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Citation: 2005TCC8
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Date: 20050111
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Docket: 2004-589(IT)I
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BETWEEN:
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RODOLFO JOSÉ SLOBODRIAN,
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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
BédardJ.
[1] The Appellant appeals income
assessments for 1999, 2000, 2001 and 2002 (the "relevant taxation
years"). The Minister of National Revenue (the "Minister")
disallowed claims for tax credits for charitable donations in
relation to purported gifts of $44,993.00 in 1999, $29,113.00 in
2000, $18,000.00 in 2001 and $37,600.00 in 2002. The main reason
the Minister disallowed the tax credits is that no property was
gifted by the Appellant during the relevant taxation years and
that the donations were not proven by receipts for the gifts that
contained prescribed information, as provided by
subsection 118.1(2) of the Income Tax Act (the
"Act").
[2] At the beginning of the hearing,
the Appellant admitted to the facts set out in paragraph 11
of the Reply to Notice of Appeal, except for subparagraphs (c),
(d), (e), (f) and (g). Paragraph 11 reads as follows:
a) during the
years in litigation, the Appellant was retired from
"Université Laval";
b) during the
years in litigation, the Appellant participated in advance
research and teaching for the Canadian Space Agency;
c) in filing
his Income Tax Returns for the taxation years in litigation, the
Appellant claimed charitable donation tax credits in relation to
the amounts of $44,993 in the 1999 taxation year, $29,113 in the
2000 taxation year, $18,800 in the 2001 taxation year and $37,600
in the 2002 taxation year, for the unpaid time spent for
researches with "Université Laval" (hereinafter,
the "employer");
d) the
Appellant did not charge anything to the employer;
e) no form T4
was prepared by the employer regarding the amounts mentioned in
the subparagraph c) above;
f) for
the taxation years in litigation, the Appellant has not shown
that he gave something, in terms of property, to the
employer;
g) for the
taxation years in litigation, the appellant did not provide the
Minister with official receipts issued by a registered
organization, as prescribed by the section 3501 of the Income
Tax Regulations;
h) the
Appellant filed with the Tax Court of Canada a Notice of Appeal
for the 1995 taxation year, concerning the same litigation;
i) this
Notice of Appeal was registered by the Tax Court of Canada under
the number 97-812(IT)I;
j) by
Judgment rendered by the Honorable judge
Louise Lamarre-Proulx, dated May the 15th, 1998, the
appeal was dismissed;
k) the
Appellant also filed with the Tax Court of Canada a Notice of
Appeal for the 1996, 1997 and 1998 taxation years, concerning the
same litigation;
l) this
Notice of Appeal was registered by the Tax Court of Canada under
the number 2000-3121(IT)I;
m) by Judgment
rendered by the Honorable judge Pierre Archambault, dated October
the 18th, 2001, this appeal was also dismissed;
n) this
decision was brought to the attention of the Federal Court of
Canada (Docket A-497-01);
o) the
decision of the Honorable judge Pierre Archambault was maintained
at this point;
p) the
assumptions of fact outlined in paragraphs k), l), m), n) and o)
were first made by the Minister in confirming the
assessments.
[3] I do not deem it useful to provide
a detailed recitation of the facts in the appeals as they are
substantially similar to those set out in the reasons for
judgment of the Honourable Justice Lamarre Proulx published in
[1998] 3 C.T.C. 2454 and in the reasons for judgment of
Archambault J. published in [2001] A.C.I.
no 702.
[4] The evidence revealed
(i) that in 1999, the Appellant,
principal investigator for a contract entered into with the
Canadian Space Agency, conducted scientific research as part of
contract 9F007-8-5009TPS6C at the Department of Physics of
the Faculté des sciences et de
génie of the Université Laval (the
"Faculté"). During that year, he taught the students of
the Université for three weeks. He did not receive
remuneration that year for research and higher education teaching
activities. The Appellant also produced a letter from the
Université Laval (Exhibit I-1) in which the director
of the Faculté provided a monetary value of the services
rendered by the Appellant. He valued the services provided in
1999 at $47,040.00, an amount equivalent to 1,960 hours of work
at an hourly rate of $24. That hourly rate of $24 corresponded to
the rate of pay of the Appellant's senior assistant and
represented, according to the director, the lowest possible rate
at which the Appellant's work may be valued.
(ii) that in 2000, the Appellant
conducted scientific research as part of the same contract as in
1999. During that year, he also made new research proposals to
the Natural Sciences and Engineering Research Councilof Canada
(NSERC) and the Canadian Space Agency. In 2000, he also taught
courses and did not receive remuneration for research and higher
education teaching activities. The Appellant also produced a
letter (Exhibit I-1) similar to that of 1999, in which the
director of the Faculté provided a monetary value of the
services rendered by the Appellant. He valued the research
services at $11,040.00 and the services related to teaching
activities and the preparation of proposals at $14,720.
