A P Braekevelt v. Minister of National Revenue, [1973] CTC 2101, 73 DTC 82

The Chairman (orally):—This is an appeal by Alfred P Braekevelt against a reassessment by the Minister of National Revenue for the taxation year 1970. This reassessment involves the question of whether or not tuition fees paid to Wayne State University by the appellant are deductible by him pursuant to paragraph 11(1)(qb) of the Income Tax Act as it was for that taxation year.

This is a problem that has caused great consternation to this Board, its predecessor and the courts, particularly with respect to taxpayers residing in the so-called border cities where degree courses are available in the United States. The Parliament of Canada recognized the distinction between students attending Canadian universities on a part- time basis and Canadian students attending US universities under similar circumstances. It is now possible to say that they have further recognized the peculiar situation that this type of resident finds himself in by providing for the deduction of tuition fees under the new Income Tax Act.

However, I am bound by the Income Tax Act as it existed in the 1970 taxation year, and in particular I am bound by the case of Ritchie v MNR, [1971] CTC 860; 71 DTC 5503, a decision of Mr Justice Heald of the Federal Court of Canada. In that case the appellant was in a similar position to Mr Braekevelt in so far as his desire to come under the provisions of paragraph 11(1) qb) was concerned. He was employed, as I recall, by the Ford Motor Company and attended Wayne State University to further his education and to acquire a specialist degree. He attended one class per week over a period of time, and the case was argued on the narrow point of whether or not a student attending one class per week with a perfect attendance record could qualify as a full- time student within the meaning of paragraph 11(1)(qb). Mr Justice Heald, on the facts of that case, found that he could not, and dismissed the appeal.

This case is very similar to a case which came before me in Windsor, Ontario last week. I had three such cases before me but only one was successful. I refer to Ingram v MNR, and I took some time in explaining why I thought it was distinguishable from the Ritchie case.

In the case before me, the appellant wished to obtain a Master’s Degree in Business Administration. He made investigations at the University of Windsor and the University of Western Ontario but found that such a course was not available to him on terms that he could comply with. He sought further and apparently found that Wayne State University in Detroit, Michigan, one of the United States of America, was giving such a course. Exhibit R-1, which is the School of Business Administration Calendar for 1970-1971, indicates at page 31 that a student with a strong academic credit, who is devoting full time to graduate studies and who is carrying on no outside employment, may register in a program not to exceed 16 credits per quarter.

As the evidence indicates, this meant that a student without any outside employment could obtain the degree that this taxpayer obtained in a period of one academic year.

In 1968 the appellant was employed by one of the colleges commonly called “community colleges” in the City of Sarnia where he lived. He was required to instruct or teach for 15 hours per week. He had an understanding, with the community college that encouraged him to take this course at Wayne State University, that when he was not teaching he could devote himself to furthering his education.

The evidence further indicates that he attended the university during the fall of 1968, the full academic year of 1969, and the first six months of 1970. When I say he attended the full academic year, I point out that, except in the summer months, he took his courses in the evening. He used his spare time during the Easter break and the summer holidays and other periods when not required to teach at the institution in which he was employed on a full-time basis, towards furthering the obtaining of the degree at Wayne State University. He changed his employment in the fall of 1969 and became a teacher in a secondary school in Sarnia, which also encouraged him to take these courses.

As a result, he obtained a Master’s Degree in Business Administration from Wayne State University in 1970, having completed the course in two academic years. This resulted in an increase in income of $500 per year. The question now before me is whether he falls within the ambit of the Ritchie case or whether he can bring himself within paragraph 11 (1 )(qb) and be entitled to the deduction of the tuition expenses.

In my view, the calendar sets out the ideal circumstances under which a student with a strong academic record might obtain this de- gree, I think that this Board would be blind to the realities of everyday existence in our present society if it did not recognize that many people are occupied in more than one type or class of employment. It is not uncommon for a farmer who wishes to establish himself as a full-time farmer to take employment in a factory to supplement his income until the farm is sufficiently profitable to warrant full-time operation. This is perhaps one of the reasons for the high rate of unemployment, that there are industrious people who seek out and find additional employment to supplement their incomes from their main sources of employment.

In this day and age I find it completely unrealistic to say that, under all circumstances, even in tax law that must be strictly construed, it is impossible for a person to be fully employed in one occupation and at the same time qualify as a full-time student under paragraph 11 (1)(qb) of the Income Tax Act. To do so in each and every instance would, in the mind of the Board, mean that one would have to be completely oblivious of the daily facts of life.

For this man to obtain the degree which he did, under the circumstances that he faced and in the period of time that he did, shows a high degree of skill and industry on his part, and places him in the position of a good many full-time, otherwise unemployed students, who often take more than the idealistic period of one year to obtain a degree such as he did. I think that this case is clearly distinguishable from the narrow point determined in Ritchie v MNR. As I said last week, and I repeat, it is highly questionable in my mind that Mr Justice Heald, having been given the facts that I have in this case and that I had in the Ingram case last week, would have come up with the same decision that he did in the Ritchie case.

Therefore, on the evidence, I would allow the appeal and refer the matter back to the Minister for reassessment, allowing the tuition fees of $837 as a deductible expense under paragraph 11(1)(qb).

Appeal allowed.