Date:
20020820
Docket:
2002-240-IT-I
BETWEEN:
GRAHAM HUNT,
Appellant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Reasons for
Judgment
Beaubier,
J.T.C.C.
[1] This appeal pursuant to the
Informal Procedure was heard at Nanaimo, British Columbia,
on July 26, 2002. The Appellant was the only witness.
[2] Paragraphs 5 to 11 inclusive of the
Reply to the Notice of Appeal read:
5. By
Notices of Reassessment, dated March 19, 2001, for the 1998 and
1999 taxation years, the Minister disallowed moving expenses
claimed by the Appellant, in the amounts of $7,310 and $10,284
respectively.
6. The
Appellant revised his claims for moving expenses in the 1998 and
1999 taxation years to $7,310 and $12,447 respectively, as shown
on Exhibit "A".
7. At all
material times the Appellant's residence was located at 6266
Chippewa Road, Duncan, British Columbia.
8. In so
reassessing the Appellant's income tax return for the 1998
and 1999 taxation years on March 19, 2001, the Minister made the
following assumptions of fact:
(a) the Appellant
and his late spouse, Patricia Hunt, (the "Spouse"),
spent the three-year period from July 1995 to approximately
July 1998 living on their sailboat, while they travelled from
Vancouver Island to the United States, Mexico, Guatemala,
Costa Rica, Panama, Isla San Andres, Honduras, Belize, Mexico and
the Bahamas;
(b) while
travelling the Appellant's mailing address was in
Canada;
(c) while
travelling the Appellant had no bank accounts in countries other
than
Canada;
(d) at all
material times the Appellant was a factual resident of
Canada;
(e) the Appellant
incurred expenses of $19,758, for transporting the sailboat,
including household effects, overland from Miami to Seattle and
for hotels, meals, car rental, and airfares, as detailed on the
attached "Exhibit "A";
(f) the
Appellant did not return to a new work location in Canada;
and
(g) the Appellant
and the Spouse continued to live on the sailboat after their
return to Canada and in or about May 1999 they moved back into
their residence, referred to in paragraph 7
herein.
B. ISSUES TO BE
DECIDED
9. The issue
is whether the Appellant, in computing his income for the 1998
and 1999 taxation years, should be allowed deductions for moving
expenses, in the amounts of $7,310 and $12,447, in the 1998 and
1999 taxation years.
C. STATUTORY
PROVISIONS, GROUNDS RELIED ON AND RELIEF SOUGHT
10. He relies on
sections 62 and 64.1 and subsection 248(1) of the
Act.
11. He submits that
throughout the period from 1995 to 1998 the Appellant was
ordinarily a resident of Canada and that the location of his
residence remained at 6266 Chippewa Road, Duncan, British
Columbia.
[3] None of the assumptions were
refuted by the evidence.
[4] This appeal centres on section 62
of the Income Tax Act (the "Act") and the
definition of "eligible relocation" in subsection
248(1) of the Act. They read:
62. (1) There may be
deducted in computing a taxpayer's income for a taxation year
amounts paid by the taxpayer as or on account of moving expenses
incurred in respect of an eligible relocation, to the extent
that
(a) they
were not paid on the taxpayer's behalf in respect of, in the
course of or because of, the taxpayer's office or
employment;
(b) they
were not deductible because of this section in computing the
taxpayer's income for the preceding taxation year;
(c) the
total of those amounts does not exceed
(i) in any
case described in subparagraph (a)(i) of the definition
"eligible relocation" in subsection 248(1), the taxpayer's
income for the year from the taxpayer's employment at a new
work location or from carrying on the business at the new work
location, as the case may be, and
(ii) in any case
described in subparagraph (a)(ii) of the definition
"eligible relocation" in subsection 248(1), the total of amounts
included in computing the taxpayer's income for the year
because of paragraphs 56(1)(n) and (o);
and
(d) all
reimbursements and allowances received by the taxpayer in respect
of those expenses are included in computing the taxpayer's
income.
Section 248(1)
...
