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Citation: 2004TCC594
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Date: 20040902
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Docket: 2004-1193(IT)I
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BETWEEN:
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JAMES A. KRAUSE,
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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
Bowman, A.C.J.
[1] This appeal is from an assessment
for the appellant's 2002 taxation year.
[2] As a preliminary matter,
respondent's counsel argued that the appeal should be dismissed
because the assessment for 2002 was a nil assessment. I agree.
The assessment for that year was for nil tax and the appellant
informed me that the income tax deducted by his employer was
refunded to him. Accordingly, even if I agreed with the appellant
on the question of substance that he raises, it would, as a
practical matter, be of no immediate pecuniary value to him,
although tuition and education tax credits can in some
circumstances be carried forward to subsequent years.
[3] The appellant is enrolled in a
Ph.D. program in a recognized California educational institution,
Touro University International, ("Touro") a college of business
administration. He enrolled with Touro after receiving his M.A.
from Royal Roads University in British Columbia.
[4] If the appeal for 2002 were
properly before the court, that is to say, were it not from a nil
assessment, the issue would be whether the appellant is entitled
to a tuition fee credit under subsection 118.5(1) of the
Income Tax Act in respect of the fees that he paid to
Touro or an education credit under subsection 118.6(2).
[5] The Minister of National Revenue
allowed the appellant a credit for the fees paid to Royal Roads
University, but not for the fees paid to Touro. The problem
arises from the fact that Mr. Krause took the courses in
which he was enrolled at Touro on-line. He did not
physically attend lectures at Touro's location in California.
Although the material published on the internet about Touro and
its Ph.D. program in Business Administration describes Touro as a
"branch campus of Touro College (New York)" it is not clear
whether Touro had a campus in the conventional sense of buildings
and lecture halls and other facilities at which students can
physically attend lectures.
[6] The context in which this somewhat
vexing but nonetheless important question arises can best be seen
by a comparison of the wording of
paragraphs 118.5(1)(a), (b) and (c) as
well as the wording of section 118.6. Those provisions read 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
(ii)
certified by the Minister of Human Resources Development to be an
educational institution providing courses, other than courses
designed for university credit, that furnish a person with skills
for, or improve a person's skills in, an occupation,
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
. . . . .
(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
. . . . .
(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 those fees exceed $100, except to the
extent that those fees
. . . . .
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
(i) a
university, college or other educational institution designated
by the Lieutenant Governor in Council of a province as a
specified educational institution under the Canada Student
Loans Act, designated by an appropriate authority under the
Canada Student Financial Assistance Act, or designated by
the Minister of Higher Education and Science of the Province of
Quebec for the purposes of An Act respecting financial
assistance for students of the Province of Quebec, or
(ii)
certified by the Minister of Human Resources Development to be an
educational institution providing courses, other than courses
designed for university credit, that furnish a person with skills
for, or improve a person's skills in an occupation,
(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
(c) if the individual referred to in
subsection (2) resided, throughout the year referred to in that
subsection, in Canada near the boundary between Canada and the
United States, an educational institution in the United
States to which the individual commuted that is a university,
college or other educational institution providing courses at a
post-secondary school level;
"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" (other than an institution described in
subparagraph (a)(ii) thereof), that is a program at a
post-secondary school level but, in relation to any particular
student, does not include any such program
. . . . .
118.6 (2) - There may be deducted in computing an
individual's tax payable under this Part for a taxation year
the amount determined by the formula
A × B
where
A is the appropriate percentage
for the year; and
B is the total of the products
obtained when
(a) $400 is multiplied by the number of months in the year
during which the individual is enrolled in a qualifying
educational program as a full-time student at a designated
educational institution, and
(b) $120 is multiplied by the number of months in the year
(other than months described in paragraph (a)), each of which is
a month during which the individual is enrolled at a designated
educational institution in a specified educational program that
provides that each student in the program spend not less than 12
hours in the month on courses in the program,
if the enrolment is proven by filing with the Minister a
certificate in prescribed form issued by the designated
educational institution and containing prescribed information
and, in respect of a designated educational institution described
in subparagraph (a)(ii) of the definition "designated
educational institution" in subsection (1), the individual has
attained the age of 16 years before the end of the year and is
enrolled in the program to obtain skills for, or improve the
individual's skills in, an occupation.
