|
Citation: 2003TCC892
|
|
Date: 20031203
|
|
Docket: 2003-964(IT)I
|
|
BETWEEN:
|
|
GREG KITURA,
|
|
Appellant,
|
|
and
|
|
|
|
HER MAJESTY THE QUEEN,
|
|
Respondent.
|
REASONS FOR JUDGMENT
Miller J.
[1] Mr. Greg Kitura appeals, by way of
informal procedure, the decision of the Minister of National
Revenue (the "Minister") to include in income $10,000
that Mr. Kitura withdrew from his Registered Retirement Savings
Plan (RRSP) in 2000, as part of the Lifelong Learning Plan (the
"LLP"). The Minister's position is that Mr.
Kitura's $10,000 withdrawal did not qualify as an eligible
amount, because the educational institution he attended was not a
designated education institution, and also because Mr. Kitura was
not in full-time attendance, as required by section 146.02(1) of
the Income Tax Act. Mr. Kitura disagrees with both of the
Minister's reasons.
[2] Mr. Kitura enrolled in a degree
program at California Coast University ("CCU") in
October 1998, switching to the MBA program in 1999. He did so
because his employer in High Level, Alberta, had previously
encouraged senior employees to enroll in that program and some
had done so. Mr. Kitura obtained and reviewed a publication from
Canada Customs and Revenue Agency ("CCRA") entitled
"Lifelong Learning Plan" and based on that review,
believed he qualified. He withdrew funds from his RRSP and
enrolled in the program on the assumption that his withdrawal
from his RRSP would not be brought into income.
[3] Mr. Kitura had looked at other
correspondence courses across Canada but believed the CCU best
fit his requirements. The program required nine courses, each for
a duration of three months. Mr. Kitura confirmed that he spent
approximately 10 to 15 hours a week on his course work. In the
year 2000, he took three courses over a nine-month period. During
this time, Mr. Kitura continued to work full-time, although he
had since moved back to Edmonton from High Level, where he had
first started the program. Mr. Kitura has taken eight of nine
courses towards his MBA at CCU since starting the program.
[4] The relevant legislation in
connection with the LLP is as follows:
146.02(1) The
definitions in this subsection apply in this section.
"eligible amount" of an individual means a particular amount
received at a particular time in a calendar year by the
individual as a benefit out of or under a registered retirement
savings plan if
(a) the
particular amount is received after 1998 pursuant to the
individual's written request in a prescribed form;
(b) in
respect of the particular amount, the individual designates in
the form a person (in this definition referred to as the
"designated person") who is the individual or the
individual's spouse or common-law partner;
(c) the total
of the particular amount and all other eligible amounts received
by the individual at or before the particular time and in the
year does not exceed $10,000;
(d) the total
of the particular amount and all other eligible amounts received
by the individual at or before the particular time (other than
amounts received in participation periods of the individual that
ended before the year) does not exceed $20,000;
(e) the
individual did not receive an eligible amount at or before the
particular time in respect of which someone other than the
designated person was designated (other than an amount received
in a participation period of the individual that ended before the
year);
(f) the
designated person
(i) is
enrolled at the particular time as a full-time student in a
qualifying educational program, or
(ii) has received
written notification before the particular time that the
designated person is absolutely or contingently entitled to enrol
before March of the following year as a full-time student in a
qualifying educational program;
(g) the
individual is resident in Canada throughout the period that
begins at the particular time and ends immediately before the
earlier of
(i) the
beginning of the following year, and
(ii) the time of the
individual's death;
(h) except
where the individual dies after the particular time and before
April of the following year, the designated person is enrolled as
a full-time student in a qualifying educational program after the
particular time and before March of the following year and
(i) the
designated person completes the program before April of the
following year,
(ii) the designated
person does not withdraw from the program before April of the
following year, or
(iii) less than 75% of the
tuition paid, after the beginning of the year and before April of
the following year, in respect of the designated person and the
program is refundable; and
(i) if
an eligible amount was received by the individual before the
year, the particular time is neither
(i) in the
individual's repayment period for the individual's
participation period that includes the particular time, nor
(ii) after January
(or a later month where the Minister so permits) of the fifth
calendar year of that participation period. ...
"excluded withdrawal" of an individual means
(a) an
eligible amount received by the individual; or
...
"qualifying educational program" means a qualifying
educational program (as defined in subsection 118.6(1)) at a
designated educational institution (as defined in subsection
118.6(1)), except that the definition "qualifying educational
program" in subsection 118.6(1) shall be read
(a) without
reference to paragraphs (a) and (b) of that definition; and
(b) as if the
expression "3 consecutive weeks" were "3 consecutive
months".
