Date: 20011018
Docket: 2000-3121-IT-I
BETWEEN:
RODOLFO JOSÉ SLOBODRIAN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasonsfor
Judgment
(delivered orally from the bench onJune 26,
2001, at Québec, Quebec,
and amended for greater clarity)
Archambault, J.T.C.C.
[1]
Mr. Slobodrian is appealing income tax assessments for the 1996,
1997 and 1998 taxation years (relevant taxation years).
The Minister of National Revenue (Minister) disallowed
charitable donation tax credits in relation to alleged gifts of
$41,160 in 1996, $41,160 in 1997 and $47,040 in 1998.
Essentially, the Minister disallowed these credits on the basis
that no property was gifted by Mr. Slobodrian in the
relevant taxation years and that no prescribed receipts were
provided pursuant to subsection 118.1(2) of the Income Tax
Act (Act).
[2]
At the beginning of the hearing, Mr. Slobodrian admitted all of
the facts outlined in paragraph 6 of the Reply to the Notice of
Appeal, except those set out in subparagraphs d) and e).
Paragraph 6 reads as follows:
In so assessing the Appellant for the taxation years in
litigation, the Minister made the following assumptions of
fact:
a)
in filing his Income Tax Returns for the taxation years in
litigation, the Appellant claimed charitable donations tax
credits in relation, among other things, to the amounts of
$41,160, $41,160 and $47,040 respectively for the 1996, 1997 and
1998 taxation years, for the unpaid time spent for researches
with Laval University (hereinafter, the
"employer");
b)
the Appellant did not charge anything to the employer;
c)
the amounts mentioned in the subparagraph a) above, were not
included on the forms T4 prepared by the employer;
d)
for the taxation years in litigation, the Appellant has not shown
that he gave something, in terms of property, to the
employer;
e)
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;
f)
the Appellant filed with the Tax Court of Canada a Notice of
Appeal for the 1995 taxation year, concerning the same
litigation;
g)
this Notice of Appeal was registered by the Tax Court of Canada
under the number 97-812(IT)I;
h)
by Judgment rendered by the Honorable judge Louise
Lamarre-Proulx, dated May 15th, 1998, the appeal was
dismissed.
[3] I
do not intend to describe in detail the facts of this appeal
because they are essentially similar to those set out in the
reasons of Judge Lamarre Proulx published in [1998] 3 C.T.C.
2654. I would add, however, that the same research contract
(research contract) was renewed in 1996, 1997 and 1998.
Mr. Slobodrian was the person who took the first steps to secure
that contract between Public Works and Government Services Canada
(Public Works) on behalf of the Canadian Space Agency and
the Université Laval.
[4]
Under the contract, several researchers were to be hired to
perform the services necessary to carry out the research project.
According to Mr. Slobodrian, it was clearly understood that
university professors were not to be paid for services performed
under such a contract with Public Works. Here,
Mr. Slobodrian acknowledged that he was a retired professor
and stated that, given the limited funds obtained to finance the
research project, Université Laval would not have been in
a position to remunerate his services. So he generously agreed to
provide them free of charge.
[5]
As result of the services performed by the team of researchers
supervised by Mr. Slobodrian, papers and reports were
furnished to Public Works. Mr. Slobodrian took the position
that intellectual property resulted from his research efforts,
that this property was donated to Public Works and that this gift
qualified for the purposes of the charitable donation tax credit.
However, it was stipulated in the research contract that any
intellectual property arising out of the research project would
vest in Canada and not in Université Laval or any
of the members of the research team.
[6]
In support of his position before this Court, Mr. Slobodrian
filed a letter from Université Laval which confirmed that
he had supervised students' thesis work in 1996 and had also
acted as principal researcher under the research contract. This
letter also confirmed that Mr. Slobodrian did not receive
any remuneration for his teaching and research work done for the
benefit of Université Laval. In addition, the director of
the "Faculté des sciences et génie,
département de physique" (Faculty) gave a
monetary evaluation of Mr. Slobodrian'sservices. For
1996, he estimated their value at $41,160, which represented
1,960 hours at $21 per hour. This hourly rate of $21 was the rate
paid to Mr. Slobodrian's first assistant and, according
to the director, it represents the lower limit of the value to be
assigned to Mr. Slobodrian's work. Similar letters were
prepared for 1997 and 1998. The only difference for 1998 is that
the hourly rate was increased from $21 to $24.
[7]
In addition to pointing to the fact that he had provided his
services free of charge, Mr. Slobodrian referred to expenses
(additional expenses) that he incurred during the relevant
taxation years. These expenses essentially represent the cost of
scientific books, dues and fees, the cost of supplies such as
software and hardware products and the cost differential for
out-of-home meals, estimated at $4 per day over 240 working days
for 1998[1]. They
also represent travelling costs which include the costs for
travelling to the university campus and the costs for parking on
such campus. Also included in the travelling expenses are the
costs for round trips to Toronto, Ottawa and Calgary. Mr.