(3) - In calculating the amount deductible under subsection
(2) in computing an individual's tax payable under this Part
for a taxation year, the reference in that subsection to
"full-time student" shall be read as "student" if either
(a) an
amount may be deducted under section 118.3 in respect of the
individual for the year; or
(b)
the individual has in the year a mental or physical impairment
the effects of which on the individual have been certified in
writing, to be such that the individual cannot reasonably be
expected to be enrolled as a full-time student while so impaired,
by a medical doctor or, where the impairment is
(i) an impairment of sight, by a
medical doctor or an optometrist,
(ii) a hearing impairment, by a medical doctor or an
audiologist,
(iii) an
impairment with respect to the individual's ability in
feeding and dressing themself, or in walking, by a medical doctor
or an occupational therapist, or
[7] It should be noted in
passing that under section 118.61 unused tuition and education
tax credits can be carried forward to subsequent years under
certain circumstances. This is not, however, a matter that is
before me.
[8] It will be seen from the
passages that I have set out above that the requirements for
credits for tuition fees fall into three categories:
(a)
Where the educational institution is in Canada, all that is
required is that the student be "enrolled" ("inscrit" in the
French version).
(b)
Where the university is outside Canada the student must be "in
full-time attendance at a university outside Canada" ("le
particulier fréquente comme étudiant à plein
temps").
(c)
Where the individual resided in Canada near the
United States border what is required is that the student
"was at any time in the year enrolled at an educational
institution in the United States... and commuted to
that educational institution in the United States" ("il est
inscrit... à un établissement d'enseignement
situé aux États-Unis... il fait
régulièrement la navette entre sa résidence
et cet établissement.")
[9] Finally, for the education credit
under section 118.6, the student must be "enrolled in a
qualifying educational program as a full-time student at a
designated educational institution." Such a designated
educational institution may be in the United States. If the
student suffers from a disability as envisaged by
subsection 118.6(3) he or she need only be a "student" not a
"full-time student". Among the material filed by the appellant is
the required certificate signed by a medical doctor certifying
that the appellant has a physical impairment as contemplated by
that section.
[10] So far as section 118.5 is concerned
the question is whether the appellant was a student in full-time
attendance at Touro. There are two parts to the question:
(a)
Was Mr. Krause in attendance at Touro?
(b)
If so, was his attendance full-time?
[11] The second question is fairly easy to
answer. If Mr. Krause's following courses on-line by
means of a computer without his being physically at the
university's premises can be called "attendance" it was, in my
view, full-time. The expression "full-time" in the context of
attendance at a university is distinguished from part-time
attendance. He testified that he spends on average between 22 and
36 hours per week on the course. The university regards him as
being in full-time attendance. This is what the appellant
is taking, as demonstrated by his transcript.
[12] In the internet material published by
Touro it states: "The normal full time load is two courses (four
credits each) per session".
Interpretation Bulletin IT-516R2 states:
"Students are ordinarily accepted as being in 'full-time
attendance' if the university regards them as such." I would not
describe his participation in the courses at Touro as part-time
and I have no reason to doubt the correctness of the Tuition Fees
Certificate signed by officers of Touro which reads:
[13] Mr. Krause is also working about
30 hours or less per week at a McDonald's restaurant. This
in itself does not make his attendance at university any the less
full-time. Many full-time students have to take work to finance
their education.
[14] The remaining question is whether
taking all of the courses electronically amounts to "attendance".
The certificate which is quoted above uses the word "attendance"
but nothing turns on this. The meaning of a word in a statute is
generally regarded as a question of law.
[15] In Hlopina v. R. [1999] 2 C.T.C.
2127, Bowie J. considered the meaning of full-time attendance. I
shall not repeat the numerous authorities cited by him dealing
with the meaning "full-time".
[16] He concluded that taking a
correspondence course was not attendance. He said at paragraph
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. (8) 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:*(9)
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, ...
[17] Bowie J. based his conclusion on the
difference between the French word "fréquenter" and
"attend". He accepted that while "attend" might connote something
other than physical presence, "fréquenter" required
physical presence. I would not have found that
"fréquenter" had any less ambiguity than "attend".
