Alain G L Gaudet v. Her Majesty the Queen, [1978] CTC 138, 78 DTC 6073

Décary, J [TRANSLATION]:—The question is whether plaintiff, who Is married with four children, was entitled to deduct from his income for 1973 tuition fees of $180 that he paid for his wife, whom he was supporting in full while she was a full-time student under paragraph 110(1 )(h) of the Act.

The Minister of National Revenue refused to allow the deduction of these tuition fees in a notice of reassessment dated May 12, 1975. Plaintiff filed a notice of objection to the reassessment on May 23, 1975. The Minister of National Revenue sent plaintiff a notification. dated January 26, 1976, confirming the said assessment, and stating that plaintiff's wife had not been in full-time attendance at a designated educational institution within the meaning of paragraph 110(1)(h) and subsection 110(9) of the Act. Plaintiff filed an appeal with the Tax Review Board, but the Chairman dismissed his appeal on. November 17, 1976; hence the appeal to this Court, which is a trial de novo.

Paragraph 110(1 )(h) reads as follows:

110. (1) For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be deducted from his income for the year such of the following amounts as are applicable:

(h) where the taxpayer was the supporting individual for the year in respect of a student who was in full-time attendance at a designated educational institution and enrolled in a qualifying educational program at that institution, the amount by which

(i) $50 multiplied by the number of months in the year during which the student was so in attendance and was so enrolled

exceeds

,(ii) the amount, if any, of the taxable income for the year of the student computed before making any deduction under paragraph (g).

Paragraph 110(1)(h) was introduced into the Income Tax Act by subsection 35(6), 21-22 Eliz II [1973-74], c 14, and is applicable under subsection 35(9) to the taxation years 1972 et seq. This subsection reads as follows:

35. (9) Subsections (1), (3) to (6) and (8) are applicable to the 1972 and Subsequent taxation years.

In the 1948 Act, RSC 1952, c 148, as amended, there were no provisions similar to those in paragraph 110(1 )(h) of the Act now in effect. Paragraph 11 (1)(qc) of the 1948 Act provided conditions which had to be met by students claiming fees, but there were no provisions with respect to these fees when they were paid by an individual supporting the student.

Paragraph 11 (1 )(qc) read as follows:

11. (1) Notwithstanding paragraphs (a). (b) and (h) of subsection (1) of section 12, the following amounts may be deducted in computing the. income of a taxpayer for a taxation year:

(qc) where a taxpayer was during the year a student enrolled at an educational institution in Canada

(i) that is a university, college or other educational institution providing courses at a post-secondary school level,

(ii) that is a school operated by or on behalf of Her Majesty in right of Canada or a province, a municipality in Canada, or a municipal or public body performing a function of government in Canada,

(iii) that is a high school or secondary school providing courses leading to a secondary school certificate or diploma that is a requirement for entrance to a college or university, or

(iv) that is certified by the Minister of Manpower and Immigration to be an educational institution by which courses are conducted that provide or improve the. qualifications of a person for employment or for the carrying on of a business or profession,

The provisions of paragraph 11 (1)(qc) of the 1948 Act became paragraph 60(f) (19-20-21 Eliz Il [1970-71-72], c 63) of the Income Tax Act in effect* in 1972. The provisions were substantially the same as those in paragraph 11 (1 )(qc) of the 1948 Act:

60. There may be deducted in computing a taxpayer’s income for a taxation year such of the following amounts as are applicable:

(f) where the taxpayer was during the year a student enrolled at an educational institution in Canada

(i) that is a university, college or other educational institution providing courses at a post-secondary school level,

(ii) that is a school operated by or on behalf of Her Majesty in right of Canada or a province, a municipality in Canada, or a municipal or public body performing a function of government in Canada,

(iii) that is a high school or secondary school providing courses leading to a secondary school certificate or diploma that is a requirement for entrance to a college or university, or

(iv) that is certified by the Minister of Manpower and Immigration to be an educational institution by which courses are conducted that provide or improve the qualifications of a person for employment or for the carrying on of a business or profession,

It should be noted that both these paragraphs apply only to cases where the student himself pays his tuition fees.

When another individual pays the student’s tuition fees, as well as Supporting him, this individual must be related to the student to be entitled to the deduction provided for in paragraph 110(1)(h), since the provisions of paragraph 110(9)(c) read as follows:

(c) “supporting individual” for a taxation year in respect of a student means an individual (in this paragraph referred to as a “relative” of the student) who was during the year the student’s spouse, parent, grandparent, brother or sister, except that

It has been proven that plaintiff supported the student and that the latter was his spouse, that the Ste-Foy College which the plaintiff’s wife attended was a designated educational institution, and that she was enrolled in a qualifying educational program.

