Janice Shpak, Brian J Shpak v. Minister of National Revenue, [1981] CTC 2429, 81 DTC 366

The Chairman:—The appeals of Mrs Janice Shpak and Mr Brian Shpak, from assessments in respect of the 1977 taxation year, were heard on common evidence by agreement between parties.

In their tax returns, each of the appellants included in their respective income for 1977 an amount of $1,403.24 as dividend income; each deducted the dividend income deduction of $1,000 and included as a credit, tax withheld on payment of the dividend.

The Minister disallowed the deductions on the grounds that dividend income deductions are only available to Canadian residents and he submits that the appellants were residents of the United States of America and were not residents of Canada in 1977.

Summary of Facts:

Because the market value of comfortable housing was one quarter of the price being paid for comparable homes in Vancouver, the appellants purchased a home in Point Roberts, USA, a small town on the southernmost tip of a peninsula, contiguous to British Columbia, but cut off from Canada by the Canadian-American border. While Point Roberts is contiguous with the Province of British Columbia, it is isolated from the mainland of the State of Washington by several miles of water. Access to the United States by land from Point Roberts is possible only by passing through Canada (Exhibit R-1).

Other than the loss of medical benefits, the move to the United States posed no problems to Mr Shpak who has dual citizenship, but Mrs Shpak had to be admitted into the United States as a landed immigrant.

Mr Brian Shpak, a chartered accountant, was licensed to exercise his profession in Canada only and, in any event, there were no suitable openings for a chartered accountant in Point Roberts. As a result, Mr and Mrs Shpak both worked in Vancouver for all of the 1977 taxation year.

The evidence is that the appellants had no lodgings or abode in Canada in 1977 but commuted to their work in Vancouver daily. The weekends, according to Mr Shpak’s evidence, were generally spent at home in Point Roberts, with occasional weekend trips to Vancouver or elsewhere.

The families of both appellants, as I understood it, lived in Calgary. The appellants have no relatives in the United States but a few friends in Point Roberts. The greater part of their social life was centred around Canadian friends and most of their banking was done in Canada. Although, on cross- examination, Mr Shpak admitted that he did not have any intention of moving back to Canada, he did see to it that his daughter acquired Canadian citizenship.

The basic issue in these appeals is not that of citizenship or domicile; it is whether or not the appellants were residents of Canada in 1977, within the meaning of the Income Tax Act, SC 1970-71-72, c 63, as amended. In their notices of appeal, the appellants admit that they were “domiciled and resident” in the United States but submit that since both appellants were continually employed in Canada in 1977; that their social and professional ties were in Canada and that they were present in Canada 250 days in the year; they were also residents of Canada for tax purposes.

Mr Shpak cited several passages from the Supreme Court decision in Percy Walker Thompson v MNR, [1946] CTC 51; 42 DTC 812, in support of his contention that he and his spouse were Canadian residents in 1977. One of the points in the decision cited on which there was general agreement is that “residence” is a question that can only be determined on the facts of a given case. The facts in the instant appeal are, however, distinguishable from those of the Percy Walker Thompson case (supra).

The courts agree that a person may have more than one residence as opposed to a domicile. The dictionary’s definition and the ordinary sense of the word “residence” poses no serious problems. For purposes of the Income Tax Act however, the concept of “residence” has taken on a much more complex meaning which defies any exhaustive definition.

In the Thompson case (supra) in which Mr Justice Rand made a rather complete exposé of the concept of residence, he states at 63 and 815 respectively, and I quote:

In Lysaght v Commissioners, supra, “residing” was examined by the House of Lords and it must, I think, be said that the language of “plain men” was stretched to the breaking point to encompass the facts that had been found by the Commissioners to be residence. The enquiry lies between the certainty of fixed and sole residence and the uncertain line that separates it from occasional or casual presence, the line of contrast with what is understood by the words “stay” or “visit” into which residence can become attenuated; and the difference may frequenty be a matter of sensing than of a clear differentiation of factors.

The gradation 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 in the light of the above that the words of Mr Justice Rand at 64 [815] of the Thompson case (supra), which were cited by Mr Shpak, must be read when he states in speaking of ordinary residence:

. . . It is held to mean residence in the ocurse of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application.

For the purposes 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 circumstance, but also accompanied by a sense of transitoriness and of return.

But in the different situation 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”.

In applying the principles enunciated by Mr Justice Rand in the Thompson case (supra) to the facts of the present appeal, which are admittedly unusual, I must come to the conclusion that, for tax purposes, the appellants must be considered as residents of Canada.

Working in Vancouver on a permanent basis, and returning daily to their home in Point Roberts was in 1977 part of the appellants’ ordered, customary and ordinary mode of living. Point Roberts, admittedly their domicile and their residence, was not however the centre of their interests, their social life and their conveniences. The uncontradicted evidence is to the effect that 90% of their social ties, interests and activities were in Canada throughout the year 1977. Their income tax returns were filed in Canada and contributions made to the Canada Pension Plan and the Unemployment Insurance Plan. Their daily presence and regular attendance at their place of work in Canada cannot, in my opinion, be considered simply as visits.

On the basis of most of the criteria of residency listed by my colleague, Mr G Tremblay in Laurin v MNR, [1979] CTC 2571; 79 DTC 439, I must again come to the conclusion that the appellants indeed have dual residency and that Canadian residency is one of them.

Counsel for the respondent, in support of his contention that the appellants were not residents of Canada, rightly cited the case of R &L Food Distributors Ltd v MNR, [1977] CTC 2579; 77 DTC 411, the facts of which are not unlike those of the instant appeal. In that case, the late Mr A W Prociuk, then Member of the Board, dismissed the appeal on the ground that the homes of both taxpayers were in Michigan, USA. None of the taxpayers had sought out or maintained any social ties in Canada. In that sense, the facts of R &L Food Distributors Ltd (supra) can be distinguished from the facts of the present appeal.

I conclude, therefore, that the appellants’ customary mode of living includes spending a very considerable portion of their time, not only working in Canada, but where they have centred a major part of their social as well as economic activities. The facts and circumstances of these appeals and case law cited preclude me from considering that the appellants’ continual presence in Canada in 1977 was other than that of residents of Canada.

For these reasons, the appeal is allowed and the matter referred back to the Minister for reassessment on the basis that the appellants were residents of Canada during the 1977 taxation year.

Appeals allowed.