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Citation:2004TCC34
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Date: 20040113
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Docket: 2003-2319(IT)I
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BETWEEN:
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RONALD V. CLEVELAND,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
McArthur J.
[1] The issues in this appeal are
whether Ronald V. Cleveland is entitled to (i) a tuition fee
credit of $6,283; and (ii) an education tax credit in the 2001
taxation year for courses taken by Internet only, from a
university in the United States.
[2] The Appellant was enrolled at
Capella University[1] in a Masters of Science Organizational Psychology
program from January 1, 2000 to March 30, 2002. He graduated
in November 2002. Capella is an "online" university. It
is recognized by Canada Customs and Revenue Agency (CCRA) as a
"university" outside Canada for the purposes of
paragraphs 118.5(1)(b) and 118.6(1)(b) of the
Income Tax Act. The Appellant took courses over the entire
year. During 2001, he had full-time employment with RLG
International Inc. (RLG) earning $101,355 annually while living
in Saskatchewan.
Position of the Appellant
[3] His courses were conducted online
using course rooms, e-mails, telephone and virtual libraries. It
was clearly distinguishable from correspondence courses. He
states, in effect, that he attended Capella in Minnesota through
modern technology without leaving his home in Saskatchewan.
[4] He claims that the wording of
sections 118.5 and 118.6 entitled him to tuition and education
tax credits and they should be interpreted with reference to the
wording of subsections 6(2) and 15(1) of the Charter of Rights
and Freedoms (Charter) and provisions of the North
American Free Trade Agreement (NAFTA).
Position of the Respondent
[5] With respect to the tuition tax
credit claimed, while the Minister of National Revenue admits
that Capella is an online university, the Appellant was not in
full-time "attendance" at Capella which is
mandatory in paragraph 118.5(1)(b). The key word is
"attendance". The Minister adds that the Appellant was
not entitled to an "education tax credit" because he
does not meet the requirement in the definition of
"designated educational institution" in subsection
118.6(1).
[6] The relevant legislation reads 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
...
(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,
...
118.6(1)
For the purposes of sections 63 and 64 and this subdivision,
"designated educational institution" means
...
(b) a
university outside Canada at which the individual referred to in
subsection (2) was enrolled in a course, of not less than 13
consecutive weeks duration, leading to a degree, or
"qualifying educational program" means a program of not less
than 3 consecutive weeks duration that provides that each student
taking the program spend not less than 10 hours per week on
courses or work in the program and, in respect of a program at an
institution described in the definition "designated educational
institution" ...
French Version
118.5(1)
Les montants suivants sont déductibles dans le calcul de
l'impôt payable par un particulier en vertu de la
présente partie pour une année
d'imposition:
a) si le
particulier est inscrit au cours de l'année à
l'un des établissements d'enseignement suivants
stués au Canada :
...
b) si, au
cours de l'année, le particulier fréquente
comme étudiant à temps plein une
université située à l'étranger,
où il suit des cours conduisant à un diplôme,
...
118.6(1)
Les définitions qui suivent s'appliquent aux articles
63 et 64 et à la présente sous-section.
"établissement d'enseignement
agréé"
b)
université située à l'étranger,
où le particulier mentionné au paragraphe (2) est
inscrit à des cours d'une durée minimale de 13
semaines consécutives qui conduisent à un
diplôme;
Charter of Rights and Freedoms
("Charter")
6(2) Every citizen of Canada and
every person who has the status of a permanent resident of Canada
has the right
(a) to move
to and take up residence in any province, and
(b) to pursue
the gaining of a livelihood in any province
...
15(1) Every individual is equal before and
under the law and has the right to the equal protection and equal
benefit of the law without discrimination and, in particular,
without discrimination based on race, national or ethnic origin,
colour, religion, sex, age or mental or physical disability.
North American Free Trade Agreement
("NAFTA")
2020(1) If an issue of interpretation or application of this
Agreement arises in any domestic judicial or administrative
proceeding of a Party that any Party considers would merit its
intervention, or if a court or administrative body solicits the
views of a Party, that Party shall notify the other Parties and
its Section of the Secretariat. The Commission shall endeavor to
agree on an appropriate response as expeditiously as
possible.
[7] Paragraph 118.5(1)(a)
provides for a tuition credit for a student "enrolled"
at an educational institution in Canada. In contrast, a
university student outside of Canada must be in "full-time
attendance" under paragraph 118.5(1)(b) as opposed to
simply "enrolled" (paragraph
118.5(1)(a)).
