United States
and she returned to Canada on a full-time basis;
(h) The Appellant had credit cards
with American Express and Master Card. Invoices on the credit
cards were sent to the Appellant at a U.S. address;
(i) The Appellant had bank
accounts in the United States and she paid for miscellaneous
expenses with cheques drawn on this bank account. However, as
noted above, the Appellant sent substantial sums of money from
her bank accounts to her husband in Canada and he deposited this
money in his Canadian bank account. (Note: Many of the cheques in
Tab 5 of Exhibit A-1 show the Appellant's address as
P.O. Box 0408, Allen Park, Michigan.);
(j) Tab 3 of Exhibit A-1
contains a copy of an insurance binder for the boat owned by the
Appellant (see page 119 of Exhibit A-1). The insurance binder is
effective for the period June 9, 1994 to June 9, 1995. The
insurance binder lists the Appellant's address as 1406 Shore
Club Drive, St. Claire Shores, Michigan. (Note: This is the
address of the condominium owned by the Appellant's friends
Mr. and Mrs. Wilson.) The insurance binder also states that the
Appellant's mailing address is 621 Tecumseh Road East,
Windsor,
Ontario.
____________
[10] The leading case in Canada on the
question of residence is Thomson v. M.N.R. (1941-46), 2
DTC 812. In Thomson Mr. Justice Rand of the Supreme Court
of Canada said at page 815:
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 it's many
shades of meaning vary not only in the contexts of different
matters, but also in different aspects of the same matter.
[11] At page 817, Mr. Justice Rand referred
to Mr. Thomson's home in East Riverside, New Brunswick and
said:
He is at East Riverside as at his "home" and the
mere limitation of time does not qualify that fact."
[12] In his argument counsel for the
Respondent referred to the attempt by the Appellant to become a
non-resident of Canada and said:
The intention was always there, but it was never carried out
appropriately or properly to the point that the Canadian ties
were severed.
[13] I have carefully examined all of the
relevant facts and I have concluded that there is no sufficient
permanency involving the Appellant's connections to the
United States that would result in the severing of the
Appellant's residence ties to Canada in the 1993, 1994 and
1995 taxation years. If we were to paraphrase the words of Mr.
Justice Rand in Thomson quoted above we could say
"when the Appellant was in the family home in Windsor, she
was" as at her home". In reaching this conclusion I
have relied mainly on connections with Canada such as the Ontario
drivers licence, her OHIP coverage, her membership in the Windsor
Yacht Club, the location of her husband and two children in the
family home during the years in question and the fact that her
husband swore in an affidavit when he purchased a home for the
family in 1995 that his wife was a resident of Canada. I find
that her connections to the United States were of a very
temporary nature. The P.O. Box numbers and a sharing of a
room with a relative or a friend with no lease or indication of
rent being paid is too temporary to establish a residence in the
United States. I agree with the comments made by counsel for the
Respondent when he said that while the Appellant may have
intended to sever her ties to Canada she did not sever the ties
properly or appropriately.
[14] Before concluding my comments I wish to
add that since I have determined that the Appellant was not a
resident of the United States in the 1993, 1994 and 1995 taxation
years the tie breaking provisions contained in the Canada - U.S.
Tax Treaty do not apply in this situation.
[15] The Minister imposed penalties under
subsection 163(2) of the Income Tax Act because the
Appellant did not declare her worldwide income on her tax returns
for the relevant years. On the evidence presented to me, I have
concluded that the Appellant believed that she was a
non-resident of Canada and therefore her method of filing
her tax returns does not constitute gross negligence.
[16] In my opinion there is no basis for a
penalty being imposed under subsection 163(2) of the
Act. The penalty should be deleted.
[17] For the reasons outlined above I allow
the appeals and refer the matter back to the Minister for
reconsideration and reassessment on the basis that the Appellant
was a resident of Canada for the 1993, 1994 and 1995 taxation
years and that the penalties be deleted. I make no award of
costs.
Signed at Vancouver, British Columbia, this 14th day of July
2003.
Little, J.
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