Theodore C York v. Minister of National Revenue, [1980] CTC 2845, 80 DTC 1749

M J Bonner:—This is an appeal from an assessment of income tax for the appellant’s 1977 taxation year. The issue is whether the appellant was resident in Canada at any time during the year. The respondent contended that he was so resident within the meaning of subsection 2(1) of the Income Tax Act. The respondent did not, however, contend that by virtue of subsection 250(1) of the Act the appellant was deemed to have been so resident. It is therefore necessary to review the evidence as to the appellant’s history and routine of life.

There was no evidence as to where the appellant was born. He came to Canada in 1939. He stayed here until 1949. Prior to 1949 the appellant studied engineering and obtained an engineering degree. He also married. In 1949 the appellant went to England for post-graduate studies. He returned here with his wife and two children in 1951. For three years he worked as an engineer in this country. In 1954 he moved to the United States with his family. He remained there continuously until 1968. In that year he became a naturalized US citizen. In that year, following the loss of his job in the United States, he returned to Canada to take a new job. The new job lasted for two years. During 1971 and 1972 the appellant remained in Canada, working as a self-employed consultant. In 1973 he moved back to the United States. There he worked as an employee for six months. Thereafter he practised his profession on a self-employed basis working for various companies in the US which required his services.

In 1977 the appellant’s principal client was a company named Alcoa. He practised his profession from an office in his home, an apartment in Pittsburgh, Pennsylvania. The apartment was occupied by the appellant under a lease entered into in 1975 and renewed yearly thereafter.

When the appellant returned to Canada in 1968 he bought a house in Mount Albert, Ontario. A few months later, after the necessary domestic ar- rangements had been made, the appellant’s wife and children joined him, and the family lived in the house at Mount Albert. Unfortunately, however, marital difficulties arose and I gather that the appellant’s wife and children remained behind in Mount Albert when the appellant returned to the United States in 1973. The appellant visisted Canada rather infrequently after 1973. With two exceptions, his post-1973 visits to this country were for the purpose of seeing his children, and were made three or four times a year. Although during those visits he stayed in the Mount Albert home, he appears to have stayed as a visitor only and not as a person whose home it was. During the post-1973 period the appellant made monthly payments to his wife for her support and that of the children.

The two exceptional post-1973 visits were made in order to fulfill a contract made by the appellant with a company which needed the services of an engineer having expertise in US military specifications. The first such visit, in June and July of 1977, lasted for thirty-two days. The second, in August of that year, lasted for sixteen days. It appears that the appellant’s Canadian engagement did not impair his ongoing relationship with his principal client, Alcoa.

In 1977 the appellant held what he said was non-resident membership in the Ontario Association of Professional Engineers. He also held membership in the Engineering Institute of Canada and the Canadian Society of Mechanical Engineers. The appellant maintained a bank account in Newmarket. He filed a 1977 tax return with the respondent, indicating that he resided in Mount Albert.

I am not of the view that the appellant was a resident of Canada in 1977. As I see it, apart from the relatively infrequent visits here to see his children, he came here only to fulfill his obligations under a contract entered into in the course of the business of a self-employed engineering consultant. In 1977 that business was one which might have required the appellant’s attendance in places outside Pittsburgh but, nonetheless, that city appears to have been and to have remained the base of a business operation involving work outside the United States only by way of exception from the norm. It was for that reason that the appellant maintained an apartment in Pittsburgh. In 1977 the appellant’s children were, or were on the verge of becoming, young adults. The appellant’s wife was, to him, no magnet. As I see it, the bank accounts and professional memberships were the debris of a closed phase of the appellant’s life. The ownership of the Mount Albert home appears to stand on much the same footing. Although there was no evidence as to the arrangements made between the spouses on separation, the continued ownership by the appellant of the Mount Albert home appears not to have been the result of any decision by the appellant to retain it for purposes connected with an intended return to this country. Rather, in all the circumstances, it appears to have been retained for the purpose of providing shelter for the appellant’s wife and children.

A 1977 tax return was filed, showing the appellant as a resident of Ontario at the Mount Albert address. This, the appellant testified, was due to a misunderstanding. He believed that he had to file a Canadian tax return and he filled it out as best he could. I do not regard mis-statements made by the appellant in such circumstances as irrevocable admissions.

When all the facts revealed in evidence are considered together, it is apparent that in 1977 the appellant’s connection with Canada was tenuous. That connection consisted of only two elements of any consequence at all, namely the children and the contract. The combined weight of the two factors is not, in my view, of sufficient weight to justify a finding that the appellant was a person resident in Canada within the meaning of subsection 2(1) of the Income Tax Act. The appeal is therefore allowed and the assessment vacated.

Appeal allowed.