Citation: 2011TCC328
Date: 20110705
Docket: 2010-3762(IT)I
BETWEEN:
MAY ABDALLA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
The Appellant claimed a
credit that was transferred to her from her spouse. This credit was based on
the Appellant’s spouse having paid $5,000 for tuition that the Appellant’s
spouse could include in his tuition credit. Of this amount, the Canada Revenue
Agency disallowed the amount of $3,154 for tuition that the Appellant’s spouse
paid to the University of Phoenix for courses that he was taking
online and therefore denied the transfer of the credit to the Appellant based
on this amount.
[2]
Although, in
determining the credit that is transferred from an individual to his or her
spouse for the purposes of the Income Tax Act (the “Act”), there
is no distinction between the portion of the credit based on the tuition credit
available under section 118.5 of the Act and the portion of the credit
available under section 118.6 of the Act, in the Reply it is stated
that the credit transferred was based on the tuition paid by the Appellant’s
spouse. Since the amount that the Appellant’s spouse paid for tuition is
greater than the maximum amount that could be used to determine the amount
of credit that may be transferred, it is only necessary to review the
provisions related to the tuition credit in this appeal.
[3]
A person may, subject
to certain limitations, transfer to his or her spouse any tuition credit or the credit available
under section 118.6 of the Act that the person is unable to use to
reduce his or her taxes payable. In this appeal the issue is whether the
Appellant’s spouse was entitled to include the amount he paid for tuition in
2008 in determining the amount he could claim as a tuition credit pursuant to
section 118.5 of the Income Tax Act (the “Act”). If the tuition
amount paid by the Appellant’s spouse could not be included in determining the
amount of the tuition credit that the Appellant’s spouse could claim pursuant
to this section, then the credit related to this tuition could not be
transferred to the Appellant.
[4]
Subsection 118.5(1) of
the Act provides in part as follows:
118.5 (1) For the purpose of computing the tax payable under this
Part by an individual for a taxation year, there may be deducted,
(a) where the individual was during the year a student
enrolled at an educational institution in Canada that is
(i) a university, college or other educational institution providing
courses at a post-secondary school level, or
…
an amount equal to the product obtained when the appropriate
percentage for the year is multiplied by the amount of any fees for the
individual's tuition paid in respect of the year to the educational institution
if the total of those fees exceeds $100, except to the extent that those fees
(ii.1) are paid to an educational institution described in
subparagraph (i) in respect of courses that are not at the post-secondary
school level,
…
(b) where the individual was during the year a student in
full-time attendance at a university outside Canada in a course leading to a
degree, an amount equal to the product obtained when the appropriate percentage
for the year is multiplied by the amount of any fees for the individual's
tuition paid in respect of the year to the university, except any such fees
(i) paid in respect of a course of less than 13 consecutive weeks
duration,
…and
(c) where the individual resided throughout the year in Canada near the boundary between Canada and
the United States if the
individual
(i) was at any time in the year a student enrolled at an educational
institution in the United States that is a university, college or other
educational institution providing courses at a post-secondary school level, and
(ii) commuted to that educational institution in the United States,
an amount equal to the product obtained when the appropriate
percentage for the year is multiplied by the amount of any fees for the
individual's tuition paid in respect of the year to the educational institution
if the total of those fees exceed $100, except to the extent that those fees
(iii) are paid on the individual's behalf by the individual's
employer and are not included in computing the individual's income, or
(iv) were included as part of an allowance received by the
individual's parent on the individual's behalf from an employer and are not
included in computing the income of the parent by reason of subparagraph 6(1)(b)(ix).
[5]
There are three
possible situations contemplated by this subsection:
(a)
where the individual is
enrolled at an educational institution in Canada;
(b)
where the individual is
in full-time attendance at a university outside Canada;
and
(c)
where the individual
resided near the border between Canada and the United States, was enrolled at an
educational institution in the United
States that provided courses
at the post-secondary school level and the individual commuted to such
institution.