Slobodrian indicated that these expenses were not incurred
specifically in carrying out the research project. They were
expenses that he had incurred in attending conferences covering
subjects of interest for a physicist such as him.
[8]
It should be noted that under the research contract funding was
provided to Université Laval for supplies and materials
and travelling and living allowances, in addition to labour costs
and general administration fees. Such travelling expenses would
include, for instance, expenses for attending meetings with NASA
in Houston. The additional expenses that Mr. Slobodrian
incurred were not covered by the research contract.
Analysis
[9]
The issue raised by these appeals is essentially whether all the
conditions required under the Act for claiming charitable
donation tax credits have been met. The Minister contends that no
property was gifted by Mr. Slobodrian through the performance of
his services. Furthermore, there were no official receipts that
met the requirements of section 3501 of the Income Tax
Regulations (Regulations). As I mentioned before, the
same issues were dealt with by Judge Lamarre Proulx in
Mr. Slobodrian's appeal for the 1995 taxation year.
In her decision, she held that, in order for one to qualify for a
charitable donation tax credit, property had to be gifted. She
relied, at paragraph 23, on the following dictum of Chief Justice
Jackett of the Federal Court of Appeal in Rapistan Canada Ltd.
v. M.N.R, 74 DTC 6426:
. . . as far as I know, under no system of law in Canada, does
knowledge, skill or experience constitute "property"
that can be the subject matter of a gift, grant or assignment . .
. As I understand the law, knowledge or ideas, as such, do not
constitute property.
[10] In
paragraph 26 of her decision, Judge Lamarre Proulx applied this
principle to the case of Mr. Slobodrian and came to the following
conclusion:
In the circumstances of the present appeal, the Appellant
contributed his knowledge, skill and talents in the form of
services to the university. While these added value to, and
ultimately resulted in a work capable of ownership, hence
property, the services themselves were not capable of ownership
and therefore should not be considered property. Not being
property, services cannot be the object of a gift.
I am in complete agreement with her conclusion and I believe
that it is equally applicable to the years under appeal here.
[11] Before
concluding, I would like to add two comments. First, even if
property had been donated by Mr. Slobodrian to Her Majesty in
Right of Canada or to a registered charity, he did not file with
the Minister, as required by subsection 118.1(2) of the Act,
receipts which contained the information prescribed under section
3501 of the Regulations. Therefore, Mr. Slobodrian would not
be entitled to any tax credit for charitable donations. Second,
the letter attached to the tax returns filed by Mr. Slobodrian
does not provide a fair market value of "property"
given by Mr. Slobodrian: it only provides an evaluation of the
minimum value of the "services" that he performed for
Université Laval. No evidence was provided of the fair
market value of the property that Mr. Slobodrian claims he
transferred to Université Laval and ultimately to the
Government of Canada. Thus, Mr. Slobodrian's appeals
cannot succeed because not only there is no evidence that any
property was given by him to the Government of Canada but, even
if such property had been given, there is no evidence of its
value.
[12] So for
all of these reasons I come to the conclusion that Mr. Slobodrian
did not succeed in establishing that the Minister made an error
in assessing him for the three relevant taxation years, and his
appeals are dismissed.
Signed at Ottawa, Canada, this 18th day of October 2001.
"Pierre Archambault"
J.T.C.C.
COURT FILE
NO.:
2000-3121(IT)I
STYLE OF
CAUSE:
RODOLFO JOSÉ SLOBODRIAN
v. The Minister of National Revenue
PLACE OF
HEARING:
Québec, Quebec
DATE OF
HEARING:
June 26, 2001
REASONS FOR JUDGMENT BY: The Honorable
Judge Pierre Archambault
DATE OF
JUDGMENT:
August 8, 2001
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Anne Poirier
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-3841(IT)I
BETWEEN:
REID OLIVER SANDERS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on May 7, 2001 at Toronto,
Ontario, by
the Honourable Judge M.J. Bonner
Appearances
Agent for the
Appellant:
Concetta Sanders
Counsel for the
Respondent:
Kimberly Moldaver
JUDGMENT
The
appeal from the assessment of income tax for the 1996 taxation
year is allowed and the assessment is referred back to the
Minister of National Revenue for reassessment on the basis that
the Appellant is entitled to deduct the sum of $3,500 paid
pursuant to paragraph 4 of the Order of October 8, 1996.
The appeals from the assessments for the 1997 and 1998 are
dismissed.
Signed at Ottawa, Canada, this 18th day of October 2001.
J.T.C.C.
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