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At the hearing learned counsel for the appellant argued that the said sum of $200,000 payable at the rate of $40,000 a year, was a pension within the meaning of Article VIA of the Canada-United States Tax Convention, and therefore tax exempt. ... Article VIA of the Canada-United States Tax Convention reads: ARTICLE VIA Pensions (including Government pensions) and life annuities derived from within one of the contracting States by a resident of the other contracting State shall be exempt from taxation in the former State. ...

According to him we have the counterpart in the new Act at sections 104 to 108 inclusive and he explains: That principle may be expressed by saying that to the extent that trust income is payable to a beneficiary in a taxation year under the terms of a trust, whether it in fact is paid or not, to such extent the amount so payable is deductible from the trust income for such taxation year and the trustees are not required to include same in taxable income and pay tax thereon (subsections (6) and (21) of section 104). 8 He also stated that, according to Article VIII of the Canada-US Tax Convention, a non-resident does not have to pay tax on capital gains, and that the Minister, by taxing the trust in his reassessments, is trying to do indirectly what he is forbidden to do directly. 9 He admitted that a trust is taxed as an individual and that no deductions may be taken under section 109 or paragraph 110(1)(d), but he also maintained that once a trust designates the beneficiaries under subsection 104(21), this provision preserves and applies the “conduit” principle to capital gains received by a trust, a principle otherwise preserved for ordinary trust income by subsection 104(6). ... If the capital gains are deemed those of the US residents, then Article VIII of the Canada- US Tax Convention applies, which article reads as follows: Gains derived in one of the contracting States from the sale or exchange of capital assets by a resident or a corporation or other entity of the other contracting State shall be exempt from taxation in the former State, provided such resident or corporation or other entity has no permanent establishment in the former State. 10 On the other hand, counsel for respondent argued that, notwithstanding the fact that the trust has made a designation pursuant to subsection 104(21), it must nevertheless, in order to remove the equivalent amount from its income, be eligible to make a deduction in computing its income pursuant to subsection 104(6) of the Act. ...

The facts of this appeal are well spelled out at paragraph 5 of the Reply to the Notice of Appeal, which reads as follows: In assessing the Appellant for his 1975 taxation year the Respondent relied, inter alia, on the following assumptions of facts: (a) During 1975, the Appellant was separated from his wife; (b) On July 21, 1975, a judgment on provisional measures ordered the Appellant to pay to his wife an alimentary pension of $50.00 per week; (c) The Respondent allowed an amount of $600.00 which represents the payments made by the Appellant to his wife pursuant to the said judgment (July 21, 1975 to October 3, 1975, 12 weeks X $50.00); (d) On October 3, 1975, a Decree Nisi of Divorce was rendered by the Superior Court; (e) The said Decree Nisi provided inter alia: “LA COUR DONNE ACTE aux parties de la convention qu’elles ont souscrite le 3 octobre 1975, laquelle convention, produite comme pièce P-4, se lit comme suit: “1- Petitioner will pay Respondent the sum of ($2,500.00) Two Thousand Five Hundred Dollars in full of all claims for alimentary pension past, present and future, payable at rate of $833.33 per month, commencing October 1975;” (f) On October, November and December 1975, the Appellant paid to his wife $833.33 each month pursuant to the said Decree Nisi; (f) By notice of reassessment, dated November 9, 1979, the Respondent denied the deduction of the amounts referred to in paragraph 5 (f); At the hearing, the representative of the appellant referred the Board to the decision in MNR v William Albert Hansen, [1967] CTC 440; 67 DTC 5293, in which case Mr Justice Jackett decided in favour of the appellant and I quote the following: The paragraph in question provided exclusively for the wife’s maintenance and for nothing else. ...

Une convention plus formelle a été signée le 3 janvier 1972 pour confirmer le contrat du 4 novembre 1971. ... Cette convention était pour une période de 15 ans (15 x $15,000 = $225,000). 3.13 La convention prévoyait à l’article 7 qu’advenant le décès de M Bernèche avant l’expiration de ladite période de 15 ans, le résidu de ces versements serait payable à son épouse, Dame Noëlla Bernèche, ou à sa succession. ... La présente convention sera valable tant et aussi longtemps que MASKINONGE n’aura pas rempli la totalité des obligations qu’elle a assumées en vertu de la convention dont une copie est annexée aux présentes comme cédule “A”; 18. ...

The appellant applied for a rebate of this sum so deducted on the ground that it was exempt from Canadian income tax by Virtue of Article 4 I of the Canada-France Income Tax Convention, 1951, which reads as follows: I. ... The respondent took the position that the appellant was taxable pursuant to the provisions of Article 13 III and IV of the said Canada- France Income Tax Convention and assessed accordingly by notice of assessment dated November 8, 1967. ... Article 13 III and IV of the Canada-France Income Tax Convention reads as follows: III. ...