[6]
If either (a) or (c) is
applicable, there is no restriction on the duration of the courses that must be
taken. If (b) is applicable, then subparagraph 118.5(1)(b)(i) of the Act
provides that the fees paid will not include the fees “paid in respect of a
course of less than 13 consecutive weeks duration”.
[7]
The Appellant’s spouse
was taking courses over the internet from the University of Phoenix. There was no dispute that the courses would lead to a degree. Counsel
for the Respondent indicated that the Respondent did not take issue with
respect to whether the Appellant’s spouse was in full-time attendance at the University of Phoenix and therefore the only issue in relation
to paragraph 118.5(1)(b) of the Act was the duration of the
courses taken by the Appellant’s spouse.
[8]
The Appellant’s spouse
relied on the decision of Justice Little in Cammidge v. The Queen,
2011 TCC 172. In this decision Justice Little concluded that since the University
of Phoenix had two locations in Canada in 2008, that the taxpayer in that case
could claim the amount paid for tuition as part of the amount determined under
paragraph 118.5(1)(a) of the Act. As noted above, if paragraph
(a) applies, then there is no restriction on the duration of the courses taken.
[9]
The Appellant’s spouse
did not introduce any evidence in relation to the locations that the University of Phoenix had in Canada
in 2008 and was not even aware that the University of Phoenix
had any locations in Canada until he read the decision of Justice
Little in Cammidge, above.
[10]
Justice Beaubier in Robinson
v. The Queen, 2007 DTC 348, 2006
TCC 664 also concluded that since the University of Phoenix had a campus in
Canada in 2004 that the tuition paid by the taxpayer in that case qualified for
a credit pursuant to paragraph 118.5(1)(a) of the Act. Justice
Beaubier stated that:
6 The
University of Phoenix had a campus in Canada in 2004. It conforms with
subparagraph 118.5(1)(a)(i) of the Income Tax Act since it is an
"other educational institution providing courses at a post-secondary
school level".
[11]
In the recent decision of Faint
v. The Queen, 2011 TCC 260, Justice Margeson concluded that the
taxpayer, who took online courses from the University of Phoenix, was not
enrolled at an educational institution in Canada, even though the University of
Phoenix had a campus in Canada. The taxpayer in that case did not attend any
classes at the Canadian campus nor was there any other connection to the Canadian
campus.
[12]
In Cammidge and Robinson
there was no indication that the taxpayer attended any classes at the Canadian
locations of the University of
Phoenix nor was there any indication that there
was any other connection between the Canadian locations and the taxpayers.
Therefore it would appear that the decisions in the cases of Cammidge and
Robinson cannot be reconciled with the decision in the case of Faint.
[13]
The Supreme Court of Canada in The
Queen v. Canada Trustco Mortgage Company, 2005 SCC 54, 2005 DTC 5523
(Eng.), [2005] 5 C.T.C. 215, 340 N.R. 1, 259 D.L.R. (4th) 193, [2005]
2 S.C.R. 601, stated that:
10 It has been long established as a matter
of statutory interpretation that “the words of an Act are to be read in their
entire context and in their grammatical and ordinary sense harmoniously with
the scheme of the Act, the object of the Act, and the intention of Parliament”:
see 65302 British Columbia Ltd. v. R., [1999] 3 S.C.R. 804 (S.C.C.), at
para. 50. The interpretation of a statutory provision must be made according to
a textual, contextual and purposive analysis to find a meaning that is
harmonious with the Act as a whole. When the words of a provision are precise
and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive
process. On the other hand, where the words can support more than one
reasonable meaning, the ordinary meaning of the words plays a lesser role. The
relative effects of ordinary meaning, context and purpose on the interpretive
process may vary, but in all cases the court must seek to read the provisions
of an Act as a harmonious whole.
