William Dickson v. Her Majesty the Queen, [1996] 3 CTC 2351 (Informal Procedure)

McArthur J.T.C.C.: — This appeal was heard in Edmonton, Alberta under the Informal Procedure of this Court with respect to the Appellant’s 1992 taxation year.

The Appellant appeals the Minister of National Revenue’s decision (“Minister”) to include the amount of $22,895.00 Canadian Forces pension income, received by the Appellant in his 1992 taxable income.

Simply put, the issue is whether the Appellant was a deemed resident in Canada pursuant to paragraph 250(1 )(c) of the Income Tax Act (“Act”) for the 1992 taxation year.

Other issues raised in the pleadings were disposed of, by both parties, prior to the hearing.

The relevant facts are not in dispute.

The Appellant was a member of the Canadian Forces serving in Lahr, Germany, when he retired from the Forces in July 1988. Immediately upon retirement he commenced employment with the Canadian Forces in Lahr. In correspondence filed as Appellant’s exhibits he was described as “Locally Engaged Employee (LEE) of Canadian Forces Europe”. He was also described as a “Civilian staff officer in the Civil Affairs and Civil - Military Co- operations section of Canadian Forces Europe Headquarters”.

The Appellant filed his income tax returns on the basis that he was a resident of Canada throughout the period he was a member of the Canadian Forces.

The Appellant filed a T1 General Income Tax Return indicating an employment income of $51,225.40. This amount was the total of employment income indicated on two T4 Statements. The first T4 indicated the Appellant’s employer as DSS (Department of Supply and Services), Lahr, Germany. The second T4 indicated the employer’s name Department of National Defense. Both employers, of course, were Canadian Government Departments.

The Appellant acknowledged that he was a Canadian resident and his employment income received while employed by the Canadian Government in Germany was taxable. In fact tax was withheld from the source. He submits that he be considered a non-resident with respect to his Canadian Forces Pension income received in 1992 and this income should not be taxable.

There was no question of double taxation. He was not considered by Germany to be a resident of Germany and the Appellant was not taxed by Germany on the pension income in the amount of $22,895.00 in each of 1990 and 1992.

He stated the following in his Notice of Appeal:

As I indicated in my original Notice of Objection during 1992 I was working with Canadian Forces Europe Headquarters as a locally engaged employee (LEE). Upon my separation from the Canadian Forces on April 5, 1988, I became a non-resident of Canada. I severed all primary residential ties with Canada, including moving my spouse, dependants, personal property and social ties. I did not retain any provincial hospitalization or seasonal residence in Canada. In addition, I was denied the right to vote.

The reason for the objection was that I was a non- resident of Canada for 1992. In addition to the facts above, I was also denied my basic freedoms as a Canadian citizen and resident - the right to vote.

Paragraph 250(1 )(c) reads in part:

For the purposes of this Act, a person shall, ... be deemed to have been resident in Canada throughout a taxation year if

(c) he was, at any time in the year,

(i) ... officer or servant of Canada,

The good faith and credibility of the Appellant are not in question. During the 1992 taxation year the Appellant was a civilian employee of Canada. While the definition section 245 of the Act does not assist in defining servant, The Shorter Oxford English Dictionary 1993 includes in its definitions of servant: “one who is under obligation to render certain services, to obey orders”.

I have no difficulty in concluding that the Appellant, as an employee of the Canadian Government in 1992, was a deemed resident in Canada by virtue of paragraph 250(1 )(b).

As such, subsection 56(1) requires that there be included in the Appellant’s taxable income for the 1992 taxation year.

In conclusion, the Minister properly reassessed the Appellant pursuant to subsection 56(1) of the Act by including in his income the amount of $22,895.00 which was pension income from Supply and Services Canada NCR/50 Canadian Forces Pensions in the 1992 taxation year and properly taxed the Appellant as a deemed resident in Canada pursuant to paragraph 250(1 )(c) of the Act.

For these reasons, the appeals are dismissed.

Appeal dismissed.