Findings The appellant testified that his education increased through his association and membership in the Canadian Institute of Mining and Metallurgy where he would attend a convention once a year and meet with associates and learn of new techniques. ... As a result of his membership he also receives an annual news report after the annual convention and articles are submitted to the monthly bulletin by learned members by the metallurgical and mining association whereby scientific papers are published, one of which was submitted by the appellant to the bulletin and was published and related to “angle of intersection’’. ... Most lawyers in Canada are members of the Canadian Bar Association which issues various publications and has annual conventions and sectional meetings for the on-going education of its members. ...

The expenses he sought to deduct on filing his tax return were reported on Schedule 9 and are summarized as follows: Accounting, Legal, Collection $ 25.00 Advertising, Promotion 2,818.94 Automobile Expenses (Gasoline; insurance, repairs)' 3,706.19 Business Tax, Fees, Licenses 415.11 Convention Expenses (Please provide details) 124.87 Office Expenses, Postage, Stationery 179.68 Supplies, Materials 57.18 Telephone, Light, Heat, Water 150.00 Total $7,476.97.».• Add: Capital Cost Allowance (Please refer to Schedule 8) 841.25 Total Expenses (Deduct from “Gross Income”) 8,318.22 8,318.22 Excess of Income over Expenses (Please enter this amount below) 2,423.83 Adjustments to Income Excess of Income over Expenses $2,423.83 Add: (d) personal or non-business portion of automobile or other expenses included above 682.11 Net Income from Business or Commissions 3,105.94 The $3,228.11 disallowed formed part of the total $8,318.22 shown above, and details are provided later in this decision. Contentions The respondent’s reply to notice of appeal provided the following details regarding the disallowances: (a) the amount of $1,416.51 which was part of the amount the appellant had claimed as advertising and promotional expenses was disallowed as it was used for personal use and not for the purpose of generating income; (b) the amount of $784.48 which was part of the amount claimed as automobile expenses was disallowed as it had not been substantiated by receipts or vouchers; (c) the amount of $30 which was part of the amount claimed as business taxes or fees was disallowed as it was an expenditure of a personal nature; (d) the amount of $124.87 which had been claimed as convention expenses was disallowed as it was an expenditure of a personal nature; (e) the amount of $57.18 which had been claimed as an expense for office supplies was disallowed as it was an expenditure of a personal nature; (f) the amount of $100 which was part of the amount claimed as telephone expenses was disallowed as it was an expenditure of a personal nature; (g) the amount of $715.07 which was part of the amount claimed as a capital cost allowance on his car was disallowed as the appellant did not own the automobile upon which he claimed the capital cost allowance as of December 31, 1974. ...

The appellant relies on an Act entitled “An Act to implement agreements for the avoidance of double taxation with respect to income tax between Canada and Trinidad and Tobago, Canada and Ireland, Canada and Norway and Canada and the United Kingdom, and to implement a supplementary income tax convention between Canada and the United States of America'’ which is chapter 75 of the Statutes of Canada 1966-67 and the Agreement thereto. ... To confirm that his submission was correct that dividends in the circumstances shall not be taxed in excess of 15%, the appellant’s counsel referred to Article XI of the Canada-US Tax Convention which reads as follows: Article XI 1. ...

Secondly, we are presently dealing with Article 18 of the Canada-UK Tax Agreement, whereas the Stickel case dealt with the interpretation of Article VIIIA of the Canada-US Reciprocal Tax Convention, and although the purport of these two articles is basically the same, the wording is slightly different. ... In the present case, the appellant not only remained in Canada beyond the two-year period, but continued to teach at the University of Alberta, as he had done since his arrival in Canada. 14 In my opinion, the words of the learned Chief Justice of the Federal Court of Canada, in his reasons for judgment in the Stickel case are particularly significant and applicable to the facts of this appeal when he says at page 261 [203, 5179]:... we are all agreed that the words “for a period not exceeding two years” are an integral part of the expression “for the purpose of teaching... at a university...” and do not relate to the period of the visit as revealed by the actual events. 15 Although the learned Chief Justice was interpreting the wording of Article VIIIA of the Canada-US Reciprocal Tax Convention, his interpretation of that article is wholly applicable to the comparable wording of Article 18 of the Canada-UK Tax Agreement, which reads as follows: Article 18 A professor or teacher who visits one of the territories for a period not exceeding two years for the purpose of teaching at a university, college, school or other educational institution in that territory and who is, or was immediately before that visit, a resident of the other territory shall be exempt from tax in the first-mentioned territory on any remuneration for such teaching. 16 The appellant in this appeal is not being disqualified from benefiting from the exemptions provided for in the Tax Agreement because he has remained in Canada beyond the period of two years. ...

There does not appear to be an International Tax Convention between Canada and East Africa. ...