George G Addie v. Minister of National Revenue, [1980] CTC 2647, [1980] DTC 1556

John B Goetz:— This is an appeal by the taxpayer with respect to his 1978 taxation year wherein as a geologist he sought to deduct the following fees:

The sum of $430 as an education deduction in attending the Canadian Outward Bound Mountain School and the sum of $25 paid to the British Columbia Institute of Technology were also claimed.

At the outset of the hearing it was agreed that the appeal with respect to the deductions of $70 for membership in the Association of Professional Engineers of British Columbia and the deduction of $70 as dues to the Association of Professional Engineers, Geologists and Geophysicists of Alberta be allowed. It was further agreed that the appeal for deduction of fees for The Cordilleran Section of the Geological Association of Canada in the sum of $36.25 be dismissed and further that the payments of $430 to the Canadian Outward Bound Mountain School and $25 paid to the British Columbia Institute of Technology were properly disallowed by the Minister.

The issue then resolves upon whether fees for membership in the Canadian Institute of Mining & Metallurgy in the sum of $35 are properly deductible from the appellant’s income.

Facts

The appellant is registered in the Association of Professional Engineers of British Columbia and obtained a Bachelor of Science Degree from Mount Allison University in 1958, and a Bachelor of Science Degree from Washington State University in 1968, both degrees requiring three years of study. The latter degree related to the study of economic geology. The ap- pellant apparently has recognized expertise in the mineral and geological fields, having dealt with Cominco on what was known as “Kimberley Fault Problem’’ and he was retained to find the north section of the ore body and give advice as to the net slip of the Fault. He also was retained to ascertain the extension of an ore body at the Reeves MacDonald Mine, which he did in fact locate on the west side of the Ponderosa River, which mine is now called the Annex Mine. From 1970 to 1972 he was an employee of J C Sproule & Associates who were engineers specializing in geology and who were also geophysicists. Their function was to find domes in the Ellasmere mining area. In 1972 he opened his own consulting firm, Addie Consultant Ltd, in British Columbia and in 1974 he joined the Department of Mineral Resources where he is now employed as District Geologist.

Findings

The appellant testified that his education increased through his association and membership in the Canadian Institute of Mining and Metallurgy where he would attend a convention once a year and meet with associates and learn of new techniques. Periodic district meetings of this group were held and the appellant, through his membership in the Canadian Institute of Mining and Metallurgy, received a monthly bulletin which was filed and appears to be extremely informative for any one in the mining and metallurgical field. As a result of his membership he also receives an annual news report after the annual convention and articles are submitted to the monthly bulletin by learned members by the metallurgical and mining association whereby scientific papers are published, one of which was submitted by the appellant to the bulletin and was published and related to “angle of intersection’’. He stated in cross-examination that this article had been received with great enthusiasm by members of the Association. He admitted that the Canadian Institute of Mining and Metallurgy was not established by any statute in any province, and his prime reasons for joining were the maintaining and upgrading of his expertise in this particular field of geology which assisted him in finding employment throughout the years and the increase of the use of his services by word of mouth as his expertise grew.

Filed at the hearing by the appellant and the respondent, was the Engineering Profession Act, Revised Statutes of British Columbia, c 128, wherein in section 2 the “practice of professional engineering’’ is described as follows:

2. In this Act, unless the context otherwise requires,

“practice of professional engineering” means the carrying-on of any branch of chemical, civil, electrical, forest, geological, mechanical, metallurgical, mining or structural engineering, including the reporting on, designing, or directing the construction of any works which require for their design, or the supervision of their construction, or the supervision of their maintenance such experience and technical knowledge as are required by or under this Act for the admission by examination to membership in the Association, and, without restricting the generality of the foregoing, shall be deemed to include reporting on, designing, or directing the construction of public utilities, industrial works, railways, bridges, highways, canals, harbour-works, river improvements, lighthouses, wet docks, dry docks, floating docks, launch-ways, marine-ways, steam-engines, turbines, pumps, internal-combustion engines, airships and aeroplanes, electrical machinery and apparatus, chemical operations, machinery and works for the development, transmission, or application of power, light, and heat, grainelevators, municipal works, irrigation-works, sewage-disposal works, drainage- works, incinerators, hydraulic works, and all other engineering-works, and all buildings necessary to the proper housing, installation, and operation of the engineering-works embraced in this clause; but the execution as a contractor of work designed by a professional engineer, the supervision of construction of work as foreman or superintendent or as an inspector, or as a roadmaster, trackmaster, bridge or building master, or superintendent of maintenance, shall not be deemed to be the practice of professional engineering within the meaning of this Act; (Italics mine).

“professional engineer” means a person who is registered or duly licensed as such under the provisions of this Act. (Italics mine).

The appellant was duly licensed under this Statute, having met all the requirements thereof, including subsection 11(1).

