William R Morton v. Minister of National Revenue, [1976] CTC 2463, 76 DTC 1275

Delmer E Taylor:—This is an appeal from an income tax assessment for the year 1974. The matter at issue is the non-acceptance by the Department of National Revenue of the claim by the appellant that he was a non-resident of Canada during the taxation year in question. The respondent relies, inter alia, upon sections 3 and 250 of the Income Tax Act, RSC 1952, c 148, as amended by section 1, SC 1970-71-72, c 63 (the Income Tax Act).

The salient facts are shown by reference to the statements filed with the Board. From the Notice of Appeal by the appellant:

The Morton family left Canada for Bangladesh on August 26, 1973 and returned to Moncton October 11, 1974. We had set up housekeeping in our own residence during our time away.

During my stay in Bangladesh direct payment was made to my Canadian bank account by Canadian National, the parent Company of Canac Consultants Ltd. The source of this payment was from the Commonwealth Fund for Technical Co-operation.

From the Reply to the Notice of Appeal by the Minister of National Revenue:

2. By Notice of Assessment dated September 9th, 1975 the Respondent assessed the Appellant for tax upon the Appellant’s employment income for the 1974 calendar year.

3. During the period from on or about August 26th, 1973 to on or about October 4th, 1974 (“the period in question”), the Appellant was absent from Canada.

4. During the period in question the Appellant lived at the city of Dacca in the country of Bangladesh, where the Appellant was employed by Canac Consultants Ltd, a subsidiary of Canadian National Railways.

5. In assessing the Appellant for income tax for 1974, the Respondent assumed, inter alia, that:

(a) the Appellant’s home at 31 Wentworth Drive, Riverview, New Brunswick, had been maintained and occupied by a friend of his wife upon the understanding that the Appellant would be returning to New Brunswick to re-occupy the said house upon the conclusion of his work in Bangladesh;

(b) the Appellant maintained a bank account in Canada in to which direct deposits were made by the said Canadian National Railways, with respect to the Appellant’s work in Bangladesh.

The only other significant matters brought to the attention of the Board at the hearing were that the appellant did not pay any form of tax on his income in Bangladesh, and that while there he was paid a living allowance.

The appellant is under the false impression that merely not living physically in Canada during a certain period of time qualifies a taxpayer for non-resident status as described in the Income Tax Act. This is not the case; the requirements as indicated in the Act must be met. Residence is quite different from domicile. It is quite possible for purposes of the Income Tax Act to be a resident in more than one country at the same time. Accordingly, even if the appellant were successful in showing the Board that he had been a resident of Bangladesh (and there was no evidence to support this, nor did it appear that the appellant wished this to become a reality in terms of all the ramifications which might attach to it), this would, nevertheless, not necessarily relieve him of his responsibilities as a resident of Canada.

A “non-resident”, as defined in the Act, means “not resident in Canada”. Not resident in Canada, by deduction, is the opposite to resident in Canada, under the Act, and this is ‘‘a reference to a person resident in Canada includes a person who was at the relevant time ordinarily resident in Canada”. (Italics are mine.) The appellant remained an employee of a Canadian Crown corporation, maintained his home in New Brunswick, and a bank account in Canada into which his salary was deposited. On the completion of his work overseas, which was relatively short and consisted of only one session, he returned and occupied his home. There is no indication of even the intention, let alone the fulfilment of a determination to remain outside Canada on anything other than a temporary basis. There is evidence that the period of time spent in Bangladesh by the appellant was a sojourn there for a particular purpose, and in no way changed his basic residency status.

The appeal is dismissed.

Appeal dismissed.