A qualifying educational program is defined in paragraph. 110(9)(b), which reads in part as follows:

110. (9) For the purposes of paragraphs (1)(g) and (h),

(b) “qualifying educational program’’ means a program of not less than 3 consecutive weeks duration that provides that each student taking the program spend not less than 10 hours per week on courses or work in the program, but, in relation to any particular student, does not include any such program

This definition establishes two conditions: the number of consecutive weeks during which the course is given, and the number of hours per week that must be spent on courses or work in the program. It has been proven that the course in question here was of more than 3 weeks’ duration, and that plaintiff’s wife spent at least 17 hours per week, that is, 7 hours in courses at night (two 3 /2-hour sessions)- and 10 hours of work for the courses. '•-q-

It should be noted that the context of this expression in the 1948 Act is not the same as that of paragraph 110(1)(h) of the Act. Paragraph 110(1)(h) provides conditions of application, defined in paragraphs 110(9)(a), (b) and (c). In my opinion, the definitions can affect the meaning to be given to the expression ‘‘student in full-time attendance”.

The differences between paragraphs 60(f) and 110(1)(h) would appear to be the following: the taxpayer referred to in paragraph 60(f) is the student himself who pays his own tuition fees, whereas the taxpayer referred to in paragraph 110(1 )(h) is the parent who pays the tuition fees of the student he supports. In paragraph 60(f) the range of educational institutions is very wide, whereas in paragraph 110(1 )(h) it is restricted to assistance for educational programs.

I believe that these two distinctions should be considered when examining precedents, since the Court has never had to decide as to the scope of the provisions in paragraph 110(1)(h), which provide for the deduction of tuition fees by the parent of the student. I believe that it will prove useful to examine the precedents nonetheless, keeping in mind that the context is different for paragraph 110(1)(h). Since the Ste-Foy CEGEP where Mrs Gaudet studied in 1973 is an educational institution provided for under subparagraph 60(f)(iv) of the aforementioned Act, she would have been entitled to deduct her tuition fees from her taxable income had she had one, and had she paid these fees herself.

In the cases decided by the Tax Appeal Board, the Exchequer Court and the Federal Court, the meaning of the expression “student in full-time attendance” (and “un étudiant qui suivait les cours à plein temps” in French) in paragraph 11 (1)(qb) and in paragraph 60(f) of the Act now in effect, in respect of a student who pays his tuition fees himself, had to be established.

Two contrary judgments were handed down, one by Dumoulin, J of the Exchequer Court, affirming by an oral decision from the Bench the judgment of Mr W S Fisher, then a Member of the Tax Appeal Board, and the other by Heald, J of the Federal Court. Each of these cases was decided on the basis of the provisions of paragraph 11 (1)(qb) of the 1948 Act, where the context is not the same as for paragraph 110(1)(h) of the Act in effect in 1973. Consequently, I believe that I need not refer to the precedents, except as to the manner of interpreting paragraph 110(1)(h), that is, whether it should be liberally or strictly interpreted.

In Charles David Moore v MNR, 33 Tax ABC 160; 63 DTC 734, the late Mr W S Fisher, QC, Member of the Tax Appeal Board, stated the following with respect to interpretation, at pages 162-4 [735-6]:

I fully realize that there is a rule established by the courts that exemption provisions, including, no doubt, provisions regarding deductions, should be strictly construed. This, however, is an interpretation in connection with taxation statutes which has been established by the courts and is not found, so far as I am aware, in any legislation enacted by the Parliament of Canada. Indeed the Parliament of Canada, in Section 15 of the Interpretation Act, RSC 1952, c 158, has provided as follows:

”15. Every Act and every provision and enactment thereof, shall be deemed remedial, whether its immediate purport is to direct the doing of any thing that Parliament deems to be for the public good, or to prevent or punish the doing of any thing that it deems contrary to the public good; and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act and of such provision or enactment, according to its true intent, meaning and spirit."

(The italics are mine.)

This provision in the law as enacted by Parliament is one of long standing. and if it comes in conflict with a rule established by the courts, it is my opinion that the parliamentary law should take precedence if it is the opinion of the court or a board that the true intent and spirit of the legislation enacted by Parliament is of such a nature that it should not be interpreted only in the narrowest sense which might be put upon the specific words contained in the said legislation—unless, of course, there is a very clear indication that Parliament intended the words enacted by it to be open only to an extremely strict interpretation within the terms of a set definition.

From my reading of the provisions of paragraph (qb) (quoted above), I am of the opinion that Parliament did not intend that too strict an interpretation should be put upon either of the following expressions “in full-time attendance’’ or other educational institution in Canada’’. Parliament was no doubt well aware that many students, for example those in medicine, spend only some seven or eight months at university during the first two or three years of their course. and for the balance of the year take employment in any number of types of occupation in order to derive income from which they may be enabled to pay. not only their medical school fees, but also their board and lodging while in attendance at a medical college away from home. . . .