The following cases were cited by counsel: MNR v Robert A F Montgomery, [1970] CTC 115; 70 DTC 6080; Her Majesty the Queen v Robert B Swingle, [1977] CTC 448; 77 DTC 5301. Both of these cases were decisions of the Federal Court, Trial Division. The Montgomery case (supra), I feel, really has no application in the case before me in that it related merely to a naval officer who sought to deduct, as professional membership, fees that he paid as “wardroom dues’’ which really relate only to the social aspect of being a naval officer. On the other hand, the Swingle decision (supra) is very pertinent to my consideration of the facts in this case. In that case, heard before Collier, J, a professional analyst had sought to deduct dues from various societies relating to the continuing and upgrading of his profession as a forensic chemist. His appeal was allowed by the Tax Review Board, that is to say, he was allowed the deductions claimed by him. The Minister of National Revenue appealed to the Federal Court, Trial Division, wherein Mr Justice Collier disallowed the appeal. The defendant in that case was a chemist holding a Doctor’s Degree in Applied Sciences and also held a post-doctorate Degree. He had to keep up with modern techniques and technical developments in chemistry and indicated that in the Public Service, so-called professional societies are considered desirable qualifications. The organizations to which he subscribed, published learned journals and provided him with technical information and knowledge.

The whole issue in this case turns on my interpretation of the provisions of subparagraph 8(1)(i)(i) of the Income Tax Act, SC 1970-71-72, c 63, as amended, which reads as follows:

(1) In computing a taxpayer’s income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:

(i) amounts paid by the taxpayer in the year as

(i) annual professional membership dues the payment of which was necessary to maintain a professional status recognized by statute, (Emphasis mine).

While Mr Justice Collier dismissed the appeal in Swingle (supra) on the grounds that the defendant in that case had not established that there was any statute setting up or defining an “analyst”, at 457 and 5307 respectively, he stated:

If the defendant is viewed merely as an analyst, I have difficulty in holding, on the evidence before me, that an analyst has a “professional status recognized by statute”. I assume there are many kinds of analysts. The legislation earlier referred to (the Canada Shipping Act, the Northern Inland Waters Act, the Arctic Waters Pollution Prevention Act and the Clean Air Act) do not define an “analyst”. Nor do they describe that occupation in any manner from which a “professional status” can be inferred. The statutes merely provide that “any person”, or sometimes a “qualified person” may be designated as an analyst. Subsection 731(1) of the Canada Shipping Act (to use it as an example) reads:

731.(1) The Minister may designate any person as a pollution prevention officer or an analyst for the purposes of this Part.

But when one turns to subparagraph 8(1 )(i)(i) of the Income Tax Act the use of the term “professional” seems to infer special skills, abilities, or qualifications. The statutes relied on by the defendant are silent as to those matters. The defendant has not brought his claim for the deductions clearly within the terms of this subparagraph conferring the right.*

Sheaffer Pen Co of Canada Ltd v MNR (53 DTC 1223) (1953) CTC 345 at 349.

I concur with the observations made by the learned Trial Judge wherein he states at 456 and 5307 respectively:

I can visualize situations where a profession is recognized by statute, but where no annual dues are required to be paid in order to carry on that profession; yet at the same time it may be “necessary” to belong to organizations in order to remain qualified, in the practical and business sense; to be able effectively to perform, and earn income, in a particular profession.

I am advised by counsel for the appellant that the portion of the Swingle judgment relating to non-qualifications, by merely being a chemist, for the deductions of dues from various institutes and chemical societies, is being appealed.

Nevertheless, I am bound by the findings of the learned Justice Collier but I feel it open to me at this point in time, to express my view with respect to the deductibility of the dues to the Canadian Institute of Mining and Metallurgy (or any like professional association), and here I refer back to paragraph 2 of the Engineering Profession Act of the Province of British Columbia, and in particular to the words in italics.

The appellant is a fully qualified geologist and specializing in the metallurgical and mining fields, which terms are used in the Engineering Profession Act and to be qualified as a professional engineer, he must have one of these qualifications or others relating to other branches of engineering to be registered and licensed under the provisions of the Engineering Profession Act. The membership in the Canadian Institute of Mining and Metallurgy is, in my view, an off-shoot of the definition of “practice of professional engineering” in a specialized field and in order to specialize in that field, the appellant maintains and derives great benefits from his membership in the Canadian Institute of Mining and Metallurgy. I take the position that the definition of “practice of professional engineering” as a mining specialist in mining and metallurgy is included in the words of subparagraph 8(1 )(i)(i). Certainly this would seem logical in light of the constant attempts by various professional societies to upgrade the qualifications of their membership. Some lawyers, for instance, belong to the Canadian Tax Foundation and, specializing in the taxation field, find that this is vital to their practice. Most lawyers in Canada are members of the Canadian Bar Association which issues various publications and has annual conventions and sectional meetings for the on-going education of its members. The membership dues in the Canadian Bar Association are deducted by all practising lawyers, whether they be partners or employees of a legal law firm.

I feel that the only logical and reasonable interpretation of subparagraph 8(1)(i)(i) is that it recognizes all branches of practice of professional engineering and would therefore permit the inclusion of fees and dues paid by a professional engineer specializing in a particular field of engineering to maintain and upgrade his qualifications in that specialized field. Perhaps Parliament, through the Department of National Revenue, should and could give this question some consideration.

In that the appellant does not bring himself squarely within the provisions of subparagraph 8(1)(i)(i), and in being bound by the decision in the Swingle case (supra), I must dismiss the appeal.

Appeal dismissed.