[8] The issue narrows down to whether
the Appellant was in "full-time attendance" at Capella
situated outside of Canada (Minneapolis, Minnesota). The
Appellant referred to his being discriminated against contrary to
the Charter of Rights and additionally submits that
Articles 1201 to 1205 of NAFTA be taken into
consideration as an influence in interpreting sections 118.5 and
118.6 of the Act.
[9] Before venturing to the
Charter and NAFTA arguments, the relevant sections
of the Act must be interpreted on their own. If the
wording of the Act on its own is clear and unambiguous
then no reference need be made to external legislation or
documentation.
[10] The crucial word is
"attendance" as in "full-time attendance" in
paragraph 118.5(1)(b). Does this mean full-time
physical attendance? The word "attendance" may be
ambiguous. Both parties referred to the common dictionary
definition of "attendance".
[11] The Canadian Oxford Dictionary
(1998) defines "attendance" as "the act of
attending or being present". It is difficult to conclude
that the Appellant was present at Capella, having never set foot
on the physical or geographical location in Minneapolis. The
Appellant argues, in effect, that the law must evolve with the
times and interpret attendance to include being at Capella
electronically.
[12] I believe this is stretching the plain
meaning of attendance too far. This conclusion is strongly
supported by reference to the French version of
paragraph 118.5(1)(b) which reads: "le
particulier fréquente comme étudiant à plein
temps une université". Robert & Collins
French-English, English French Dictionary Second Edition
defines "fréquenter" and
"fréquente" at page 317 as:
lieu to frequent; voisins to see frequently
ouoften; jeune fille to go around with; to keep
company with ... il fréquente plus les cafés que
la faculté: he's in cafésmore often
than at lectures; il les fréquente peu: he seldom
sees them; nous nous fréquentons beaucoup: we see
quite a lot of each other, we see each other quite often
ou frequently;
The Canadian Oxford Dictionary definition of
"frequent" (the English translation of
"fréquente") includes "attend or go to
habitually". The Respondent filed the following translation
provided by the Ministry of Education for Ontario:
A translation of section 118.5(1)(b) of the Income
Tax Act
French Version
b) si,
au cours de l'année, le particulier
fréquente comme étudiant à plein
temps une université située à
l'étranger, où il suit des cours conduisant
à un diplôme,
English translation
(b) if,
during the year, the individual goes frequently to an out
of the country university as a full-time student, where he is
studying towards a diploma.
[13] I find that there must have been a
physical presence by the Appellant at Capella to benefit from
section 118.5. If the legislature wanted to have an
"online" university included in paragraph
118.5(1)(b), it would state so explicitly and not leave
the taxpayer to twist and turn and speculate to find an extended
meaning of "attend". I cannot rewrite the
legislation.
[14] Bowie J. in Hlopina v. R.[2] reviewed the
jurisprudence with respect to the same question and concluded at
paragraph 12:
12 The ambiguity in the
English text is resolved by reference to the French version of
the Act. The expression "... le particulier
fréquente comme étudiant à plein temps une
université ..." used in paragraph 118.5(1)(b)
is in contrast to the expression "... université
située à l'étranger, où le
particulier ... est inscrit ..." used in paragraph
118.6(1)(b). Clearly, the former requires physical
presence at the university, while the latter does not. Where, as
here, one version of the statute is clear and unambiguous, while
the other might bear the same or a different meaning, I am bound
to apply the meaning which is common to both versions. While the
verb "to attend" in English might connote something
other than physical presence, the same cannot be said of the
French verb "fréquenter". I must, therefore,
reluctantly conclude that the tuition credit under section 118.5
of the Act is not available to a taxpayer who studies by
way of correspondence courses taken at a university outside
Canada. I share the sentiment expressed by Heald J. in Ritchie,
where he said:
I said at the trial that I was sympathetic to the
respondent's position. He and others like him are to be
commended for their industry, their perseverance and their
dedication to self-improvement. It may well be that the
respondent and other taxpayers in a similar position should be
able to deduct tuition fees in these circumstances. However, it
is not the Court's function to legislate - I can only
interpret the statute as it presently exists,
The facts in Hlopina resemble the present ones. In
Hlopina the taxpayer held a full-time job. He was also a
registered student at a college in the United States taking its
courses solely through correspondence.
[15] Mr. Hlopina could only claim the
education credit if he was in "full-time attendance" at
the college. Bowie J. found:
The English version of the Act was ambiguous regarding
what was considered attendance. However, the French version
unequivocally required physical attendance. When one version of
the statute was clear and unambiguous, the court was bound to
apply the meaning which was common to both versions. Thus, as the
Appellant was not in full-time attendance at the school, he was
not eligible for the tuition credit under section 118.5 of the
Act.