Similar observations could be made in connection with students in dentistry. theology. or a number of other professions where students must go through a prescribed course of instruction in order to be fully qualified to offer their services to the public in their chosen field, and surely Parliament must have been aware of this situation when enacting its legislation and when it used the term “in full-time attendance at a(n) . . . educational institution in Canada in a course at a post-secondary school level.’’

As for the interpretation to be given to “attendance”, the following is stated at pages 170-71 [739-40] of the same judgment:

In his notice of appeal to the Board. the appellant stated that the correspondence-course portion of his training and instruction covered . the period “from September through April, inclusive, with variations of

a couple of weeks due to a varying number of lessons in different years’’, and dealt with the theory of accountancy. In the said notice of appeal, the appellant dealt with the word “attendance", and submitted that physical attendance was not necessary. He quoted the Oxford English Dictionary as defining the word attendance’’ as “the act of attending’’, and since ’’attending" is the present participle of the verb “to attend’’, he looked to the definition of ’attend", which read as follows:

“1. To turn the mind to; 2. To apply oneself to; or 3. Be present at.’’

He submitted, therefore, that it was very obvious, from the facts in connection with his own case, that it was necessary for him to both “turn his mind to’ and ’’apply himself to" the course in question, and accordingly he contended that the requirements of attendance, as stipulated in the Income Tax Act, were met, beyond any doubt, in the case of the chartered accountant’s course. He submitted that it was not necessary that there should be physical attendance at any institution, although in fact there was physical attendance by the appellant at his principal’s office where he received his practical instruction. The appellant contended that it was most unreasonable and unrealistic for the respondent to attempt to confine the meaning of the word “attendance” to the third definition, only, and to argue that the meaning of “attendance” was not met also by the first two definitions of the verb “to attend” as quoted above.

At page 173 [741] of the same judgment, it is stated that:

In the light of all these representations, and the facts in connection with this particular taxpayer’s case, and my understanding of the. intention. of the legislature when Section 11(1)(qb) of the Income Tax Act was enacted, and in view of the “fair, large and liberal construction and interpretation” which I think should be given to the wording as contained in’ the said paragraph, I have reached the conclusion that this appeal should be allowed for the reasons indicated above and, more particularly, for the reasons outlined by the appellant in his notice of appeal in support of the interpretations which he considers should be put upon the words “full-time attendance” and “other educational institution”, with which I am in agreement.

This judgment was affirmed by the oral decision of Dumoulin, J, dismissing the appeal of the Minister of National Revenue.

The same interpretation of the provisions of paragraph 11 (1)(qb) as in Charles David Moore v MNR was given by Cecil L Snyder, QC, Chairman of the Tax Appeal Board, in John Kenneth Carson v MNR, 41 Tax ABC 249; 66 DTC 424, where he stated at pages 251-2 [426]:

Tuition fees were paid by the appellant for a course which, he was required by the terms of his contract to pursue. In the year 1963, Section (11)(1)(qb) of the Income Tax Act permitted the deduction: of tuition fees paid by a student in full-time attendance at: an educational institution in Canada in a course at a post-secondary school level. This section was reviewed in Moore v MNR, 33 Tax ABC 160 [63 DTC 734], and it was held that the instruction received by a student in accountancy, articled to a chartered accountant who was a member of the Institute of Chartered Accountants of British Columbia, and pursuing his studies through a “correspondence course”, was instruction in a course at post-secondary school level. It was decided that the appellant in the Moore case was in full-time attendance at an educational institution and entitled to deduction of his tuition fees. In the Moore appeal it was further held by this Board, and the decision was affirmed by oral judgment in the Exchequer Court of Canada, that the provisions of Section 11 (1)(qb) should receive a fair, large and liberal construction and interpretation to ensure the attainment of the object of the Act. It would seem, indeed, that this was the intent of Parlia- ment because in 1964 paragraph (qc) was enacted and it provided for the deduction of tuition fees paid to an educational institution providing courses at a post-secondary school level if such amount exceeded $25. This new enactment did not require “full-time attendance” at an educational institution. Of course, this paragraph (qc) is not applicable to the taxation year 1963 but it seems to confirm the intention of Parliament that tuition fees paid by a student pursuing a course at post-secondary school level are deductible from his income in any event. The appellant’s evidence indicated that he continued his studies commenced in the summer of 1963 throughout the year with assistance from the principal of the school. This fact, considered with the decision in the Moore case and the subsequent enactment of paragraph (qc) of Section 11(1), leads to the conclusion that the appellant should be permitted to deduct from his. income tuition fees paid in 1963.

