Eric Mah v. Minister of National Revenue, [1990] 2 CTC 2119, 90 DTC 1582

Kempo, T.C.J.: —I am delivering these reasons for judgment orally, however I expressly reserve the right to edit and expand upon them subsequently if need be.

This appeal concerns Mr. Mah's 1987 taxation year from the respondent's disallowance of a deduction claimed under the provisions of section 110.7 of the Income Tax Act and regulations 7302 and 7303 of the Income Tax Regulations. The deduction being sought has been commonly described as the northern resident deduction.

The matter proceeded before me by way of argument only, it being agreed that the applicable and essential facts are those as set out in the Minister's reply to notice of appeal, paragraphs 5 and 6, thusly:

5. The Town of Smithers ("Smithers") is not a prescribed area pursuant to Schedule IX of the Income Tax Regulations.

6. In so confirming the Notice of Assessment, the Minister assumed, inter alia:

(a) the Appellant resided in Smithers, in the Province of British Columbia, during the 1987 taxation year;

(b) Smithers is south of the 55 degree North altitude;

(c) the population of Smithers is less than 10,000;

(d) Smithers is not entitled to a total of 50 points or more in accordance with Income Tax Regulation 7303(5), but is entitled to a total of 35 points based on the following:

(i) 25 points for population pursuant to Income Tax Regulation 7303(7)(a);

(ii) 0 points because there is an all-weather road providing access to Smithers, pursuant to Income Tax Regulation 7303(7)(b);

(iii) 0 points because the distance by all-weather road between Smithers and the administrative centre of the urban centre with a population of 15,000 or more, namely, Prince George, is less than 402 kilometres pursuant to Income Tax Regulation 7303(7)(c);

(iv) 0 points because Smithers is neither tundra nor open woodland as defined by Income Tax Regulation 7302, and pursuant to Income Tax Regulation 7303(7)(d);

(v) 10 points for falling on or being encompassed by a line with a point value of 10 on the British Columbia map set out in Schedule X of the Income Tax Regulations, pursuant to Income Tax Regulation 7303(7)(e).

Stripped down to its essentials, the issue is one of statutory interpretation. A deduction is permitted to an individual residing in a “prescribed area” of Canada pursuant to section 110.7. Under subsection 248(1) of the Income Tax Act “prescribed” means prescribed by regulation. Under Regulation 7302(1) "area" is defined in an inclusive manner as including a city, town, village or hamlet or any place listed in the most recent edition of the Place Name Reference List published by Statistics Canada.

Regulation 7303(1) provides that an area is a prescribed area for the purposes of section 110.7 of the Act in a manner of Canadian geographic east-west planes. An area on or north of the 60th parallel of north latitude is one without any limitative conditions imposed respecting matters of population, roads and access to defined administrative centres of defined urban centres. Another area is one south of the 60th parallel and north of the 55th parallel encompassing certain such limitative provisions. The third area, in which the subject Smithers, British Columbia is found, is one south of the 55th but north of the 50th parallel with more stringent limitative conditions imposed of the kind already described.

The appellant argues that a single family residence located immediately outside the boundary of Smithers would qualify for the allowance in that having a population of one it thereby gathers the necessary 50 points on population alone to qualify. This, he says, makes the limitative requirements of the regulations somewhat ludicrous and certainly unequitable to those living inside Smithers on otherwise adjacent property.

I have a great deal of sympathy for this and the other analysis and arguments advanced by the appellant that major inequities arise out of the plain meaning of the subject regulations.

The difficulty that does present itself, however, is that the appellant is seeking to establish an ambiguity in the otherwise plain meaning of the word "area" simply because of the result. The principal of statutory interpretation that I am aware of is that the word or words themselves must firstly present an ambiguity before the Court may disregard the application and consequences of the plain meaning rule. Put another way, the inequitable result of legislation does not itself invite or allow a judicial finding that certain legislative terminology must therefore be ambiguous.

The interpretative consequences of the legislation (which may well have been intentional) is the drawing of arbitrary lines in which a taxpayer may be within or without. Unfairness of result in this case is one curable by Parliament and not by the Courts.

Conclusion

In the result, and for the reasons given, the appeal is to be dismissed.

I am advised that the outcome of this appeal is to apply to and be binding upon the appeals of twenty other appellants who are in the identical circumstances of Mr. Mah. These twenty appeals are listed and are called for hearing this date. The reasons for judgment given in the Eric Mah appeal will also apply to each of these other appeals with the consequence that each is to be similarly dismissed.

Appeal dismissed.