Cristofaro – Quebec Court of Appeal applies Oceanspan to find that a non-resident with no sources of income in Quebec could not transfer a tax credit to a Quebec taxpayer

In 2003-0026827, CRA applied Oceanspan to find that a non-resident student who has no Canadian sources of income is precluded from transferring her unutilized tuition credits to her resident father under ITA s. 118.9 because:

an individual who is not resident in Canada and who has no Canadian source income would not be entitled to the tuition and education tax credits. The individual is not liable to pay tax in Canada, and therefore has no need to utilize the provisions permitting the tax credits.

Here, a similar approach was followed in finding that an Ontario-resident, who paid Quebec income taxes because a portion of his professional firm’s practice was in Quebec, could not be transferred a tuition credit (under the Quebec equivalent of s. 118.9) by his daughter studying in Scotland, who was resident in Ontario and had no Quebec sources of income. In addition to referring to Oceanspan as “particularly illuminating,” the Court quoted with approval the reasoning of Monaghan J in Marino (finding that U.S. tuition generated by a student while not a Canadian resident and without a source of income under s. 2(3) could not be carried forward to when he became a Canadian resident).

Neal Armstrong. Summary of Agence du revenu du Québec v. Cristofaro, 2021 QCCA 1025 under s. 118.9.