[14]
It seems to me that the
requirement of paragraph 118.5(1)(a) of the Act is that the
taxpayer must be “enrolled at an educational institution in Canada” and not simply enrolled at an educational
institution that has a location in Canada. There are
three situations contemplated by subsection 118.5(1) of the Act. The
third situation is one where an individual is enrolled at an educational
institution in the United States and commutes to that institution. It seems
to me that this contemplates that the place of enrolment is the place where the
classes will be held. It also seems to me that the same interpretation of
“enrolled at an educational institution” should apply for the purposes of
paragraph 118.5(1)(a) of the Act. It does not seem to me that the
Appellant’s spouse, who did not even know that the University of Phoenix had any locations in Canada,
should be considered to have enrolled at an educational institution in Canada. He indicated that he was taking courses offered by
the University of Phoenix from their location in Phoenix. He was not taking any courses at any Canadian
location of the University of Phoenix. It does not seem to me that
the Appellant’s spouse was enrolled at an educational institution in Canada.
[15]
Therefore, in order for
the fees paid by the Appellant’s spouse to qualify for a tuition credit, the
fees must have been paid in respect of a course that was at least 13 consecutive
weeks in duration. The Appellant’s spouse took several courses in 2008. Each
course lasted for 6 to 8 weeks and when one course finished another one began. Therefore
the Appellant’s spouse spent more than 13 consecutive weeks taking courses. The
issue in this appeal is whether the consecutive courses, with a duration of
more than 13 consecutive weeks, is sufficient to allow the amount paid for
these courses to be included as tuition for the purposes of paragraph 118.5(1)(b)
of the Act when the courses, on an individual basis, were less than 13
consecutive weeks in duration.
[16]
There are two
conflicting decisions in relation to this matter. In Ferre v. The Queen, 2010
TCC 593 Justice Paris concluded that the reference to “a course” in
subparagraph 118.5(1)(b)(i) of the Act means an individual course.
Justice Paris stated that:
24 In this case, the individual courses
or “modules” taken by the Appellant in 2006 and 2007 were less than 13 weeks in
length, and therefore, the fees paid in respect of those modules are not eligible
for the tuition credit.
[17]
In the recent decision
of Justice Bowie in Siddell v. The Queen, 2011 TCC 250, Justice
Bowie referred to the decision of Justice Paris in Ferre but concluded
that “the word ‘course’ in this context [refers] not to the individual modules,
but the entire curriculum pursued throughout the academic year”. He thus
concluded that the taxpayer was entitled to claim a tuition tax credit for what
appears to be the same MBA program offered by the University of Liverpool that was considered in Ferre.
[18]
I agree with the
conclusion reached by Justice Bowie that individuals in the circumstances of
the taxpayer in Siddell and the Appellant’s spouse in this case should
be entitled to include the fees paid for tuition in determining their tuition tax
credit. It seems to me that this conclusion can be supported based on the
application of the Interpretation Act to the Act.
[19]
Subsections 3(1) and
33(2) of the Interpretation Act provide that:
3. (1) Every provision of this Act applies, unless a
contrary intention appears, to every enactment, whether enacted before or after
the commencement of this Act.
…
33. (2) Words
in the singular include the plural, and words in the plural include the
singular.
[20]
Therefore unless a
contrary intention appears, the word “course” in subparagraph 118.5(1)(b)(i)
of the Act will include “courses”. The language used in paragraph
118.5(1)(b) of the Act is as follows:
… where the individual was during the year a student in full-time
attendance at a university outside Canada in a course leading to a degree, an
amount equal to the product obtained when the appropriate percentage for the
year is multiplied by the amount of any fees for the individual's tuition paid
in respect of the year to the university, except any such fees
(i) paid in respect of a course of less than 13 consecutive weeks
duration,
[21]
For the purposes of the
tuition credit the fees are determined “in respect of the year”. Any of the
fees that are determined for the year that are paid in respect of “a course” of
less than 13 consecutive weeks duration are not to be included. Would it have
been the intention of Parliament that a single course of not less than 13 consecutive
weeks duration leading to a degree would qualify for a tuition credit but two
or three courses that are taken that would lead to a degree and which are in
total at least 13 consecutive weeks in duration would not qualify for a tuition
credit? In either case the individual is attending class (in person or online)
and working on the course materials for at least 13 consecutive weeks and in
each case the course or courses lead to a degree.
