Chester J Webb v. Minister of National Revenue, [1974] CTC 2320

Judge K A Flanigan (orally: September 23, 1974):—This is an appeal by Chester J Webb against a reassessment of the Minister of National Revenue for the 1972 taxation year. The point at issue is one which, I believe, comes before the Board for the first time.

The appeal arises out of the 1972 tax legislation allowing certain moving expenses to taxpayers as a deduction from their income in a given year. The facts are not in dispute and have been agreed upon.

The appellant was at all material times a member of the Canadian Forces stationed in Germany. During his posting in Germany he met and married a German national. He was subsequently transferred or posted back to Canada, and he sought to deduct all costs of moving his personal effects above and beyond the amounts allowed or paid for in that respect by the Canadian Forces.

The appellant had a second claim in his notice of appeal with respect to a charitable donation which, after discussion with members of the staff of the respondent, he dropped, having satisfied himself that the charitable donation was not made to a charitable organization recognized or approved for the purposes of the Canadian Income Tax Act.

The appellant has presented a very logical and orderly argument on his own behalf in support of his contention that he should be entitled to the deduction claimed for the additional cost of moving his personal effects. He bases his argument on paragraph 250(1)(b), which provides:

250. (1) For the purposes of this Act, a person shall . . . be deemed to have been resident in Canada throughout a taxation year if

(b) he was, at any time in the year, a member of the Canadian Forces,

The purpose of this section is clearly to ensure that the treasury of Canada will not lose the opportunity to tax members of the Canadian Forces who are being paid by the Government of Canada should they be absent from this country and who, without this specific charging section, would be non-residents and therefore non-taxable under our Canadian statute.

The appellant seeks to apply the “deemed residence” of paragraph 250(1)(b) to the wording of paragraph 62(1)(a) of the 1972 Act for the purpose of having himself defined as a resident of Canada who “has ceased to carry on business or to be employed at the location or locations in Canada at which he ordinarily so carried on business”. This is clearly a deducting section and introduces for the first time in our tax law such a provision.

Short of attending the actual hearings that were conducted on the various sections of the proposed legislation that is now law, or of drawing on one’s knowledge of what was contained in the White Paper on Taxation and its predecessor the Carter Commission Report, one can only speculate on the reasons for enacting this provision, but it would seem that section 62 is clearly meant to contain an incentive to taxpayers to change their residence to a location where their employer offers them alternative employment, or where new employment is available to them, without having to bear the burden of the sometimes prohibitive cost of moving within this vast country.

lt has been said in argument that a taxpayer, to claim an exemption or deduction, must bring himself clearly within the meaning of the section of the Act purporting to grant such a deduction. It is also trite law to say that any section of a fiscal statute must be as rigidly interpreted and as consistently applied as possible, since so many millions of people are affected by the statute.

It has also been said by this Board and by the courts that Parliament, in passing fiscal legislation, must try to generalize to a certain degree because it is impossible to cover specifically each and every situation that an individual taxpayer might experience. So it is no more unusual under this Act than it was under the pre-1972 legislation to find that in a given set of circumstances logic does not necessarily apply and inequality among taxpayers may seem to exist.

There is no doubt whatsoever in my mind that section 62 was meant to include, and does include, only those persons who were physically resident within the confines of Canada at the time the move was made and at a time when the section was in effect, as it refers to moving from one residence in Canada to another residence in Canada. There are many sections, perhaps far too many sections, of the new legislation that make use of the word “deemed”. As one reads through the Act, one sees that, in some instances, it has more than its normal, everyday dictionary meaning, and in other instances, the meaning attributed hardly seems applicable.

It has long been established, in the common law as well as in statute law, that a member of the Armed Forces does not lose his domicile while serving abroad as a member of those Forces. Nor, under para- graph 250(1 )(b) of the Income Tax Act (as I have said), does he lose his status as a Canadian resident. This provision in the 1972 legislation is not new; it is merely one that has been carried forward from previous legislation. As I said at the outset, it is there so that the members of the Armed Forces will be liable to taxation in Canada notwithstanding their actual physical presence in a foreign jurisdiction.

Therefore I can see no discrimination, nor any direct connection between the two sections. I think they are mutually exclusive and, in my view, there is no conflict between them. The exempting section does not apply to this appellant because he was not in a location in Canada at the time that he made his move, notwithstanding the fact that he was deemed to be a Canadian resident for the purposes of taxation.

I therefore find that the appeal must be dismissed and I must accept the Minister’s reassessment as being sound both in law and in fact.

Appeal dismissed.