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Citation: 2005TCC115
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Date: 20050210
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Docket: 2004-2727(IT)I
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BETWEEN:
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PATRICIA REINER,
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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
Beaubier, J.
[1] This appeal pursuant to the
Informal Procedure was heard at Kelowna, British Columbia, on
January 26, 2005. The Appellant's husband, Michael Reiner,
testified. The Respondent called Michael Roberts, the Director of
Human Resources, School District 23, Kelowna.
[2] Because the question before the
Court is largely a matter of statutory interpretation of the
Income Tax Act (the "Act") and the Reply to
the Notice of Appeal sets forth the concepts in question, the
body of the Reply in paragraphs 1 to 14, is quoted in full:
A.
STATEMENT OF FACTS
1. He admits
that the Appellant's employer did not reimburse any of her
expenses relating to her post-secondary studies for the 2002
taxation year.
2. He denies
that the Minister of National Revenue (the "Minister") disallowed
the Appellant's entire claim for an Education Tax Credit for the
2002 taxation year and states that the Minister reduced the
Appellant's Education Tax Credit from $4,800 to $800 on the basis
that her post-secondary studies were connected with her
employment as a teacher, except for the months of July and August
of that year.
3. He denies
the allegation of fact that the appeals officer allowed his
decision to be fettered by the Department of Finance, in
responding to the Appellant's Notice of Objection for the 2002
taxation year.
4. He has no
knowledge of and therefore does not admit any remaining
allegations of fact in the Notice of Appeal.
5. In
computing non-refundable tax credits for the 2002 taxation year,
the Appellant claimed an Education Tax Credit of $4,800 (the
"Amount"), calculated at 12 months of studies at $400 per
month.
6. The
Minister assessed the Appellant's 2002 taxation year to allow the
Amount in the computation of her non-refundable tax credits.
Accordingly, a Notice was issued to the Appellant dated April 17,
2003.
7. The
Minister reassessed the Appellant's 2002 taxation year to
disallow the Amount. Accordingly, a Notice was issued to the
Appellant on October 14, 2003.
8. By Notice
dated January 13, 2004, the Appellant served on the Minister a
Notice of Objection respecting the reassessment of her 2002
taxation year.
9. In response
to the Appellant's objection, the Minister further reassessed the
Appellant's 2002 taxation year to allow an Education Tax Credit
of $800. Accordingly, a Notice was issued to the Appellant on
March 29, 2004 (the "Reassessment").
10. In reassessing the
Appellant, the Minister assumed the following facts on the
Reassessment:
a) in 2002,
the Appellant was employed as a full-time teacher by School
District No. 23 (Central Okanagan);
b) in 2002,
the Appellant earned employment income of $49,731 at School
District No. 23 for teaching;
c) during
2002, the Appellant was enrolled in the Master's program at
Gonzaga University ("Gonzaga");
d) Gonzaga is
a degree granting university in the United States;
e) the
Appellant worked toward her Master's degree from Gonzaga through
distance learning by attending local classes and through the
internet, while she continued teaching full-time;
f)
School District No. 23 did not reimburse any of the Appellant's
expenses related to her studies through Gonzaga;
g) the
Appellant did not teach during the months of July and August
2002;
h) the
Appellant did not receive any income from School District No. 23
for the two months in 2002 that she did not teach; and
i) upon
receiving her Master's degree, the Appellant is entitled to a pay
raise based on her higher level of education.
B. ISSUE
TO BE DECIDED
11. The issue is whether
the Appellant is entitled to an Education Tax Credit in excess of
the amount allowed by the Minister, for the purpose of computing
her non-refundable tax credits for 2002.
C.
STATUTORY PROVISIONS RELIED ON
12. He relies on
subsections 118.6(1) and 118.6(2) of the Income Tax Act,
R.S.C. 1985, c. 1 (5th Supp.), as amended (the
"Act").
D. GROUNDS RELIED
ON ANDRELIEF SOUGHT
13. He submits that the
Minister properly calculated the Appellant's Education Tax Credit
for the 2002 taxation year under subsection 118.6(2) of the
Act, in the amount of $800, on the basis that July and
August 2002 were the only months in the year that the Appellant
was in a "qualifying educational program", as defined in
subsection 118.6(1) of the Act.