"eligible relocation"
means a relocation of a taxpayer where
(a) the
relocation occurs to enable the taxpayer
(i) to carry
on a business or to be employed at a location in Canada (in
section 62 and this subsection referred to as "the new work
location"), or
(ii) to be a
student in full-time attendance enrolled in a program at a
post-secondary level at a location of a university, college or
other educational institution (in section 62 and in this
subsection referred to as "the new work location"),
(b) both
the residence at which the taxpayer ordinarily resided before the
relocation (in section 62 and this subsection referred to as "the
old residence") and the residence at which the taxpayer
ordinarily resided after the relocation (in section 62 and this
subsection referred to as "the new residence") are in Canada,
and
(c) the
distance between the old residence and the new work location is
not less than 40 kilometres greater than the distance between the
new residence and the new work location
except that, in
applying subsections 6(19) to (23) and section 62 in respect of a
relocation of a taxpayer who is absent from but resident in
Canada, this definition shall be read without reference to the
words "in Canada" in subparagraph (a)(i), and without
reference to paragraph (b);
[5] Mr. Hunt's home in
Duncan, British Columbia was rented to other people while he
and his wife were on their sailboat. The evidence is that they
were on the sailboat at all the times in question. But Mr. Hunt
stated that their "factual" residence was in Canada.
Whether this was for tax purposes, health insurance purposes, or
other reasons, was not explained. The Appellant's sailboat,
the "Nancy Blackett" was registered in Canada as Number
347795 (Exhibit R-2). It appears from Exhibit R-2 that it sailed
out of the Maple Bay Yacht Club from which the Appellant left and
to which he returned.
[6] The Appellant advised others that
his mailing address while he sailed was Box 297, Mill Bay,
British Columbia, V0R 2P0 and that his safety deposit box was at
the Canadian Imperial Bank of Commerce, Duncan, British Columbia;
his bank account also appears to have been there.
[7] On the evidence, the Appellant was
sojourning on his sailboat while he was travelling. At all
material times he intended to return to Canada and work. He did
not describe himself as "vacationing" in Exhibit R-2,
the "Determination of Residency Status" form NR73,
E(00) when he embarked on his trip. Rather he called it
"Travel". However there is no evidence that he worked
elsewhere and in fact the trip was an extended
vacation.
[8] There is no assumption that the
Appellant's rented home in Duncan remained his residence.
There is only assumption 8(d) that "at all material
times the Appellant was a factual resident of
Canada".
[9] He returned to a job at the Maple
Bay Yacht Brokerage. Mr. Hunt had retained his membership
throughout at the Maple Bay Yacht Club and the Court assumes from
the evidence, that his sailboat was normally berthed at the
"Maple Bay Marina" before, during and after the
trip (See Exhibit A-1). He lived on his sailboat at the Maple Bay
Marina upon his return to Canada until he moved back into his
house in Duncan after his tenants vacated.
[10]
In these circumstances, it is appropriate to quote part of the
judgment of Kerwin, J. of the Supreme Court of Canada in
Thomson v. Canada, [1946] S.C.R. 209, which
reads:
KERWIN J.:- The sole point for determination in this appeal is
whether, during the year 1940, the appellant was "residing
or ordinarily resident in Canada" within the meaning of
section 9(1)(a) of the Income War Tax Act as it stood in 1940, or
whether he was merely sojourning there within the meaning of
section 9(1)(b). No question is raised to the amount of the
assessment. The relevant parts of section 9 are as
follows:--
9. There shall be
assessed, levied and paid upon the income during the preceding
year of every person.
(a) residing or
ordinarily resident in Canada during such year; or
(b) who sojourns in
Canada for a period or periods amounting to one hundred and
eighty-three days during such year;
There is no definition
in the Act of "resident" or "ordinarily
resident" but they should receive the meaning ascribed to
them by common usage. When one is considering a Revenue Act, it
is true to state, I think, as it is put in the Standard
Dictionary, that the words "reside" and
"residence" are somewhat stately and not to be used
indiscriminately for "live", "house" or
"home". The Shorter Oxford English Dictionary gives the
meaning of "reside" as being "To dwell permanently
or for a considerable time, to have one's settled or usual
abode, to live, in or at a particular place". By the same
authority "ordinarily" means "1. In conformity
with rule; as a matter of regular occurrence. 2. In most cases,
usually, commonly. 3. To the usual extent. 4. As is normal or
usual". On the other hand, the meaning of the word
"sojourn" is given as "to make a temporary stay in
a place; to remain or reside for a time".