It should be noted that Chairman Snyder referred to an amendment to the Act in the following year to try to determine the intent of the legislator. In 1964 new provisions had been adopted, those of paragraph 11(1)(qc) of the 1948 Act, and at page 252 [426] ibid it is Stated that:

Although Section 11(1)(qc), enacted in 1964, permits the deduction of tuition fees paid by a taxpayer, it is noted that Section 5(1 )(a) which sets out specifically the deductions permitted from income received from an office or employment was not amended in 1964 to include the deduction provided in paragraph (qc) from income arising from an office or employment. Surely it was not the intention of Parliament to deny to employed persons the deduction set out in Section 11(1)(qc). Such an interpretation would lead to a distorted result to hold that the provisions of Section 11 (1)(qc) are applicable only to self-employed persons or those with income from other sources. It is likely that paragraphs (qb) and (qc) of Section 11(1) were enacted to encourage students to pursue higher education and it would defeat the purpose of the legislators if a narrow and limited interpretation was given to these provisions.

I would respectfully distinguish the case at bar from the judgment of Heald, J in MNR v Frank Albert Ritchie, [1971] CTC 860; 71 DTC 5503, with respect to the interpretation to be given to such provisions, because I believe that paragraph 110(1)(h) requires a more liberal interpretation, and further, I believe that the fact that the case at bar comes under. paragraph 110(1)(h), where the context is not the same as for paragraph 11(1)(qb) of the 1948 Act, is sufficient in itself to distinguish it from Ritchie.

In Ritchie, Heald, J did not have to consider provisions similar to those in paragraphs 110(9)(a), (b) and (c), which define the following expressions for the purpose of paragraphs 110(1)(g) and 110(1)(h): “designated educational institution’’ in paragraph (a), “qualifying educational program” in paragraph (b), and “supporting individual” in paragraph (c).

Paragraph 110(9)(b), cited above, defines ‘‘qualifying educational program” as a program of not less than 3 consecutive weeks’ duration in which the student spends at least 10 hours per week on courses or work in the program.

There were no provisions similar to those in paragraphs 110(9)(a), (b) and (c) in paragraphs 11(1)(qb) and 11(1)(qc) of the 1948 Act, except the reference to 13 consecutive weeks for a university outside Canada in paragraph 11 (1)(qb).

I believe that since the-legislator required in paragraph 110(9)(b) for the purposes of paragraph 110(1)(h) a program of not less than 3 consecutive weeks’ duration and courses or work requiring at least 10 hours per week, this criterion can and must be used to determine whether a student is in full-time attendance at a designated educational institution.

Since the wife of plaintiff was enrolled in a program of 13 consecutive weeks’ duration, with 7 hours of courses and 10 hours of work per week, since plaintiff met the requirements of paragraph 110(9)(a), which defines a “designated educational institution”, and the Ste-Foy CEGEP is such an institution, and since plaintiff also met the requirements of paragraph 110(1)(c), which defines a “supporting individual”, I believe that the provisions of paragraph 110(1)(h) apply: all the requirements of paragraph 110(1 )(h) have been met, as is shown by the evidence. Consequently, plaintiff is entitled to deduct $200 from his taxable income for 1973, this amount being equal to the sum of $50 for each month during which his wife was taking the course, as provided for in the aforementioned section.

I firmly believe that the definition of “qualifying educational program” in paragraph 110(9)(b) provides us with a useful and reasonable criterion of whether a person is a “student in full-time attendance at a designated educational institution” for the purposes of paragraph 110(1)(h). A person fits this description when he attends a designated educational institution and is enrolled in a course of the duration provided for in paragraph 110(9)(b), that is, a course of not less than 3 consecutive. weeks’ duration, and spends a minimum of 10 hours per week on courses or work in the program.

Had the legislator intended us to refer to the personal qualifications of the student, as was maintained at the hearing, I do not see why he would have legislated as he did in paragraph 110(9)(b).

This interpretation of paragraph 110(1)(h), which, on the one hand, avoids considering each student’s case with respect to the time available for his training program, and on the other hand, enables us to judge clearly whether a student qualifies as a student in full- time attendance at a designated educational institution, appears to correspond very well with the intent of the legislator.

The fact. that the wife of plaintiff was considered a part-time student by the institution she attended for purposes of establishing tuition fees does not mean that she has to be considered as such, that is, a part-time student for the purposes of income tax, since the legislator provided in paragraph 110(1)(b) that a minimum of 3 consecutive weeks and 10 hours of courses or work in the program per week will be considered sufficient to be entitled to the deduction under paragraph 110(1)(h) of the Act, provided that all other conditions are met.

This designation by the educational institution does not bind the Department any more than the designation of capital with respect to a payment received by one of the parties to a contract affects it if this payment is considered to be income under a provision of the Act or by the courts.

Further, I believe that this interpretation of paragraph 110(1)(h) does away with all possibilities of discrimination, since there is a fixed criterion with regard to the duration and no reference to the individual situation of the student.

The appeal of plaintiff is therefore allowed and the assessment cancelled, and defendant will pay the costs of the case.