(iii) that in 2001, the Appellant
conducted scientific research as part of a five-month
contract (Exhibit A-3) he entered into with the Canadian Space
Agency. He sent three reports with the results of his research to
the Agency. During that year, he also counselled students of the
Faculté and directed a student's master's thesis. He also
participated in phase A of the ICAPS project of the International
Space Station of the European Space Agency. He did not receive
remuneration for the research and higher education teaching
activities. The Appellant also produced a letter (Exhibit I-1)
similar to those of 1999 and 2000, in which the director of the
Faculté provided a monetary value of the services rendered
by the Appellant. He valued the research services at $18,800. No
value was provided as to the other services rendered by the
Appellant.
(iv) that in 2002, the Appellant drafted
a two-year research proposal (Fractal Nanostructures Produced by
Laser Evaporation-Condensation in a Reduced-Gravity Environment)
for a Canadian Space Agency competition (Exhibit A-1). In a
letter dated November 4, 2002 (Exhibit A-1), the
Canadian Space Agency confirmed to the Appellant that his
proposal was successful and that a contract would subsequently be
signed in that respect, a contract which, moreover, came into
effect in 2003. The Appellant also counselled students of the
Faculté and directed a student's doctoral thesis. He also
participated in phase A of the ICAPS project of the International
Space Station of the European Space Agency. The Appellant also
produced a letter (Exhibit I-1) similar to those of 1999, 2000
and 2001 in which the director of the Faculté provided a
monetary value of the services rendered by the Appellant. He
valued the services at $37,600. The letter also spoke of cash
donations by the Appellant of $3,615.76. In 2002, the Appellant
did not receive remuneration for his services.
Appellant's Position
[5] In support of his application, the
Appellant stated that what he donated was "scientific research"
and "higher-education teaching" and not services. He submitted
that his research produced results that were presented to Public
Works and Government Services Canada as studies and reports
(Exhibit A-9). In his opinion, intellectual property resulted
from the work. In the alternative, the Appellant argued that the
Act does not explicitly restrict that which can form the subject
matter of a gift to "property." He asserted that what he made was
a "donation in kind" (i.e., a donation of goods or labour, not
money, Oxford Dictionary of Current English). In his view,
nothing prevents the recognition of a gift of services for the
purposes of the Act.
Analysis and Decision
[6] For the purposes of the Act, a
gift must involve the transfer of something known to law as
property. The mere supply of services without compensation
involves no property and hence cannot form the subject matter of
a gift.As noted by Noël J. of the Federal Court of Appeal in
Slobodrian v. Canada (The Minister of National Revenue
- M.N.R.), [2003] F.C.J. no. 1414; 2003 F.C.A 350, this is to
be contrasted with remunerated services which once performed give
rise to rights capable of ownership and which can in turn form
the subject matter of a gift. In that respect, he noted that the
simplest example of this would be the remunerated worker who
assigns gratuitously his right to the remuneration which he has
earned. It should be noted that in the present case, it is common
ground that the Appellant was to render his services without any
form of compensation.
[7] It is important to note that the
Appellant argued that as a result of his efforts, the Canadian
Space Agency became the proprietor of somewhat valuable research.
According to him, this research constituted intellectual property
which can form the subject matter of a gift.
[8] I need not decide whether the
Appellant's efforts gave rise to some form of intellectual
property because the evidence revealed
(i) that in 1999, 2000 and 2001,
the agreements, under which the research was conducted, provided
that any such property would vest in Canada and not the
Université Laval or any member of the research team.
(ii) that in 2002, the Appellant
did not conduct the research as such but rather drafted a
research proposal that was the subject of a contract that came
into effect in 2003.
(iii) that the other services rendered
by the Appellant during the relevant taxation years were
essentially related to teaching and counselling services.
It follows that the Appellant could not have become the owner
of any intellectual property which he purports to have given.
[9] Finally, the receipts submitted by
the Appellant attesting to the value of his purported gift did
not meet the requirements of subsection 118.1(2) of the Act and
section 3501 of the Regulations. In fact, they do not
reflect the registration number of the issuer or certify that the
signator is duly authorized to issue such receipts as required by
Regulation 3501. According to subsection 118.1(2) of the
Act, a charitable gift cannot be recognized unless it is proven
by a receipt reflecting this information.
[10] For these reasons, the appeals are
dismissed.
Signed at Ottawa, Canada, this 11th day of January 2005.
Bédard J.
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