Ernest G Stickel v. Minister of National Revenue, [1973] CTC 202, 73 DTC 5178

The Chief Justice:—This is an appeal from a judgment of the Trial Division dismissing the appellant’s appeals from his assessments under Part I of the Income Tax Act for the 1967 and 1968 taxation years.

The appeals were brought to have decided the question whether the appellant was exempt from income tax during those taxation years on his remuneration as an Associate Professor at the University of Alberta. The exemption was claimed under an article in the Canada- United States of America Tax Convention, which has the force of law by virtue of chapter 21 of the Statutes of Canada, 1943-44, and chapter 27 of the Statutes of Canada 1950. The article is Article VIHA of the Tax Convention as amended and reads as follows:* [1]

A professor or teacher who is a resident of one of the contracting States and who temporarily visits the other contracting State for the purpose of teaching, for a period not exceeding two years, at a university, college, school or other educational institution in such other State, shall be exempted by such other State from tax on his remuneration for such teaching for such period.

Two questions arise on this appeal. The first is whether the appellant was a person who fell within the words “A professor . . . who is a resident of’’ the United States. The second is whether the appellant was a person who fell within the words “A professor. .. who temporarily visits” Canada “for the purpose of teaching, for a period not exceeding two years, at a university . . .”.

The learned trial judge decided the second question against the appellant and did not find it necessary therefore to decide the first question. We therefore consider the second question first.

The appellant came to Canada to teach at the University of Alberta under a two-year term contract. At the expiration of that two-year term of employment, the appellant did cease to teach but he stayed in Canada for several months longer doing other work. On these facts, the learned trial judge held that Article VIIIA did not apply because he interpreted Article VIIIA as not applying where the duration of the visit was, in fact, in excess of two years. We do not so read Article VIIIA.

The question of interpretation turns on whether the words “for a period not exceeding two years” modify the word “visits” or are an integral portion of the expression “for the purpose of teaching .. . . at a university ..

Once it is appreciated that the words that constitute the second condition precedent to the application of Article VIIIA are

who temporarily visits the other contracting State for the purpose of teaching, for a period not exceeding two years, at a university . . .

and not merely “who temporarily visits the other contracting State for the purpose of teaching, for a period not exceeding two years”, we are all agreed that the words “for a period not exceeding two years” are an integral part of the expression “for the purpose of teaching . . . at a university . . .” and do not relate to the period of the visit as revealed by the actual events.

On that view of the matter it becomes a question of fact as to whether the appellant was a person who was at the relevant time a “resident” of the United States and was a person who temporarily visited Canada for the purpose of teaching at a university for a period not exceeding two years.

We do not think that it is necessary to review the evidence at length. It has been carefully reviewed by the learned trial judge although he did not find it necessary to make any findings on the questions that become relevant on the view that we have taken as to the meaning of the article.

In our view, the balance of probability on the evidence is that the appellant, who was resident in the United States, had given some thought to the possibility of moving to Canada before he obtained an opportunity to take a two-year term appointment at the University of Alberta, that he discussed the project with his family, who were not enthusiastic about the prospect of a permanent move to Canada, and that they reached a joint decision to go to Canada for the two-year appointment only but on the understanding that during that two-year period they might reconsider the possibility of making their permanent home in Canada. On those facts, having regard to the necessity of interpreting the words ‘‘temporarily visits” as including visiting for the purpose of teaching for a period as long as two years, we are agreed that the appellant was a person who temporarily visited Canada for the purpose of teaching at a university for a period not exceeding two years.

A more difficult question is whether the appellant was “a resident” of the United States at the time contemplated by Article VIIIA. The respondent’s position is that this contemplates residence in the sense given to that word when it is a basis for liability to income tax and that it is a condition of the article that a person must have been so resident throughout the period of the exemption. If that be so, it is difficult to envisage what tax relief is accorded by Article VIIIA in the case of professors and teachers that would not otherwise be available in the case of all taxpayers by virtue of the foreign tax credit provisions which are, it is believed, also contemplated by the Tax Convention in question.

We do not find it expedient to attempt to formulate any definition of what is implied by the words “is a resident” in their context in Article VIHA. No matter how narrowly the expression is construed, it would certainly embrace the appellant if he had been sufficiently affluent and hard hearted to have left his family in a family home in the United States for the two-year period and to have continued to incur the expense of maintaining his community and social relationships there during the period of his two years’ absence. This would be so in the case of a mariner or soldier who had to absent himself from his home for such a period and the work performed while away does not constitute a relevant distinction. If that would have been so in the case of a person who could afford to maintain his family in the United States while away, and was willing to do, we are of the view that a person who is on a two-year “temporary” visit to teach in a foreign university was equally a “resident” of his native land for the purposes of Article VIIIA even though he took his family with him and did not continue to incur the expense of maintaining his community and social relationships in his native land.

The appeal will, therefore, be allowed with costs and the assessments will be referred back for reassessment.