Dushan Bresky v. Minister of National Revenue, [1980] CTC 2445, 80 DTC 1400

John B Goetz:—This is an appeal by the appellant against a reassessment for the 1977 taxation year. The appellant filed his 1977 income tax return on the basis that he had ceased to be a resident of Canada on July 31, 1977 whereas the respondent assessed him on the basis that he had been a resident of Canada throughout the whole of 1977 and that he never ceased to be a resident of Canada. The appellant relied on Article IV 2 of the Canada/France Income Tax Convention. The respondent relied, inter alia, upon sections, 2, 3,115 and 250 of the Income Tax Act, SC 1970-71-72, c 63, as amended and also upon the Canada/France Income Tax Convention. By virtue of the operation of section 2 and subsection 250(3) of the Act, the appellant was liable to tax in Canada on all sources.

Facts

The appellant was a full professor of humanities at the University of Calgary, having started teaching at the University of Calgary in 1962 and has been teaching there ever since. He obtained his tenure as a professor with the University of Calgary in 1967 and in the same year also obtained his Canadian citizenship. He applied for and obtained a sabbatical leave from the University for the period from July 1,1977 to July 1,1978. In a letter to him, following the granting of the sabbatical leave, said letter from M G McGinley, Associate Vice-President (Academic Administration), one of the conditions of the sabbatical which is relevant in this appeal, was set forth as follows:

(1) that you must return to the regular, fulltime service of the University for the number of months equal to the number of months comprising the sabbatical leave, or reimburse the University for the amount of sabbatical leave assistance received during the leave period.

The appellant purchased a home in Calgary in 1967, which he still owns and which he leased for the period of his proposed absence from Canada on his sabbatical leave. He also owns a cottage in British Columbia which he obtained in 1971. He leased this cottage for the period while he was absent from Canada and when he went to France he leased a condominium which was occupied by himself and his two sons. He states that when he left on sabbatical he intended to return to the University of Calgary and maintained his health scheme coverage as well as paid his dues to the University Faculty Association and to other Societies. All his bank accounts were in Canada.

He filed French tax returns for the years 1977 and 1978. He says he discussed the filing of his returns with the tax officials in France and that he would follow what course of action was to his advantage and, in so doing, relied upon Article XV of the Canada/France Income Tax Convention which reads, in part, as follows:

Article XV: Dependant Personal Services

1. Subject to the provisions of Articles XVI, XVIII and XIX, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned, and either

(a) the remuneration does not exceed in the said year the greater of the following amounts:

(i) two thousand five hundred Canadian dollars, and

(ii) ten thousand French francs; or

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and such remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

The competent authorities of the Contracting States may, if necessary, agree to modify the above-mentioned amounts as a result of monetary or economic developments.

The appellant said he did not have paragraph 2 of Article XV with him. He told the French tax authorities that he was no longer a resident of Canada and that his permanent home was in France. Further, he said: “I told them I would be there for a year”, and then he would be returning to his home in Calgary. He admitted that taxes in France were lower than in Canada. He derived no income at all from any employment in France and all salaries paid to him were deposited into his bank account in Calgary by the University of Calgary. He never ceased to be an employee of the University of Calgary.

Findings

The appellant relied upon certain Interpretation Bulletins issued by the Department of National Revenue and other information that he thought was authoritive that he obtained from the Department of National Revenue and claims therefore that the Minister is estopped from denying him the position which he takes in his appeal.

The Minister is not estopped by any acts, errors or omissions on the part of his servants or agents. See MNR v Inland Industries Ltd, [1972] CTC 27; 72 DTC 6013, at 31 and 6013 respectively:

The difference between the wording of this memorandum and the wording of the actuarial certificate is quite substantial and it is somewhat surprising that, notwithstanding such advice, departmental approval was given to the payments on behalf of the Minister. However, it seems clear to me that the Minister cannot be bound by an approval given when the conditions prescribed by the law were not met. (Italics mine).

Further, in Ernest G Stickel v MNR, [1972] CTC 210; 72 DTC 6178, it was held that an Information Bulletin published by the Minister which misstated the effect of Article 8(a) of a Tax Convention did not create an estoppel against the Minister. See also the following cases: Cam Gard Supply Ltd v MNR, [1973] CTC 111; 73 DTC 5133, affirmed by the Federal Court of Appeal, [1974] CTC 487; 74 DTC 6429; Nathan Cohen v Her Majesty the Queen, [1978] CTC 63; 78 DTC 6099. In the editorial note of the decision in Her Majesty the Queen v Cecil M Langille, [1977] CTC 144; 77 DTC 5086, we read:

Laches cannot be imputed to the Crown; it is a privilege of the King not to be bound by the mistakes, omissions or neglects of his officers or servants.

I repeat the law and comments with respect thereto in the application of the rules relating to the words “ordinarily resident in Canada” which were cited in the decision of Thomas C Saunders v MNR.

From the facts set forth above, it is quite clear that the appallant did not divest himself of his fiscal residence in Canada and I find that he was “or- dinarily resident in Canada” during the relevant taxation year. The appellant’s ties were with Canada and particularly in the City of Calgary, Alberta. Having found that he was ordinarily resident in Canada, the Canada/France Income Tax Convention gives no assistance to the appellant and, in particular, I refer to Article IV thereof which reads in part as follows:

IV: Fiscal Domicile

1. For the purposes of this Convention, the term “resident of a Contracting State”means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.

For the above reasons, the appeal is dismissed.

Appeal dismissed.