The House of Lords has
adopted the everyday meaning as a test in applying the terms
"resident" and "ordinarily resident" in the
British Income Tax Act. Levene v. Commissioners of Inland Revenue
[[1928] A.C. 217.]; Commissioners of Inland Revenue v. Lysaght
[[1928] A.C. 234.]. Under the British Act that is of particular
importance where a finding of the Commissioners on a question of
pure fact cannot be reviewed by the Courts except on the ground
that there was no evidence on which they could have arrived at
their conclusion. Under our Act no such question arises, but the
remarks of the peers who took part in the two judgments mentioned
are of assistance. Rule 3 of the General Rules applicable to all
the Schedules of that Income Tax Act may have had an effect in
the result arrived at in some of the cases. In the Levene case
[[1928] A.C. 217.], Viscount Cave, at page 224, points out that
if a man sought to be taxed is a British subject regard must be
had to that rule
which provides that every
British subject whose ordinary residence has been in the United
Kingdom shall be assessed and charged to tax notwithstanding that
at the time the assessment or charge is made he may have left the
United Kingdom, if he has so left the United Kingdom for the
purpose only of occasional residence abroad;
and as a matter of fact, at the
foot of the same page the Lord Chancellor, after agreeing
that it was plainly open to the Commissioners to find that Mr.
Levene was resident in the United Kingdom, stated that it was
probable that Rule 3 applied to him. Viscount Sumner refers, at
p. 227, to the soundness of the Commissioners' conclusion on
Rule 3.
On the other hand, the
decision of the First Division of the Court of Exchequer
(Scotland) in Cooper v. Cadwaladar [(1904) 5 Tax Cas. 101.], was
referred to with apparent approval by Viscount Cave at page 223
of the Levene case [[1928] A.C. 217.] and by Viscount Sumner at
page 224 of the Lysaght case [[1928] A.C. 234.]. There, the
person held liable to tax was a citizen of the United States,
where he resided and practised his profession, but rented a house
and shooting rights in Scotland where he spent about two months
in each year. I refer to this decision because I find it
difficult to imagine that it would be held in Canada that a
citizen of the United States, residing in that country, but
owning a summer home in Canada which he occupied for four or five
months in each year, was, by reason of the latter facts, a
resident of this country within the meaning of our
Act.
However, that is not
the case before us. No quarrel is found with the statement of
facts contained in the reasons for judgment of the President of
the Exchequer Court and I do not, therefore, repeat all of them.
The appellant was born in Saint John, New Brunswick, and is
still a citizen of Canada. Notwithstanding the absence of a
provision corresponding to Rule 3 of the General Rules referred
to above, that is a fact to be considered. I agree with the
President that the appellant's motions in going to Bermuda,
making an affidavit as to his intention, renting a house which he
never used, and obtaining a passport, were a pure farce; that the
appellant never became a resident of Bermuda; but that, whether
that be so or not, he was certainly not a resident of Bermuda in
the year 1940. The appellant had not been there since 1933 and
his entry to Canada as a tourist from Bermuda was fictitious. The
residence he built at Pinehurst in North Carolina, presumably
with his other activities in the United States, convinced the tax
authorities of that country that he was a resident there for the
purposes of its Income Tax Act. Assuming that to be a fact, a man
may be a resident of more than one country for revenue purposes.
The frequency with which he comes to Canada and what the
President described as the routine of his life are important
matters in coming to a conclusion, and I agree with that arrived
at by the President.
The appellant seeks to
make himself a sojourner as he carefully remained in Canada for a
period or periods amounting to less than 183 days during each
year. This attempt fails. The family ties of his wife, if not of
himself, the erection of a substantial house, the retention of
the servants, together with all the surrounding circumstances,
make it clear to me that his occupancy of the house and his
activities in Canada comprised more than a mere temporary stay
therein. ...
[11] The Appellant, as he stated, factually
resided in Canada, and he was sojourning on the "Nancy
Blackett". This accords with his statement that he intended
to "travel", with the "Nancy Blackett's"
journeys into various countries in the Caribbean, and with his
own allegation of a factual residence in Canada. The evidence
does not refute assumption 8 (f) that the Appellant did not
return to a new work location in Canada which qualifies under
subsection 62(1).
[12] As a consequence, the Appellant did not
ever relocate and so the "Nancy Blackett" was
never transported as part of an "eligible
relocation".
[13] For these reasons, the Appellant has
failed to provide evidence to refute the assumptions contained in
the Reply. The appeals are dismissed.
Signed at Saskatoon,
Saskatchewan, this 20th day of August,
2002.
J.T.C.C.
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