George Park v. Minister of National Revenue, [1979] CTC 2817, 79 DTC 687

Delmer E Taylor:—This appeal, heard July 10, 1979, in the City of St John’s, Newfoundland, is from an income tax assessment for the year 1976 in which the Minister of National Revenue assessed the taxpayer for both federal and provincial income tax based on the residency status of the appellant. The respondent, in his reply of notice of appeal, relied, inter alia, on subsection 250(3) of the Income Tax Act, RSC 1952, chapter 148 as amended by section (1) of c 63 of SC 1970-71-72, on sections 2600 and 2601 of the Regulations made under the Income Tax Act and on sections 4, 23 and 24 of the Income Tax Act, RS Nfld, 1970, c 163 as amended.

Background

The appellant is a professor at Memorial University, St John’s, Newfoundland. From September 4,1976 until September 21, 1977, he took a sabbatical leave and carried on research work in England, aided by a grant from the Canada Council and a reduced salary from Memorial University. In filing his 1976 income tax return, the appellant appropriately calculated the federal tax payable but took the option of paying the 30% surtax of the basic federal tax (applicable that year) rather than the 41% of Newfoundland provincial tax.

Contentions and Argument

No evidence was introduced, both parties being in agreement on the facts.

The position of the appellant is best summarized in the written submission he made to the Board.

To begin with, the Income Tax Act section 250, entitled “Extended meaning of resident,” shows that it is possible for a taxpayer to be deemed to have been resident in Canada throughout a taxation year even though he never set foot in Canada in that year. This section therefore definitively constitutes an extended residence in Canada, which applies to certain persons whose work and principal residence is certainly physically outside Canada. The Section lists some categories of persons included in this extended residence category, but does not close off the class of those included by stipulating “if and only if” in its initial clause, or the like. I proceed on the principle that where the law is not explicit the law did not intend to be, and the most reasonable interpretation of the law’s meaning should decide an issue. My case is most reasonably assimilated to the category of persons enjoying, for a limited period, extended residence in Canada while physically residing outside Canada, per 31 December 1976. This follows from Income Tax Regulation 2601: since I did not cease to reside in Canada before the end of 1976, I did not reside in a particular province on the last day of the 1976 taxation year, and 2601 does not define my circumstance.

(7) Whereas the purpose of extended residence is to facilitate international amity and cooperation in face of ambiguities about residence, no such ambiguities are countenanced in Canadian law where its jurisdiction is complete. Income Tax Regulation 2607 applies, for example, to NWT and the Yukon per 2600(3). In the matter of assigning taxpayers’ residences to one or another internal jurisdiction, it is reasonable to suppose the Canadian Tax laws intend to eliminate ambiguity as to the place of principal residence of all taxpayers, including those deemed to enjoy extended residence in Canada. Accordingly, it is reasonable to assume that on 31 December 1976 my residence at 1 Summerfield, Cambridge, UK, placed me in the same residence category as persons explicitly listed in section 250 of the Income Tax Act, which defines “extended meaning of resident.” Evidently, persons in this category are subject to a federal surtax in lieu of provincial tax.

Counsel for the respondent made reference to a recent case heard before the Board (Bruce S Hoyt v MNR, [1977] CTC 2401; 77 DTC 270), in which the general subject of residency on a provincial basis was touched upon by my colleague, the Assistant Chairman, and I quote from 2406 and 274 respectively of that decision:

Even though the appellant, in my opinion, cannot succeed on the main issue under appeal, his counsel still contended that the appellant “was not resident in the Province of New Brunswick on December 31, 1974”. Subsection 1(1) of the Income Tax Act, RSNB 1973, c I-2 reads as follows:

1.(1) An income tax shall be paid as hereinafter required for each taxation year by every individual

(a) who was resident in New Brunswick on the last day of the taxation year, or

(b) who, not being resident in New Brunswick on the last day of the taxation year, had income earned in the taxation year in New Brunswick as defined in paragarph 2(4)(b).

He contended that, if the appellant was not resident in that province on that day, he was not liable to taxation by that province for the 1974 taxation year. However, counsel did not agree that, were this argument successful, the appellant would be liable to additional federal income tax under the federal Income Tax Act. Where was the appellant resident on December 31, 1974? The reason for the absence from the province was not referred to in any way as determining whether or not the appellant was a resident in the Province of New Brunswick on December 31, 1974. The absence could have been caused by a holiday, a business trip, treatment of an illness or even an enforced or involuntary absence; the submission, I presume, would have been the same regardless of the reason for the absence on December 31, 1974. First of all there was no suggestion that he was not resident in New Brunswick, say in the month of May, 1974. There was no suggestion that he was resident anywhere, even in Spain, although he was there on December 31, 1974. As was pointed out previously, it could be that, on December 31,1974, he had a family in New Brunswick, and owned or leased a home there, and possibly a car and other property. Two things he did have were a bank account, and all rights under the Agreement together with some obligations under the same document which could run for possibly a further five and one-half years.

If one interprets “was a resident in” to mean “lived in” on the 31st day of December, 1974, then the appellant did not live in New Brunswick in this case. In such a case, if one took a holiday for a full day out of a province and that day were December 31st, then that person was not a resident in the province which he left for that one day. I am of the view that unless someone is shown to be a resident on December 31 in a second place, having been immediately previously thereto a resident in another place, he is still resident in the former place when he is only absent from that place because of a holiday. A person, in my view, does not cease to be a resident in a province when he goes to another province or even another country just for a holiday, even though it be of a reasonably extensive duration. It is all the more so, when, not only were the ties with that place not broken, but rather, he was required to return.

The result is, I hold that on the last day of the 1974 taxation year the appellant was resident in New Brunswick.

Findings

The issue, as I see it, is that the appellant accepts the fact that he was a Canadian resident on December 31, 1976 for income tax purposes, but rejects the proposition that, concurrently, he was a resident of the Province of Newfoundland. While such a situation might be conceived (resident in Canada but not resident in a particular province of Canada), I fail to see in the argument he has proposed that it can be applied in this case. I would conclude simply that in fact he was a resident of Canada, with his centre of vital interests remaining in the Province of Newfoundland for income tax purposes not affected in any way by his domicile in the United Kingdom on December 31, 1976.

Decision

The appeal is dismissed.

Appeal dismissed.