"Fréquenter" is defined in Grand Dictionnaire Larousse
Encyclopédique as follows:
FRÉQUENTER v. t. (lat. frequentare,
être assidu) [conj. 3]. 1. Fréquenter un
lieu, un établissement, y aller souvent ou
régulièrement; hanter : Fréquenter
une maison, les cafés, les cinémas. Les
élèves qui fréquentent
l'établissement scolaire doivent se plier au
règlement intérieur. Je ne fréquente pas ce
genre d'endroit. - 2. Fréquenter une voie,
une route, l'emprunter en grand nombre : Les voitures
fréquentent beaucoup l'autoroute du Sud. - 3.
Fréquenter qqn, un milieu, avoir des relations suivies
avec eux : Fréquenter des hommes politiques, des
voisins. - 4. Fam. Fréquenter (qqn),
courtiser, voir fréquemment la personne aimée. -
5. Fréquenter qqch, y avoir souvent recours
(langue soutenue) : Fréquenter les grandes
oeuvres de la littérature classique.
◆ v. i. Litt. Fréquenter qqpart,
y aller habituellement; être habitué d'un
lieu
[18] Looking at the English version alone,
to say that someone attends university electronically by way of
the internet does no violence at all to my understanding of the
word "attend". We must recognize that this is 2004 and that
whereas even 25 years ago to attend university required that one
turn up physically at classes, technology has moved ahead so
dramatically that it is entirely possible to attend lectures by
seeing and hearing them on a computer.
[19] Mr. Krause, in his written argument
described his program at Touro as follows:
[3] His program is conducted: online using live conferences;
using CDs and virtual libraries. For those parts of the program
dealing with his dissertation, there have been face to face
discussions with a professor on his dissertation committee,
weekly live on-line conferences, chat-lines and conference call
to date. He is linked directly to his Professors by a internet
connection. It is clearly distinguishable from correspondence
courses.
[20] In the material published on the
internet Touro describes the process in some detail. The material
reads in part as follows:
· The
normal full time load is two courses (four credits each) per
session. (There are four sessions of twelve weeks each year) If a
student's schedule is heavy, only one course per session will be
allowed. Touro University International provides excellent
advising services to help students select the proper courses.
·
Students can pre-register (and reserve a guaranteed space in the
courses). Students will be notified of the time that
pre-registration is available (approximately 10 weeks prior
to the start of a session).
·
Students must pay or make arrangements to pay tuition when
registering for classes. This payment will make the registration
official.
· Be
certain that your computer configuration meets the minimum
standards for the Touro University International courses, if you
have questions TUI has an excellent IT support unit that will be
able to respond to your questions.
·
Students will receive a CD-ROM with software and installation
information. Students should install the software and test their
computer systems prior to the start of classes. TUI provides
excellent support services to assist students in this process.
Non Required courses are contained on a CD-ROM which will
be sent to students prior to the start of each new session. The
required Ph.D. courses are taught using a website rather than a
CD-ROM. The primary feature in these courses in a live
scheduled conference with the Professor and all students in the
course. Students will receive access to the course website,
software, and support for the conference.
· All
Touro University International materials are on the Internet and
the CD students will receive. Thus, the purchase of textbooks is
not required or necessary. Students are encouraged to purchase
statistical analysis software for the research methods courses
and dissertation work. SPSS - Graduate version, is recommended
and students will be notified prior to the courses for
specifics.
· On
the first day of the session, students begin the activities as
outlined in the course syllabus. This syllabus is on the course
web page (for required courses) or on the course CD (for
preparatory or elective courses).
·
Students should complete all requirements for the courses and
contact their professors, educational advisor or Touro University
International Student Services if they are experiencing any
problems or have any questions. Remember, Touro University
International is the 24/7 business hour university.
. . . . .
How does the dissertation process work in a distance learning
environment?
By using teleconferencing and other Touro University
International Innovative tools, the students have constant
contact and feedback from their dissertation chair and committee.
In addition, the Touro University International cyber library
provides excellent research materials on-line.
[21] There are, nonetheless, arguments that
may lend some support to the position that full-time attendance
means not only that the student be enrolled as a full-time as
opposed to part-time student but also that he or she physically
be present at the university. One is that
paragraph 118.5(1)(c) speaks only of being "enrolled"
whereas paragraph (b) uses the term "full-time
attendance" - a concept that obviously subsumes enrolment. The
principle is that where Parliament uses different words it means
something different. A possible answer to this is that the
distinction that is to be drawn from the different wording in
paragraphs (a) and (c) as opposed to paragraph
(b) is the difference between part-time as opposed
to full-time students.
[22] Another argument is found in the
technical notes to Bill C-18, May 30, 1991.
