Thomas C Saunders v. Minister of National Revenue, [1980] CTC 2436, 80 DTC 1392

John B Goetz:—This is an appeal with respect to the appellant’s 1975 and 1976 taxation years against the respondent’s reassessments for the said years. The appellant was assessed by the Minister as being a person ordi- narily resident in Canada and relied, inter alia, upon sections 2, 3 and subsection 250(3) of the Income Tax Act, SC 1970-71-72, c 63, as amended.

Facts

The appellant is a medical doctor and a professor at the University of Calgary and in October of 1974 applied for a sabbatical leave to pursue a fellowship program which allowed him a year of studies in medical education in general at Michigan State University, USA. In his application, he Stated that if the leave were granted, he would be leaving Calgary August 25,1975 and returning to Calgary September 4,1976. Further, he stated that he had made arrangements for the deputy director of the Department of Family Practice within the University Hospital to take over his duties during the year of absence from the University. On December 13, 1974 the associate vice-president (Academic Administration) of the University wrote Dr T C Saunders, the appellant, granting him the leave of absence under the terms and conditions as would apply had a sabbatical leave been granted. The leave was to extend from September 1,1975 to August 31,1976. In that letter to the appellant, the following paragraph was contained therein:

(a) that you must return to the regular, full-time service of the University for the number of months equal to the number of months comprising the leave, or reimburse the University for the amount of leave assistance received during the leave period.

On his return to Canada, the appellant wrote Dr L E McLeod, the Dean of the Faculty of Medicine, stating: “I trust that the knowledge gained will be of use to the University and the Faculty of Medicine. I enjoyed my year as a Student and my family enjoyed the experience of living in a new environment”.

Prior to leaving for the United States, the appellant leased his home for a period commencing September 1, 1975 and expiring August 31, 1976. The appellant leased a house at Lansing, Michigan, for one year being exactly the same period for which he leased his home which he owns in Calgary. He stated that Canada was his birth-place, that he has always been a Canadian citizen, that his family ties were in Canada, and that when he left Canada before taking up his duties, he intended to return to Canada. He maintained his Alberta Health Insurance and University Plan, continued to pay dues to the Calgary Faculty Association and to the College of Physicians and Surgeons of Alberta on the basis of a “non-resident” membership. His Canadian bank account to which funds were placed by the University, being 80% of his regular salary, was handled by his accountant who in turn would forward funds to him in the United States where he had established a bank account for the handling of funds received from the University. He retained and maintained his Alberta operator’s licence and acquired certain chattels in the United States and brought them back to Canada. The appellant places great weight upon the fact that Customs and Excise permitted him to bring these articles back on the basis that he had been a former resident of Canada and acquired these while a resident of the United States. He further relies on correspondence and Information Bulletins from the Department of National Revenue as estopping the Minister from assessing tax. The Minister is not bound by the statements of his agents or servants. If they are wrong in law with respect to the definition or “ordinarily resident in Canada”, and I find the Bulletin referred to as being wrong in law, they are not binding upon me. The appellant filed a United States income tax return because he had earned approximately $1,700 teaching there but he did not include his Canadian income.

It was agreed at the outset of the hearing of the six appeals of Saunders et al that Richard V Vandenberg would, at the conclusion of the evidence of all the appellants, give evidence which would apply to all of the appellants: Dr Thomas C Saunders, Dr Eric J Mash, Dr Merlin B Brinkerhoff, Dr Dushan Bresky, Dr Peter Lancaster and Dr William H Magee. Mr Vandenberg is an economist and executive secretary of the University of Calgary Faculty Association. One of his duties in that capacity was involved in the determination of rights of faculty members of the University of Calgary to enjoy sabbatical leave. He indicated that all the appellants were on what he considered sabbatical leave. For one to apply and obtain sabbatical leave, his qualifying for such a leave depended upon his scholarship, his teaching ability and the service rendered. He indicated that while on sabbatical, their current employment was with the University of Calgary and that is what they were being paid for. Service out of the country was the same as if he were still an employee of the University of Calgary. Mr Vandenberg admitted that all of the above-named appellants were on sabbatical leave from the University of Calgary. Filed was the University of Calgary academic salaries and benefits document for 1979-1980, the relevant portion of which I shall quote:

Regulations Governing leaves of absence:

The primary purpose of granting leave of absence to a member of the faculty is to enable him to enhance his quality as a scholar and as a teacher, thereby assisting the University to achieve greater excellence in its basic areas of responsibility, effective teaching and the advancement of learning.

In every leave of absence, a faculty member may continue to participate in such University staff benefits as are available during the period of leave.

A staff member, upon application through his Dean or Director to Dean’s Council, may be considered eligible for a sabbatical leave of . . . twelve months after the equivalent of six full years of service, . . .

The total University support to a successful sabbatical leave applicant (including any amount awarded as a University Sabbatical Leave Research Grant) is currently 80% of a staff member’s normal salary for the six-month or twelve-month leave period.

Upon termination of the leave, the staff member must submit a written report to the President through the Dean’s Council which provides a brief outline of his activities during the leave period.

A staff member may accept and retain, in addition to the level of support otherwise available from the University under these regulations, the full amount of outside assistance received as scholarships, followships, travel grants, and the like.

For purposes of pension contributions, insurance, medical and disability benefits, salary increases and promotions, the staff member on sabbatical leave should be regarded as a full time member of the academic staff.

