Denis M. Lee v. Minister of National Revenue, [1990] 1 CTC 2082, 90 DTC 1014

Teskey, T.C.J.:—The appellant appeals his 1981, 1982 and 1983 reassessments.

Issue

The single issue is whether the appellant, in any or all of the years, was resident in Canada within the meaning of subsection 2(1) of the Income Tax Act (notwithstanding that Immigration Canada treated him as a visitor).

Facts

The appellant is an electronic engineer. He was born in Erith, England on July 7, 1946. During the relevant times, the appellant held a valid passport (Exhibit A-1) 8087146 for the United Kingdom of Great Britain and Northern Ireland. The passport declares him as a British subject with a residence in the United Kingdom with the right of abode therein. The passport was issued on September 26, 1978 for a ten-year period.

Each time the appellant entered Canada, the passport was stamped by Immigration Canada with the majority of entries setting out a date upon which he must leave Canada. The authorized period of stay varied from 5 days to 45 days. On some of the stamps the word “visitor” was written in by an immigration official. Throughout the three-year period, the appellant was employed full time by a non-resident corporation and all work was performed outside Canada.

All income was deposited directly into a Canadian bank. In 1981, the appellant married Cathy Lewis, a Canadian citizen residing in Canada, who had no income of her own and was wholly dependent on the appellant. She has always resided continuously in Canada.

In June of 1981, a house near Apsley, Ontario was purchased by Cathy Lewis with money supplied by the appellant. The appellant's wife in September of 1982 borrowed money by way of a mortgage. The appellant guaranteed the mortgage which has an affidavit attached dated September 13, 1982 where he swore that he was not then a non-resident of Canada.

During the three-year period, the appellant regularly returned to Canada when not working. The appellant pleads in his notice of appeal that he was charged in Provincial Court for failure to file an income tax return for 1981 and was acquitted. However, no evidence of any kind was adduced to support this allegation.

Prior to the appellant's marriage, his parents maintained a bedroom for him in Kent, England.

During the three-year period, the appellant:

(1.) never filed or paid income tax anywhere;

(2.) was not allowed to work in Canada;

(3.) was given a fixed date to leave Canada on each entry, i.e. (not allowed to stay in Canada);

(4.) claims he could not join O.H.I.P., pay U.I. or maintain an R.R.S.P. or join a pension plan;

(5.) if he purchased property in Ontario, he would have had to pay a 20 per cent non-resident land transfer tax;

(6.) was out of the country more than 183 days a year;

(7.) had no desire to work in Canada;

(8.) had a residence in Britain in the home of his mother and father;

(9.) held a mortgage in Britain on his first wife’s house;

(10.) claims he could not live a normal life in Canada as he had to leave every 27 days;

(11.) had a bank account with the Royal Bank of Canada both in Canada and in the Caribbean.

The appellant was also asked the following questions and gave the following answers:

Q. Every time you finished your stint on the rig you would come back home to Canada to visit your wife?

A. I came back for the periods that Immigration would allow me to come.

Q. As often as you could.

A. Yes.

Q. You certainly wouldn't call your place in Canada an occasional residence or a casual residence. You would call it a home, would you not?

A. No, I wouldn't call it a home.

Q. What did you call it, a casual residence?

A. As I said before, I keep restating it, to me a home is somewhere where you're allowed to work, where you can enjoy a normal life, and I was not allowed to lead a normal life. Immigration Canada insisted that I left the country every 27 days.

Q. Was Canada a place where you occasionally resided?

A. We keep coming back to the word "reside". In my definition I didn't reside here. I was not allowed to do any of the things that I would regard as normal for a resident of an area.

Q. When people asked you on the rig where you lived what did you say?

A. Obviously I said Canada.

In 1984, the appellant purchased a car in Canada. In 1985 the appellant:

1. obtained a Canadian driver's licence;

2. obtained a Canadian visa;

3. became a landed immigrant in Canada.

Statutory Provisions

The relevant provisions of the Income Tax Act are:

2(1) An income tax shall be paid as hereinafter required upon the taxable income for each taxation year of every person resident in Canada at any time in the year.

3 The income of a taxpayer for a taxation year for the purposes of this Part is his income for the year determined by the following rules:

(a) determine the aggregate of amounts each of which is the taxpayer's income for the year (other than a taxable capital gain from the disposition of a property) from a source inside or outside Canada, including, without restricting the generality of the foregoing, his income for the year from each office, employment, business and property.

250(1) For the purposes of this Act, a person shall, subject to subsection (2), be deemed to have been resident in Canada throughout a taxation year if

(a) he sojourned in Canada in the year for a period of, or periods the aggregate of which is, 183 days or more.

250(3) In this Act, a reference to a person resident in Canada includes a person who was at the relevant time ordinarily resident in Canada.

Judicial Authorities

The leading authority on the question of residence is Thomson v. M.N.R.,

[1946] S.C.R. 209; [1946] C.T.C. 51; 2 D.T.C. 812, a decision of the Supreme Court of Canada.