This decision is helpful to me in deciding the present
one.
[16] In Gilbert v. Canada,[3] Judge
Mogan's look at the legislature's policy with respect to
section 118.5 offers insight for the present case as well. At
paragraphs 20 and 21 he stated:
20 ... It is interesting to note the contrast between
paragraphs (a) and (b) on the basis that if the
person is attending an educational institution in Canada, that
institution may be a university or a college or another
educational institution providing courses at a post-secondary
school level. In other words, if a person wants to deduct a
tuition tax credit in Canada, the person paying the tuition does
not have to be attending a university. It can be an educational
institution other than a university. But if a person wants to
deduct a tuition tax credit by going to an educational
institution outside of Canada, it is very clear to me that that
institution must be a university because of the words in the
opening lines of paragraph (b) which state: "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".
21 Parliament has created
a broader spectrum of institutions which a person can attend at
the post-secondary level within Canada and still get the tuition
credit, but Parliament has restricted the number of institutions
outside Canada for which a tuition credit can be achieved. I have
already given what I regard as the generally accepted definition
of a university being one to grant a degree. I speculate that the
distinction is to place some control on the kind of
post-secondary institutions which may exist in countries
outside of Canada where it would be impossible to determine
whether they were truly of an educational nature in that they
grant a degree. I think the legislation is more confining in
paragraph (b) to give some measure of control as to the
kinds of tuition paid to institutions outside Canada which will
give the payer or parent a tax credit. For these two reasons, the
interpretation of the word "university" on a
stand-alone basis and the comparison of paragraphs
118.5(1)(a) and (b) lead me to the conclusion that
this appeal must be dismissed.
I agree that the legislation in paragraph 118.5(1)(b)
which deals with "a university outside of Canada" is
more confining to give greater control than the legislation in
subsection 118.5(1) dealing with educational institutions in
Canada.
[17] The next issue is whether the Appellant
is entitled to the education credit under paragraph
118.6(2)(b) of the Act. To comply with the
Act, a taxpayer must be enrolled in a designated
educational institution. The relevant provisions of paragraph
118.6(1) which is a definition section reads:
118.6(1)
For the purposes of sections 63 and 64 and this subdivision,
"designated educational institution" means
(a) an
educational institution in Canada that is ...
(b) a
university outside Canada at which the individual referred to in
subsection (2) was enrolled in a course, of not less than 13
consecutive weeks duration, leading to a degree, or
"qualifying educational program" means a program of ... does
not include any such program
...
(b) if the
program is taken by the student
(i) during a
period in respect of which the student receives income from an
office or employment, and
Designated Educational Institution and Computation of
Education Credit
[18] In order to benefit from the education
credit under paragraph 118.6(2)(b) of the Act, a
taxpayer must be enrolled at a "designated educational
institution" which is defined notably as a university
outside Canada at which the taxpayer is enrolled in a course, of
not less than 13 consecutive weeks' duration, leading to
a degree.
[19] The Minister accepts that Capella is a
university outside Canada for the purpose of paragraph
118.6(1)(b) of the Act, but concluded that Capella
does not qualify because its courses last 12 consecutive weeks
and not 13, as required in the Act. The answer is
inconclusive. The Appellant stated his online courses with
Capella in 2001 lasted 13 consecutive weeks. I believe the
Minister relies on a pro forma issued by Capella for
2002 stating its courses lasted 12 consecutive weeks and assumes
the same for 2001. The Appellant is to be commended for his
dedication to self-improvement and deserves the benefit of the
doubt. He has successfully rebutted the Minister's
assumptions.
[20] I find he was enrolled at a
"designated educational institution" in a
"specified educational program" which are both defined
in section 118.6. I accept his evidence that he spent 12 hours or
more per month on courses in the Capella program.
[21] Having found, with reference to the
French version of paragraph 118.5(1)(b), that the
word "attendance" means physical attendance, there is
no need to refer to NAFTA and the Charter.
[22] In conclusion, the appeal is allowed,
but only to the extent that the Appellant is entitled to claim an
education amount of $1,440 with respect of his enrollment at
Capella for the 2001 taxation year in accordance with
subsection 118.6(2) of the Act. The Appellant is not
entitled to deduct tuition fees claimed in the amount of $6,283
in respect of his enrollment at Capella for the 2001 taxation
year.
Signed at Ottawa, Canada, this 13th day of January, 2004.
McArthur J.
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