Delmer
E
Taylor:—This
is
an
appeal
from
an
income
tax
reassessment
for
the
year
1968
in
which
the
Minister
of
National
Revenue
deducted
an
amount
of
$4,281
from
income
earned
solely
in
the
Province
of
Quebec
rather
than
proportionately
from
the
appellant’s
income
in
all
provinces.
The
appellant
relied
on
Income
Tax
Regulations,
subsection
2601(2)
while
the
respondent
relied,
inter
alia,
on
sections
3,
4,
paragraph
11
(1)(la)
and
section
139
of
the
Income
Tax
Act,
RSC
1952,
chapter
148
as
amended,
and
subsections
2601(1)
and
(2)
and
section
2606
of
the
Income
Tax
Regulations.
Facts
The
appellant
was,
during
the
year
in
question,
a
management
consultant
and
gained
income
from
businesses
located
in
eight
of
the
ten
provinces
until
May
31
of
the
year
in
question
and,
in
addition,
earned
a
salary
during
that
period
and
continuing
for
the
balance
of
the
year.
He
resided
in
the
Province
of
Quebec
on
December
31,
1968.
The
amount
in
dispute
($4,281)
is
composed
of
$4,200
in
alimony
payment
and
$81
for
pension
plan
contribution,
and
there
was
no
dispute
with
regard
to
either
the
amount
or
the
deductibility
from
the
taxpayer’s
income
for
purposes
of
income
tax
calculation.
The
sole
dispute
was
whether
it
should
be
allocated
proportionately
to
all
provinces
concerned
or
solely
to
the
Province
of
Quebec.
Contentions
The
appellant
contended
that
the
dollars
used
to
pay
the
$4,281
had
been
earned
in
all
provinces,
hence
should
be
allocated
to
all;
and
that
the
single
allocation
(to
Quebec)
resulted
in
his
being
assessed
a
higher
total
income
tax
than
should
have
been
paid
under
the
federal-
provincial
income
tax
sharing
arrangements.
The
respondent
asserted
as
follows
and
I
quote
from
the
reply
to
notice
of
appeal:
4.
The
Appellant
having
resided
in
Quebec
on
the
last
day
of
the
1968
taxation
year
and
having
received
income
from
businesses
with
permanent
establishments
outside
the
province,
his
income
earned
in
the
taxation
year
in
the
province
was
the
amount
by
which
his
income
for
the
year
exceeded
the
aggregate
of
his
income
from
carrying
on
business
in
each
other
province;
5.
The
words
“his
income
for
the
year’’
hereabove
underlined
are
defined
by
section
3
of
the
Act,
which
section
provides
for
the
deduction
of
the
alimony
payment
in
the
computation
of
said
income;
Evidence
Neither
the
appellant
nor
the
respondent
produced
any
evidence
for
examination
by
the
Board,
both
agreeing
that
the
matter
rested
on
an
interpretation
of
the
word
“income”
as
used
in
the
Income
Tax
Act
and
the
Regulations
to
which
reference
has
been
made.
Argument
The
appellant
presented
no
argument,
merely
referring
the
Board
again
to
the
regulation
he
considered
applicable,
and
to
the
logic
of
his
proposition.
Counsel
for
the
respondent
argued
the
Board
should
hold
that
the
conditions
i
equired
under
the
Income
Tax
Act
and
the
applicable
Income
Tax
Regulations
had
been
fulfilled,
and
that
the
income
in
the
Regulations
was
equivalent
to
the
net
income
in
the
Act.
In
support
of
this
position,
he
referred
the
Board
to
the
case
of
Lois
Hollinger
v
MNR
[1972]
CTC
592;
73
DTC
5003.
Findings
The
position
of
the
appellant
may
appear
to
be
reasonable
and
logical
and,
indeed,
the
actual
dollars
expended
($4,281),
if
they
could
be
traced,
may
have
come
from
all
provinces.
They
may
just
as
easily
all
have
arisen
in
Alberta
or
New
Brunswick,
or
in
Quebec.
That,
however,
is
not
the
critical
point,
which
is
that
the
major
part
of
the
income
involved
came
from
the
appellant’s
business
operations,
in
fact
all
the
income
from
provinces
other
than
Quebec
was
from
such
business
operations.
The
formula
determined
by
the
Regulations
is
that
the
aggregate
of
such
business
income
outside
the
province
of
residence
is
to
be
deducted
from
the
income
earned
in
the
taxation
year,
and
that
income
is
the
net
income
to
which
reference
has
already
been
made.
There
is
no
indication
this
business
income
outside
the
province
of
residence
should
be
reduced,
either
pro
rata
or
in
any
other
way,
by
amounts
such
as
alimony
or
pension
contributions.
The
amount
which
results
is
that
held
to
be
the
income
in
the
particular
province
of
residence.
It
is
in
effect
the
balance
of
everything
else,
and
although
it
might
be
argued
that
the
two
amounts
used
are
based
upon
different
formulae
in
some
instances—such
as
the
instant
case
where
there
is
both
business
and
salary
income—the
interpretation
to
be
taken
from
the
Income
Tax
Act
and
the
Income
Tax
Regulations
is
clear,
in
my
opinion.
The
Honourable
Camilien
Noël,
Associate
Chief
Justice
of
the
Federal
Court—Trial
Division,
in
the
Ho/linger
case
(supra)
cited
by
counsel
for
the
respondent,
summarized
the
situation
most
adequately
at
page
600
[5009]:
I
am
afraid
that
although
it
does
appear
that
the
appellant
is
paying
a
large
amount
of
taxes
on
the
income
she
receives,
I
cannot
see
how
I
can
hold
that
she
was
wrongly
assessed
in
the
light
of
subsection
2601(2)
of
the
Income
Tax
Regulations
and
the
requirements
of
its
subparagraphs
which
are
all
met
here
and
which
are
namely
that:
(1)
the
appellant
resided
in
a
province
on
the
last
day
of
taxation
year,
(2)
she
received
income
from
a
business,
and
(3)
that
business
had
a
permanent
establishment
outside
the
province,
in
the
State
of
New
Jersey.
The
appeal
is
therefore
dismissed
with
costs.
Decision
The
appeal
is
dismissed.
Appeal
dismissed.
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