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 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 ...
146(8) There shall be included in computing a
taxpayer's income for a taxation year the total of all
amounts received by the taxpayer in the year as benefits out of
or under registered retirement savings plans, other than excluded
withdrawals (as defined in subsection 146.01(1) or 146.02(1)) of
the taxpayer and amounts that are included under paragraph
(12)(b) in computing the taxpayer's income.
56(1) Without restricting the generality of section 3, there
shall be included in computing the income of a taxpayer for a
taxation year,
...
(h) amounts
required by section 146 in respect of a registered retirement
savings plan or a registered retirement income fund to be
included in computing the taxpayer's income for the year;
[5] There is no dispute that Mr.
Kitura's withdrawal from his RRSP meets the criteria set
forth in the definition of "eligible amount" in all
respects, other than the qualifications that: (i) the
institution, CCU, must be a designated educational institution;
and (ii) he must be a full-time student.
[6] The first issue to address is
whether CCU is a designated educational institution. The
Respondent advises that, in determining whether an institution
outside Canada is a designated educational institution, CCRA
follows guidelines in Interpretation Bulletin 516R2. Pursuant to
these guidelines, a designated educational institution must be
recognized by an accrediting body that is nationally accepted in
the country of the institution. With respect to the
United States, guidelines provide that an institution listed
in the current edition of "Accredited Institutions of
Postsecondary Education" published by the American Council
on Education, and indicated in that publication as being an
institution granting degrees at the Bachelor level or higher,
will qualify. An institution listed in Schedule VIII of the
Income Tax Regulations will also qualify. CCU is not
listed in Schedule VIII nor in the American Council's
publication. The Minister, through an affidavit of one of his
employees, Roxanne Rawluk, also submitted that a search of the
website of the Western Association of Schools and Colleges from
California did not reveal CCU. Her affidavit evidence did not
indicate what other searches, if any, were performed.
[7] Mr. Kitura provided a copy of the
certificate from the Council for Private Postsecondary and
Vocational Education[1] issued in accordance with the provisions of California
Education Code Section 94310. It stated that:
California Coast University ... is granted Institutional
Approval to provide the following degree programs ... MBA...
A letter dated November 6, 2003 from CCU to counsel for the
Respondent indicated its degree programs are categorized as
part-time or half-time by the State of California, Bureau for
Private Postsecondary and Vocational Education. I am satisfied
that, notwithstanding the form of accreditation CCRA requires for
their purposes, CCU was a university outside Canada at which Mr.
Kitura was enrolled in a course of not less than 13 consecutive
weeks' duration leading to a degree. He also spent more than
the required number of hours per week on work in the program. He
meets the first criteria of having been enrolled in a qualifying
educational program at a designated educational institution.
[8] The second issue is whether Mr.
Kitura was enrolled as a full-time student. There is no doubt
that Mr. Kitura spent considerable time on his studies, certainly
sufficient to meet the requirement of 10 hours per week. However,
he was not a full-time student. He took one three-month course at
a time, while carrying on his full-time employment. He was
undoubtedly a busy man. But that is the nature and the lot, if
you will, of someone returning to education through the sensible
route of correspondence courses. They are by their nature not
full-time pursuits. This is confirmed by the correspondence from
CCU which advises they are only registered as part-time or
half-time. Mr. Kitura could not be enrolled full-time even if he
wanted.
[9] Mr. Kitura expressed concern that
the package provided by CCRA misled him into believing he would
qualify, as it talked in terms of a program of 10 hours per
week for three consecutive months, thresholds Mr. Kitura believed
he had no trouble meeting. I accept that he met these
requirements. But there is the additional requirement that the
enrolment be full-time. The publication from CCRA did
indicate:
Normally the enrolment has to be on full-time basis at the
educational institution.
I can appreciate how Mr. Kitura might conclude the criteria
cited earlier established the rules for full-time. Unfortunately
for Mr. Kitura, they do not. One course at a time by
correspondence over a three-month period from a university only
authorized to offer programs in a part-time or half-time basis
does not constitute "full-time" for purposes of the
LLP.
[10] Mr. Kitura is to be commended for his
initiative and hard work. Regrettably, the nature of his studies
does not qualify the $10,000 withdrawal from his RRSP as an
eligible amount.
[11] The appeal is dismissed.
Signed at Ottawa, Canada, this 3rd day of December, 2003.
Miller J.
Email this Content