On June 14,1977, P J Krueger, Vice-President of the Academic division of the University of Calgary, wrote one Dr W W Zwirner, President of the University of Calgary Faculty Association, stating, among other things:

The requirement that the individual who has had a leave return to the University of Calgary for a stated period is to ensure that the academic benefits of the Leave will accrue to this University, in terms of enhanced contributions to our programme of teaching and research.

In order to qualify for a sabbatical leave, a professor at the University of Calgary must have at least put in four years’ teaching at that University plus two years elsewhere or six full years at the University of Calgary. The appellant qualified under these sabbatical conditions.

Findings

The relevant section to be considered is subsection 250(3) of the Income Tax Act which reads as follows:

(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. (Italics mine).

The term “ordinarily resident in Canada’’ has been interpreted in a number of legal decisions and it is my intention to cite decisions that I feel substantially cover judicial interpretations of these words.

In dealing with the question of the place where a person is ordinarily resident, it is trite to say that it is much easier to acquire a new residence than to shed an old one. Further, as Judge K A Flanigan, QC, former Chairman of this Board stated in the case of Eastwood v MNR, [1975] CTC 2156 at 2157; 75 DTC 126, at 127: “It is also well established that one can have, in a given year, more than one place of residence’’.

The decision of the learned Justice Mahoney of the Federal Court of Canada, Trial Division, in the case of Her Majesty the Queen v Kenneth F Reeder, [1975] CTC 256; 75 DTC 5160, has set forth certain criteria which are of great assistance to one in attempting to ascertain the meaning of the words “ordinarily resident in Canada’’. This case involves an employee of a Canadian subsidiary French corporation and ordinarily resident in Canada where he was born, and where he resided continuously until he went to France to learn certain mechanical techniques from a plant there. The length of his stay in France was governed only by the length of time required to acquire the expertise which he would need to become supervisor of the subsidiary plant in Canada. In filing his tax return for the year 1972, the taxpayer who has resided 246 consecutive days in France, contended that he had severed all residential ties with Canada on his departure and therefore, during the period of his non-residence, provisions of section 114 applied to absolve him of tax liability for income earned in France. I deem it useful to quote extensively from Mr Justice Mahoney’s decision wherein he was attempting to determine the pure question of fact of fiscal residence and the consideration and criteria required to determine such residence. At pages 260 and 5163 respectively, he states:

. . . While the list does not purport to be exhaustive, material factors include:

(a) past and present habits of life;

(b) regularity and length of visits in the jurisdiction asserting residence;

(c) ties within that jurisdiction;

(d) ties elsewhere;

(e) permanence or otherwise of purposes of stay abroad.

The matter of ties within the jurisdiction asserting residence and elsewhere runs the gamut of an individual’s connections and commitments: property and investment, employment, family, business, cultural and social are examples, again not purporting to be exhaustive. Not all factors will necessarily be material to every case. They must be considered in the light of the basic premises that everyone must have a fiscal residence somewhere and that it is quite possible for an individual to be simultaneously resident in more than one place for tax purposes.

Mr Justice Mahoney cites the findings of the Supreme Court of Canada in the case of Percy Walker Thomson v MNR, [1946] CTC 51; 46 DTC 812, where Estey, J at 70 and 813 respectively, states:

A reference to the dictionary and judicial comments upon the meaning of these terms indicates that one is “ordinarily resident” in the place where in the settled routine of his life he regularly, normally or customarily lives.

Rand, J at 64 and 815 respectively, states:

The expression “ordinarily resident” carries a restricted signification, and although the first impression seems to be that of preponderance in time, the decisions on the English Act reject that view. It is held to mean residence in the course 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. . . .

. . . Ordinarily 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 circumstances, but also accompanied by a sense of transitoriness and of return.

... In general the language of a taxing statute is to be taken in its colloquial or popular sense . . .

This seems to be the effort of the learned Justices in the Thomson case (supra). Kerwin, J at pages 52 and 817 respectively, states:

There is no definition in the Act of “resident” or ‘‘ordinarily resident” but they would receive the meaning ascribed to them by common usage. When one is considering a Revenue Act, it is true to state, I think, as it is put in the Standard Dictionary that the words “reside” and “residence” are somewhat stately and not to be used indiscriminately for “live,” “house,” or “home”. The Shorter Oxford English Dictionary gives the meaning of “reside” as being “To dwell permanently or for a considerable time, to have one’s settled or usual abode, to live, in or at a particular place”. By the same authority “ordinarily” means: “1. In conformity with rule; as a matter of regular occurrence. 2. In most cases, usually, commonly. 3. To the usual extent. 4. As is normal or usual’’. On the other hand the meaning of the word “sojourn” is given as “to make a temporary stay in a place; to remain or reside for a time”.

The question of determination of residence, for taxation purposes, is not an easy one and each case must turn on its own facts involving relevant criteria and indicia. Subsection 2(1) of the Income Tax Act, in effect at the time (1975-1976) reads as follows:

(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.

Subsection 250(3) then comes into play in determining whether the taxpayer was ordinarily resident in Canada.

Applying the criteria laid down by Mr Justice Mahoney in Her Majesty the Queen v Kenneth F Reeder (supra) and the judicial interpretation of a person of the term “ordinarily resident in Canada”, it is quite obvious that from the statement of facts cited above relating to Dr Saunders’ sabbatical leave and attending University in the United States, that he clearly comes within the judicial interpretation as a person “ordinarily resident in Canada” (see subsection 250(3)) and thereby is subject to tax therein for the period under appeal. Having so found, it is not necessary for me to deal with section 115 of the Income Tax Act as proposed by counsel for the appellant, nor with the provisions of the Canada-US Tax Convention.

For the above reasons, the appeal is dismissed.

Appeal dismissed.