Brulé,
T.C.J.:—
Issue
The
appellant
appeals
from
assessments
of
income
tax
for
the
1975
to
1979
taxation
years
inclusive.
The
assessments
were
made
on
the
basis
that
he
received
income
from
an
Ontario
company
while
a
non-resident
pursuant
to
subsection
115(1)
and
paragraph
2(3)(a)
of
the
Income
Tax
Act
for
the
taxation
years
1975,
1976
and
1979,
and
pursuant
to
section
3
and
subsection
2(1)
as
a
resident
for
the
taxation
years
1977
and
1978.
Mr.
Fiebert
was
the
President
and
Chief
Executive
Officer
of
White
Electronic
Development
Corporation
(1966)
Limited
(hereinafter
called
“White”),
an
Ontario
company.
He
kept
a
residence
in
New
York
and
maintained
that
this
residence
was
also
a
permanent
establishment
of
White
in
the
United
States
of
America
during
the
years
under
appeal.
In
support
of
his
position
the
agent
for
the
appellant
presented
to
the
Court
two
witnesses
who
believed
the
appellant’s
residence
to
contain
the
alleged
New
York
office
of
White.
One
witness
visited
the
home
and
indicated
there
was
a
small
workshop
to
test
equipment
and
a
private
telephone
line.
There
was
no
identifying
sign
for
White
on
the
outside
of
the
residence.
The
other
witness
testified
that
the
address
of
White
in
New
York
appeared
on
the
company
letterhead,
but
that
she
had
never
been
to
the
appellant’s
residence.
It
was
obvious
from
the
witnesses
that
the
appellant
spent
three
or
four
days
per
week
in
Toronto.
The
third
witness
called
by
the
appellant
was
the
then
Chairman
of
the
Board
of
White.
He
traced
the
operation
of
the
company
and
said
that
the
appellant’s
residence
was
an
address
for
White,
but
not
an
office
per
se.
Under
the
terms
of
a
management
agreement
the
appellant
was
paid
a
salary
and
expenses
which
expenses
included
a
telephone.
No
rental
for
an
office
was
ever
paid.
The
witness
said
categorically
that
there
was
no
branch
office
in
New
York.
Counsel
for
the
Minister
contended
that
no
evidence
was
presented
to
defeat
the
assumption
that
in
1975,
1976
and
1979
the
appellant
was
a
nonresident
of
Canada
and
that
in
1977
and
1978
he
was
deemed
to
be
a
resident
of
Canada.
He
also
argued
that
White
did
not
have
a
permanent
establishment
in
New
York.
He
cited
the
evidence
of
the
then
Chairman
of
the
Board
of
White
outlined
above
and
also
relied
on
the
case
of
Consolidated
Premium
Iron
Ores
Limited
et
al.
v.
Commissioner
of
Internal
Revenue.
This
is
a
decision
of
the
Tax
Court
of
the
United
States
and
is
reported
in
57
D.T.C.
1146
because
it
deals
with
the
interpretation
of
the
term
“permanent
establishment”
as
used
in
Article
VII
of
the
Canada-U.S.
Income
Tax
Convention.
At
1162
there
is
the
following
paragraph
in
the
judgment:
The
term
'‘permanent
establishment”
normally
interpreted
suggests
something
more
substantial
than
a
license,
a
letterhead
and
isolated
activities.
It
implies
the
existence
of
an
office,
staffed
and
capable
of
carrying
on
the
day-to-day
business
of
the
corporation
and
its
use
for
such
purpose,
or
it
suggests
the
existence
of
a
plant
or
facilities
equipped
to
carry
on
the
ordinary
routine
of
such
business
activity.
The
descriptive
word
“permanent”
in
the
characterization,
“permanent
establishment”
is
vital
in
analyzing
the
treaty
provisions.
It
is
the
antithesis
of
temporary
or
tentative.
It
indicates
permanence
and
stability.
In
the
subject
case
these
characteristics
were
not
present
thus
allowing
this
Court
to
reach
the
conclusion
that
in
the
years
under
appeal
White
did
not
have
an
office
in
New
York.
At
the
hearing
the
appellant’s
agent
produced
copies
of
1977
and
1978
tax
returns
which
the
Minister’s
counsel
agreed
to
forward
to
Revenue
Canada
asking
that
they
be
considered
in
relation
to
the
arbitrary
assessments.
This
was
done
and
it
has
been
reported
to
the
Court
that
there
was
no
evidence
at
the
hearing
proving
the
facts
alleged
in
the
documents.
The
net
result
is
that
these
returns
are
of
no
value
to
the
Court
in
arriving
at
a
decision.
As
a
result
of
the
evidence
given
and
the
application
of
the
Canada-U.S.
Income
Tax
Convention
thereto,
the
Court
hereby
dismisses
the
appeals.
Appeals
dismissed.
Email this Content