Estey, J. said on page 70 (D.T.C. 813):

one is “ordinarily resident" in the place where in the settled routine of his life he regularly, normally or customarily lives. One "sojourns" at a place where he unusually, casually or intermittently visits or stays. In the former the element of permanence; in the latter that of the temporary predominates. The difference cannot be stated in precise and definite terms, but each case must be determined after all the relevant factors are taken into consideration, but the foregoing indicates in a general way the essential difference. It is not the length of the visit or stay that determines the question.

On the same page he says: "a person may have more than one residence."

Mr. Justice Rand said at pages 63-4 (D.T.C. 815-16):

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 its many shares of meaning vary not only in the contexts of different matters, but also in different aspects of the same matter. In one case it is satisfied by certain elements, in another by others, some common, some new.

For the purpose of income tax legislation, it must be assumed that every person has at all times a residence. It is not necessary to this that he should have a home or a particular place of abode or even a shelter. He may sleep in the open. It is important only to ascertain the spatial bounds within which he spends his life or to which his ordered or customary living is related. Ordinary residence can best be appreciated by considering its antithesis, occasional or casual or deviatory residence. The latter would seem clearly to be not only temporary in time and exceptional in circumatances, but also accompanied by a sense of transitoriness and of return.

But in the different situations of so-called "permanent residence”, "temporary residence”, "ordinary residence”, “principal residence"and the like, the adjectives do not affect the fact that there is in all cases residence; and that quality is chiefly a matter of the degree to which a person in mind and fact settles into or maintains or centralizes his ordinary mode of living with its accessories in social relations, interests and conveniences at or in the place in question. It may be limited in time from the outset, or it may be indefinite, or so far as it is thought of, unlimited. On the lower level, the expressions involving residence should be distinguished, as I think they are in ordinary speech, from the field of "stay" or "visit".

Reed v. M.N.R., [1989] 1 C.T.C. 2070; 89 D.T.C. 34, a decision of my brother Judge Bonner establishes the principle that residence must be on shore and cannot be on the high seas.

The question of residency is one of fact and depends on the specific facts of each case. The following is a list of some of the indicia relevant in determining whether an individual is resident in Canada for Canadian income tax purposes. It should be noted that no one or any group of two or three items will in themselves establish that the individual is resident in Canada. However, a number of factors considered together could establish that the individual is a resident of Canada for Canadian income tax purposes:

— past and present habits of life;

— regularity and length of visits in the jurisdiction asserting residence;

— ties within the jurisdiction;

— ties elsewhere;

— permanence or otherwise of purposes of stay;

— ownership of a dwelling in Canada or rental of a dwelling on a long-term basis (for example, a lease for one or more years);

— residence of spouse, children and other dependent family members in a dwelling maintained by the individual in Canada;

— memberships with Canadian churches or synagogues, recreational and social clubs, unions and professional organizations;

— registration and maintenance of automobiles, boats and airplanes in Canada;

— holding credit cards issued by Canadian financial institutions and other commercial entities including stores, car rental agencies, etc;

— local newspaper subscriptions sent to a Canadian address;

— rental of Canadian safe deposit box or post office box;

— subscriptions for life or general insurance including health insurance through a Canadian insurance company;

— mailing address in Canada;

— telephone listing in Canada;

— stationery including business cards showing a Canadian address;

— magazine and other periodical subscriptions sent to a Canadian address;

— Canadian bank accounts other than a non-resident bank account;

— active securities accounts with Canadian brokers;

— Canadian driver's licence;

— membership in a Canadian pension plan;

— holding directorship of Canadian corporations;

— membership in Canadian partnerships;

— frequent visits to Canada for social or business purposes;

— burial plot in Canada;

— will prepared in Canada;

— legal documentation indicating Canadian residence;

— filing a Canadian income tax return as a Canadian resident;

— ownership of a Canadian vacation property;

— active involvement in business activities in Canada;

— employment in Canada;

— maintenance or storage in Canada of personal belongings including clothing, furniture, family pets, etc;

— obtaining landed immigrant status or appropriate work permits in Canada;

— severing substantially all ties with former country of residence.

The appellant claims that he did not want to be a resident of Canada during the years in question. Intention, or free choice is an essential element in domicile, but is entirely absent in residence.

After considering all of the relevant factors brought out at trial and applying the law as set out, I am satisfied that the appellant at the beginning of 1981 was not a resident of Canada. The appellant was obviously a resident of Canada on September 13, 1982 not only because he swore he was not a non-resident but he also on that day guaranteed the mortgage on the residence that became on marriage the matrimonial residence. The question for determination is at what time between January 1, 1981 and September 13, 1982 did the appellant become a resident of Canada. Although marriage can be a neutral factor, in this case it is the additional factor that tips the scales from one of non-residency to one of residency.

The appeal for the 1981 taxation year is allowed with costs. The reassessment is sent back to the Minister for reconsideration and reassessment on the basis that the appellant was not a resident of Canada on January 1, 1981 and stayed a non-resident up to the date of his marriage in 1981 whereupon he became a resident of Canada and has remained a resident of Canada from then on. It therefore follows that the appeals with respect to the 1982 and 1983 taxation years are dismissed.

Appeals allowed in part.