[22]
It does not seem to me
that there is an intention that the reference to “a course” would only refer to
the singular and therefore the amount paid for a single course of 13
consecutive weeks duration would qualify for a tuition credit but the amount
paid for two or more courses that last for 13 consecutive weeks would not
qualify for a tuition credit. As well, there is a reference to “a course” in
the first part of paragraph 118.5(1)(b) of the Act (there is a
requirement that the individual be “a student … in a course”) and it does not
seem to me that this reference to “a course” should be interpreted as including
only the singular. Paragraph 118.5(1)(b) of the Act would apply
if the individual takes one course or more than one course. Since the first
reference to “a course” in paragraph 118.5(1)(b) of the Act would
include the plural, the second reference to “a course” in paragraph 118.5(1)(b)
of the Act (which is in subparagraph 118.5(1)(b)(i) of the Act) should
also include the plural.
[23]
Counsel for the
Respondent referred to the definition of “qualifying educational program” in
subsection 118.6(1) of the Act. This definition provides, in part, as
follows:
“qualifying educational program” means a
program of not less than three consecutive weeks duration that provides that
each student taking the program spend not less than ten hours per week on
courses or work in the program …”
[24]
The argument of counsel
for the Respondent was that different language was used in this definition and
therefore if Parliament would have intended that “a course” would mean a course
of study then language such as that used in this definition would have been
used. However, this does not address the question of whether the singular
should include the plural. It seems to me that the wording in this provision
supports a finding that the singular “a course” in subparagraph 118.5(1)(b)(i)
of the Act should include the plural. In this definition only the plural
form of “courses” is used. It does not seem to me that a program would not be a
qualifying educational program if it otherwise satisfies this definition but each
student spends his or her time on only one course and not multiple courses. It
seems to me that the use of the plural in this definition would include the
singular and therefore it would seem logical that the use of the singular “a
course” in subparagraph 118.5(1)(b)(i) of the Act would include
the plural.
[25]
It also seems to me
that if subparagraph 118.5(1)(b)(i) of the Act were to refer to a
particular course of less than 13 consecutive weeks duration or
otherwise were to specify that each course for which the person paid fees
(which were to be included for the tuition credit) had to be at least 13 consecutive
weeks in duration, then this would support the position of the Respondent. It
also seems to me that the additional limitations that are also imposed, i.e.,
that the course must lead to a degree and that the course or courses must still
be 13 consecutive weeks in duration, will limit the types of courses for which
tuition fees may be claimed.
[26]
As a result it seems to
me that the exception in subparagraph 118.5(1)(b)(i) of the Act should
be read as follows (to include the plural for “a course”):
… except any such fees
(i) paid in respect of a course [or courses] of less than 13
consecutive weeks duration,
[27]
Therefore tuition fees
paid by an individual will qualify under paragraph 118.5(1)(b) of
the Act for a credit if the fees are paid for a course or for courses
that lead to a degree and the course or the courses are at least 13 consecutive
weeks in duration. Since the courses taken by the Appellant’s spouse were at
least 13 consecutive weeks in duration, the tuition fees paid by the
Appellant’s spouse will qualify for a credit pursuant to paragraph 118.5(1)(b)
of the Act and therefore this credit can be transferred to the
Appellant.
[28]
As a result the Appellant’s
appeal from the reassessment of her tax liability for 2008 is allowed and the
matter is referred back to the Minister of National Revenue for reconsideration
and reassessment on the basis that in determining the credit related to the
Appellant’s spouse’s tuition transferred from the Appellant’s spouse to the
Appellant as provided in sections 118.8 and 118.81 of the Act, the
amount of $3,154 of tuition paid by her spouse to the University of Phoenix is
to be included in determining the amount that the Appellant’s spouse may deduct
under section 118.5 of the Act. The Respondent shall pay costs to the
Appellant which are fixed in the amount of $100.
Signed at Toronto, Ontario, this 5th day of July 2011.
“Wyman W. Webb”
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