14. He submits that the
Appellant was not enrolled in a "qualifying educational program"
(as defined in subsection 118.6(1) of the Act) for the
periods from January to June, 2002 and from September to
December, 2002, inclusive, and therefore she is not entitled to
an Education Tax Credit for those periods because her studying
was undertaken during periods of time when she received income
from teaching at School District No. 23 and the studying was
connected with her employment.
[3] Assumption 10 e) is wrong. The
Appellant took her classes personally from professors from
Gonzaga on Friday evenings and all day Saturday in classrooms
provided by Okanagan University College at Kelowna and Vernon,
British Columbia. These classroom hours totalled a minimum of 10
hours per week. Her employment was for 5 days per week at
6½ hours per day as a middle school full-time teacher at
Constable Neil Bruce Middle School in School District No. 23.
Assumption 10 i) is also wrong because the Appellant must apply
for the pay raise to be "entitled" to it. The remaining
assumptions are correct.
[4] As a result of her studies, the
Appellant was granted her Masters of Arts in Curriculum
Instruction by Conzaga University on August 8, 2003 (Exhibit
A-5).
[5] The evidence is that, while the
Appellant is paid on a monthly basis for the 10 months of the
September to June school year, if she misses a day, she is docked
pay at a per diem rate.
[6] The parties agreed that none of
the effects of the provisions of the Act are in dispute
except for subsection 118.6(1) and the (b) portion of the
definition of "qualifying educational program". In the year 2002
it reads, in English:
(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
(ii) in connection
with, or as part of the duties of, that office or employment.
In French:
(b) soit que
l'étudiant suit non seulement pendant une période
pour laquelle il reçoit un revenu d'une charge ou d'un
emploi, mais aussi en rapport avec cette charge ou cet emploi ou
dans le cadre des fonctions y afférentes.
[7] Respondent's counsel argued that
the meaning of "in connection with" in subparagraph (b)(ii)
should be taken from the words of Dickson, J., speaking for the
entire Supreme Court of Canada in Gene A. Nowegijick v.
The Queen, 83 DTC 5041 at 5045, when he said:
The words "in respect of" are, in my opinion, words of the
widest possible scope. They import such meanings as "in relation
to", "with reference to" or "in connection with". The phrase "in
respect of" is probably the widest of any expression intended to
convey some connection between two related subject matters.
On this basis, the Respondent's position is that the
Appellant's program is "in connection with" her employment and is
excepted from entitlement to be a "qualifying educational
program" from September to June. But it should be noted that
Dickson, J.'s usage of the phrase "in connection with" was
obiter to the words "in respect of" which were before the
Court in Nowegijick.
[8] Within the context of the
Act and the words of subparagraph (b), the following
questions arise:
1. Is the "qualifying
educational program" provision intended to benefit taxpayers?
2. What is the meaning of
"in connection with" in the Act as a statutory whole?
3. What is the meaning of
"in connection with" juxtaposed to the remaining words in (ii)
"or as part of the duties of that office or
employment."? (Italics supplied.)
[9] It is clear that the provisions
respecting a "qualifying educational program" are intended to
benefit taxpayers.
[10] The Appellant was studying to obtain a
Master of Arts in Curriculum Instruction which was granted to her
on August 8, 2003 (Exhibit A-5). Such a degree would enhance her
qualifications as a teacher or, in distinction, her training for
a position in another school district, in a private school, in a
university, in government, or for other purposes, such as for
writing or lecturing.
[11] In other words, the program was not
part of the duties of her employment. Nor was it in connection
with her duties of employment. Rather, it was in connection with
her profession. That profession - teaching - is not confined to
School District No. 23. Nor is it even "in connection with"
School District No. 23 any more than the calling of being a
janitor is in connection with School District No. 23. That
program was personal to Patricia Reiner as an individual who has
her own duties and goals to and for herself. That is why she took
it and paid for it herself.
[12] The Shorter Oxford English Dictionary,
3rd Edition defines "connects":
To join, fasten or link together. Const. to, with.
Connection ("connexion") is:
The action of connecting; the condition of being
connected.
That state respecting the Appellant is with her profession or
calling as an individual and not with her employment. That is,
the joining, fastening or linking together is with the
Appellant's personal skills in today's mobile professional and
trades' world, and not with her duties of employment for another
person.
[13] For these reasons the appeal is allowed
and this matter is referred back to the Minister for
reconsideration and reassessment in accordance with these
Reasons.
[14] The Appellant is awarded her taxable
costs and disbursements respecting this appeal.
Signed at Calgary, Alberta, this 10th day of
February 2005.
Beaubier, J.
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