9 July 2001 Internal T.I. 2000-0047617 - SOJOURNING

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Various issues on sojourning

Position: see memo attached

Reasons: see memo attached

		July 9, 2001

	International Tax Directorate	International Section
	Rene Fleming, Manager	Tim Kuss
	Policies & Publications Section	957-2117
	Policy and Programs Division

	Attention:  Ved Arora
		2000-004761

Paragraph 250(1)(a) - Sojourning in Canada

You have requested our views with regard to certain issues raised by XXXXXXXXXX, regarding the applicability of paragraph 250(1)(a) to determine the residence status of certain airline pilots employed by a Canadian resident airline.

In this regard, you have enclosed a copy of a representation made by XXXXXXXXXX to the Winnipeg Tax Services Office ("TSO") regarding the residence status of XXXXXXXXXX. You have also included the draft submission from Corrine Webb, the TSO auditor, in response to XXXXXXXXXX representation.

Specifically, you have requested our views on the following:

1. the legal rationale for the CCRA's position that presence in Canada for any portion of a day constitutes presence for a whole day for purposes of paragraph 250(1)(a); and

2. whether sojourning in Canada for the purpose of paragraph 250(1)(a) includes any presence of the airline pilots in Canada for a purpose relating to their employment with the Canadian resident airline.

Any Part of a Day is a Day

It has consistently been the CCRA's position that any part of a day constitutes a whole day for purposes of paragraph 250(1)(a). This position is not based on any specific jurisprudence. It is consistent with paragraph 5 of the Commentary to Article 15 of the OECD Model Tax Convention on Income and on Capital (the "OECD Model") in the context of the 183 day presence test.

XXXXXXXXXX refers to two cases that he considers indicate that the CCRA approach is contrary to law. In our view, neither of these cases is precedent setting.

The first case is Stephens v. M.N.R., [1988]1 C.T.C. 2249 (T.C.C.). In this case the auditor had reviewed travel vouchers to determine the number of days the taxpayer was present in Canada. It was the auditor's view that presence in Canada for even one hour on any particular day constituted sojourning in Canada for an entire 24 hour period. The Judge commented that counsel had produced no authority in support of this interpretation nor is there any provision in the Act to deem this to be the case. While this is true, it does not appear that the Judge actually came to the conclusion that any part of a day should not be counted as a day for purposes of the sojourner rule, nor did he have to. It should be noted that the Judge went on to say that the auditor's recollection was shown to have been stale and vulnerable to error of recall. The actual travel vouchers that were produced (even accepting the part days as whole days) only totalled 175 days. On this basis, the assessment was vacated.

The second case is Wilkie v. Commissioner of Inland Revenue, 32 T.C. 495 (H.C.J.). This case is a 1951 British case and the CCRA is not bound by its decision. In any event, under the relevant U.K. law at that time, a person was not taxed as resident in a year where the person was in the U.K. for a temporary purpose and ... "has not actually resided in the United Kingdom at one or several times for a period equal in the whole to six months..." We suggest that use of the word "actually" may allow us to distinguish the U.K. law from test found in paragraph 250(1)(a). We also suggest that if the duration test in paragraph 250(1)(a) was meant to be based on the number of hours that equate to 183 full days, the legislation would be worded in that manner.

While paragraph 5 of the Commentary to Article 15 of the OECD Model makes it clear that "any part of a day is a day" for the purposes of the 183 day "presence test", in our view the same approach should be used in paragraph 250(1)(a). We appreciate that a person may be "present" in a country for a period and not be "sojourning" during that period, i.e., depending on the nature of the stay or visit. However, as far as the measurement in days of a particular visit or stay, we feel the interpretation described in the Commentary to Article 15 of the OECD Model should be followed.

Presence in Canada for Employment Purposes

It is XXXXXXXXXX opinion, based on the decision in R&L Food Distributors Ltd v. M.N.R.,[1977] C.T.C. 2579 (T.R.B.), that presence in Canada for work reasons does not constitute sojourning for purposes of paragraph 250(1)(a).

R&L Food Distributors is a case that deals with commuters. The taxpayers lived in Michigan. Their regular pattern was to commute on a daily basis to their place of employment in Windsor, Ontario and returning home that night. Paragraph 8 of the judgement reads as follows:

In The Shorter Oxford Dictionary the meaning of "sojourn" is given as "to make a temporary stay in a place; to remain or reside for a time". In perusing numerous cases decided by the Canadian and British courts, it is obvious that coming from one country to work for the day at a place of business in another country and thereafter returning to one's permanent residence in the evening is not tantamount to making a temporary stay in the sense of establishing even a temporary residence in the country where the business enterprise is situate.

The facts of this case are that the taxpayers had a regular pattern of returning to their residence in the U.S. each night. It is not clear whether the decision would have been the same if they remained in Canada from Monday to Friday, or for longer periods, notwithstanding that they were "employed" during their presence in Canada. In our view, this decision should not be taken to mean that a person could not be sojourning in Canada during any period or periods that include a time of work in Canada. Rather, simply, if a person is commuting to Canada for his employment and returning each night to his normal place of residence outside of Canada, the person is not sojourning in Canada.

Having said this, how should these principles be applied to XXXXXXXXXX situation?

Firstly, we emphasize it is important not to confuse our position that "any part of a day is a day" with whether a person is "sojourning" in Canada on any particular day that he is present in Canada. By this we mean, if a particular visit to Canada is considered part of the person's sojourning time in Canada, any part days included in the visit would be considered whole days. However a person is not automatically considered to be sojourning for every day (or part day) that the person is present in Canada. It will depend on the nature of the particular stay in Canada.

Clearly, there are no hard and fast rules that should be followed. We suggest, in the context of an airline pilot (and assuming the person has no other ties to Canada), where a person comes to Canada the day of or the day before a scheduled international flight and leaves Canada the day of or the day after the return flight, it is our view that none of these days should be considered "sojourning" days. We would consider this similar to a commuter. Within the principles of the case (and taking into account the flights the particular pilot was scheduled for), depending on the circumstances it would not be unreasonable to extend this, on occasion, to two days before or after the particular flight.

However, where the length of stay in Canada increases, the visit should not be equated with that of a commuter. In our opinion, the person would in fact be sojourning in Canada. In such a case we suggest that the entire visit would be considered sojourning, notwithstanding that the visit may include a flight or other employment related duties.

Regarding days spent in Canada on "draft standby", or for training purposes, we would generally consider these days part of the sojourning period. In those instances where the individual remains in Canada between a series of flights for any extended period of time simply because it is convenient to do so, or he can't be bothered to return to his normal place of residence, it is our opinion that such stays should generally be considered part of the sojourning period.

We do not intend to "tie the auditor's hands". Our comments are intended to provide direction. The purpose and nature of XXXXXXXXXX visits are a question of fact.

We are returning the three-ring binder containing XXXXXXXXXX representation and related documentation.

for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch

Encl.