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Citation: 2003TCC830
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Date: 20031107
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Docket: 2003-349(IT)I
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BETWEEN:
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LOIS E. ANDREWS,
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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
Woods J.
[1] Lois Andrews appeals an assessment
for the 2000 taxation year that disallowed a tax credit in
respect of tuition fees paid to a college in London, England. The
question for determination is whether the college is a university
and whether the course attended led to a degree.
[2] The appeal was heard under the
Informal Procedure.
Facts
[3] Ms. Andrews' daughter, Emily,
wished to pursue an education in acting and dance. She
auditioned, unsuccessfully, for one of only six openings at
Canada's National Theatre School. Emily then enrolled at The
London Academy of Music and Dramatic Art in London, England (the
"Academy") and paid annual tuition of approximately
$20,000. After having satisfactorily completed a three-year
acting course, the Academy awarded Emily with a diploma.
[4] Emily received a second diploma
relating to this course from an examinations board named Trinity
College London. The function of the examinations board is
to guarantee quality and standards in education and for this
purpose it evaluates courses at various colleges and grants
diplomas of different levels. The certification on Emily's
diploma was "The National Diploma in Professional Acting,
Level 4 - National Qualifications Framework." Level 4 is the
second highest level of qualification granted by the examinations
board and it is considered to equate to a first degree.
[5] Emily Andrews made a designation
to transfer the tax credit in respect of tuition fees paid to the
Academy to her mother pursuant to section 118.81 of the Income
Tax Act, R.S.C. 1985 (5th Supp.), c. 1 (the
"Act").Lois Andrews claimed a tax credit of $850
in respect of this transfer pursuant to section 118.9 which was
disallowed by the Minister of National Revenue.
Statutory Provisions
[6] The relevant requirements of the
tuition tax credit are set out in paragraph 118.5(1)(b) as
follows:
(1) For the purpose of computing the tax payable under this
Part by an individual for a taxation year, there may be
deducted,
...
(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,
[7] Sections 118.81 and 118.9 of the
Act permit the tax credit to be transferred to another
person. For the relevant year, they provide:
118.81. In this subdivision, the tuition and education tax
credits transferred for a taxation year by a person to an
individual is the lesser of
(a) the amount determined by the formula
A - B
where
A is the
lesser of
(i) the total of
all amounts that may be deducted under section 118.5 or 118.6 in
computing the person's tax payable under this Part for the
year, and
(ii) $850, and
B is the
amount that would be the person's tax payable under this Part
for the year if no amount were deductible under this Division
(other than an amount deductible under section 118, 118.3, 118.61
or 118.7), and
(b) the amount for
the year that the person designates in writing for the purpose of
section 118.8 or 118.9.
118.9. Where for a taxation year a parent or grandparent of an
individual (other than an individual in respect of whom the
individual's spouse deducts an amount under section 118 or
118.8 for the year) is the only person designated in writing by
the individual for the year for the purpose of this section,
there may be deducted in computing the tax payable under this
Part for the year by the parent or grandparent, as the case may
be, the tuition and education tax credits transferred for the
year by the individual to the parent or grandparent, as the case
may be.
Issue
[8] The issue is whether Lois Andrews
is entitled to a tax credit under section 118.9 in respect of
tuition fees paid by her daughter to the Academy. The sole
question for determination is whether the Academy is a university
and whether the course taken by her daughter was a course leading
to a degree.
Positions of Parties
[9] The Crown submitted that the
tuition fees paid to the Academy do not satisfy the conditions
set out in paragraph 118.5(1)(b) because the Academy is
not a university and the course attended by Emily did not lead to
a degree. In support, counsel referred to Gilbert v. The
Queen,[1]
Rogutski v. The Queen,[2] and Drouin v. The Queen.[3]
[10] Ms. Andrews did not question the
disallowance of the tax credit on technical grounds. Instead, she
stated that it is unfair to limit the tuition tax credit to
schools that grant degrees. Being influenced by a career in
education, Ms. Andrews expressed the view that it is important to
provide access to teaching in many fields of endeavour, including
the field that her daughter has pursued.
Analysis
[11] Subsection 118.5(1) of the Act
sets out certain conditions that must be satisfied in order to be
entitled to the tuition tax credit. If the school attended is
outside Canada, the tax credit is available only for tuition paid
to a university. There is no such restriction if the school
attended is in Canada. Ms. Andrews' disagreement with this
distinction is understandable. Ms. Andrews' daughter attended
an expensive school outside the country because Canada's
National Theatre School only had six openings in her
daughter's field of study. Nevertheless, there is no basis on
which I can provide relief unless it is consistent with the
wording of the legislation.
[12] The tax credit is available only if the
Academy is a university and the course attended led to a degree.
Several cases referred to by the Crown state that the
distinguishing characteristic of a university is the power to
grant a degree. Accordingly, the question is whether the Academy
is an institution that grants degrees and whether the course
attended by Emily Andrews led to a degree.
[13] I have concluded that the diplomas
granted to Emily Andrews by the Academy and the examinations
board were not degrees. The word "degree" has of course
many meanings. In this context, the following definition from the
Dictionary of Canadian Law, (2d ed.) is instructive:
Any recognition in writing of academic achievement which is
called a degree; and includes the degrees of bachelor, master and
doctor.
The word "diploma" is defined in the same dictionary
as:
A certificate, less than a degree, awarded by a college.
[14] I agree with Ms. Andrews' argument
that the failure of the Academy and the examinations board to
describe the award as a degree is not necessarily dispositive of
the issue. The word "degree" may have a different
meaning in Canada and the United Kingdom. However, I find that
the meaning in the United Kingdom is the same as that described
above in Canada. Each country prohibits an educational
institution from granting "degrees" unless that right
has been conferred by some statutory authority. For example, in
Ontario the Post-Secondary Education Choice and Excellence
Act prohibits an institution from granting awards described
as degrees unless duly authorized by the government. A similar
prohibition is provided by the Education Reform Act in the
United Kingdom.
[15] In this case, neither the Academy, nor
the examinations board, granted something described as a degree.
Although the examinations board granted a diploma that was
considered to equate to a degree, it was not in fact a degree
within the meaning of that term in both Canada and the United
Kingdom. Further, even if the diploma granted by the examinations
board was considered an actual degree, that would not be
sufficient for Ms. Andrews to claim the tax credit because it
must also be shown that the Academy was a university. On the
facts, the Academy was not a degree granting institution and
accordingly was not a university.
[16] For these reasons, the appeal is
dismissed.
Signed at Ottawa, Canada, this 7th day of November, 2003.
J.M. Woods J.
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