Subclause 93(3) of those notes deals with the amendment to
subsection 118.6(2) which previously required a student to be in
"full-time attendance" to obtain the education credit. That
requirement was removed by Bill C-18. The technical
note reads as follows:
Subclause 93(3)
Subsection 118.6(2) of the Act is amended to remove the
requirement that an individual be in full-time attendance
at a designated educational institution to benefit from the
education tax credit. The purpose of this amendment, which
applies to the 1991 and subsequent taxation years, it to ensure
that the credit is also available to full-time post-secondary
students enroled in distance education programs or
"correspondence courses".
I do not think that technical notes to legislation should be
taken as determinative. Parliament is supposed to be able to
express its intention clearly and unambiguously in the statutory
language that it uses. It does not seem appropriate to resolve
ambiguities in the statutory language by having recourse to notes
written by unnamed officials in the Department of Finance
explaining what the Department of Finance thought it was
achieving, or what it hoped to achieve. Nonetheless, the practice
is fairly well entrenched. In Glaxo Wellcome Inc. v. The
Queen, [1996] DTC 1159, affd [1998] 6638, the following
observation was made at page 1162:
One must bear
in mind that it is Parliament that passes legislation, and it is
through the words of that legislation that Parliament speaks. An
act of Parliament represents the collective will of Parliament.
One cannot be certain that the same can be said of extrinsic
materials. To attempt to determine the intent of a statutory
provision by reference to a speech delivered by a member of the
government, a speech that he or she may well not have written, or
by technical or explanatory notes prepared by officials of the
Department of Finance, or other budgetary materials, strikes me
as a potentially dangerous course of action. Where a court
strains to assign to reasonably comprehensible language an
extended meaning that conforms to what it conceives, on the basis
of extrinsic materials, to be what Parliament was seeking to
achieve it runs the risk of crossing the line that separates the
judicial from the legislative function.
. . . . .
The practice
today, in my experience, appears to be to refer in argument to
virtually anything that may have some bearing, however remote, on
the question to be decided - speeches in Parliament, technical
notes, explanatory notes, budgetary materials, commission
reports, published advance income tax rulings, texts by authors,
whether living or dead, articles and speeches by practitioners or
academics, interpretation bulletins - all are grist for the mill
and the court is left to determine what assistance, if any, can
be gleaned from such materials.2 The practice is now
too well entrenched to be reversed but it is important that the
reliability and the utility of such materials be put in their
proper perspective and that it be recognized that ultimately the
interpretation must be based upon the court's reading of the
legislative language itself. In that endeavour such extrinsic
aids must be handled with extreme caution. As Sopinka, J.
said in Morgantaler at p. 484:
Provided that the court remains mindful of the
limited reliability and weight of Hansard evidence, it should be
admitted as relevant to both the background and the purpose of
legislation.
2 One should be mindful of the wise observation
made by the Earl of Halsbury, L.C. in Hilder v. Dexter,
[1902] A.C. 474 at 477:
My Lords, I have more than once had occasion to
say that in construing a statute I believe the worst person to
construe it is the person who is responsible for its drafting. He
is very much disposed to confuse what he intended to do with the
effect of the language which in fact has been employed. At the
time he drafted the statute, at all events, he may have been
under the impression that he had given full effect to what was
intended, but he may be mistaken in construing it afterwards just
because what was in his mind was what was intended, though,
perhaps, it was not done.
[23] The technical note to this amendment is
useful in showing that someone involved in the amendment at least
thought about the matter. Whether a stronger inference might be
drawn from the fact the words were removed at all is a point upon
which I am not prepared to express a concluded opinion in the
absence of argument.
[24] It is obvious therefore that the matter
is by no means clear-cut. Although I need not decide the point
since the appeal must be dismissed in any event because it is
from a nil assessment, I think it is strongly arguable that
full-time attendance at a foreign university can include
full-time attendance through the internet or on-line as is
the case here. That view conforms to common sense and to the
reality of modern technology. If there continues to be doubt on
the point Parliament should move to resolve that doubt.
[25] Whatever doubt there may be under
section 118.5, there is none under section 118.6. The
appellant would certainly have been entitled to the education
credit.
[26] As stated above, since the appeal is
from a nil assessment, the appeal must be dismissed.
Signed at Ottawa, Canada, this 2nd day of September
2004.
Bowman, A.C.J.
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