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Cristofaro v. Agence du revenu du Québec, 2020 QCCQ 1461, rev'd  2021 QCCA 1025

individual with no residence or source of income in Quebec nonetheless might be liable for Quebec tax

In 2003-0026827, CRA applied Oceanspan to find that a non-resident student who has no Canadian sources of income is precluded from transferring her unutilized tuition credits to her resident father under ITA s. 118.9 because:

an individual who is not resident in Canada and who has no Canadian source income would not be entitled to the tuition and education tax credits. The individual is not liable to pay tax in Canada, and therefore has no need to utilize the provisions permitting the tax credits.

Although this federal position does not appear to have been mentioned to him, Cameron JCQ rejected a similar position advanced by the ARQ to justify the denial of a tuition credit transfer (under the Quebec equivalent of s. 118.9) by a daughter studying in Scotland, who was resident in Ontario and had no Quebec sources of income, to her father, also an Ontario resident, who had Quebec professional income allocated to him by a cross-country professional firm. Cameron JCQ stated:

The legislation does not suggest that in any year where a Quebec resident who is a student does not have liability for tax pursuant to articles 22 or 25 TA, she would not be able to transfer the unusable credit to a parent. To interpret the law as implying that would be a direct contradiction of the purpose of the legislation, that of permitting a taxpaying parent to reduce tax liability because of the support of the child for education.

He went on to indicate (at para. 49) that in any event, the daughter could be considered to be “subject to tax” (or “liable for tax” to use his preferred translation, and also essentially the phrase considered in Crown Forest):

… The income tax legislation … applies to all Canadian residents … because they may, in one year or another, earn business income in Quebec… . In that sense, the daughter is “subject to the tax” to use Revenu Québec’s phrase, because she could, potentially, depending on circumstances, get some business income generated in Quebec even without being a resident here.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.9 a non-resident with no sources of income in Quebec nonetheless could transfer a tax credit to a Quebec taxpayer 434

R. v. Loosdrepht, 2009 DTC 6088 (BC Prov. Ct.)

Before going on to find that the individual taxpayer had committed tax evasion by filing nil returns and taking the position that he was not a taxpayer, Hicks, J. stated (at para. 44) that "the courts in this Province have found without exception that the argument to exclude so-called natural persons from the obligations of the Income Tax Act has no basis."

Doyle v. MNR, 89 DTC 5483, [1989] 2 CTC 270 (FCTD)

A reference in s. 225.1(5) to a taxpayer "should be interpreted as allowing an agent to sign on behalf of a taxpayer providing the agency is well and truly established."

The Queen v. Merali, 88 DTC 6173, [1988] 1 CTC 320 (FCA)

nexus to Ccn source

"[B]oth residents and non-residents who derive income from Canadian sources are included, by definition, in the term 'taxpayer'." [C.R.: 248(1) - "Income Bond"]

Oceanspan Carriers Ltd. v. The Queen, 87 DTC 5102, [1987] 1 CTC 210 (FCA)

"taxpayer" refers to a person who may become liable to tax

"Taxpayer" "refers to resident individuals or corporations who may be liable to pay tax at some time whether or not they are, at any given time, liable therefor." A corporation with no Canadian-source income accordingly was not a "taxpayer" for purposes of s. 111(8)(b), and non-capital losses which it incurred while not a resident corporation could not be carried forward to be deducted from income earned while the corporation was resident in Canada.

Words and Phrases

Gordon v. The Queen, 86 DTC 6426, [1986] 2 CTC 280 (FCTD), aff'd 89 DTC 5481 (FCA)

It was found respecting some losses from a partnership engaged in the breeding and racing of horses that s. 31(1) applies at the level of the individual partners to whom the farming losses have been flowed through rather than at the partnership level, i.e.,a partnership is not the "taxpayer" for the purposes of s. 31(1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 31 - Subsection 31(1) 147

Lea-Don Canada Limited v. Minister of National Revenue, 70 DTC 6271, [1971] S.C.R. 95, [1970] CTC 346

"taxpayer" did not extend to those not subject to tax

A Canadian subsidiary ("Nassau") of a Bermudan company that did not carry on business in Canada was leasing an aircraft to the appellant, which was another Canadian subsidiary of the Bermudan company. Nassau sold the aircraft to the Bermudan company for a sale price that was lower than the aircraft's fair market value and took the position that s. 17(2) of the pre-1972 Act which applied to a taxpayer carrying on business in Canada who sold anything to a person with whom he was not dealing at arm's length) did not apply to deem Nassau to have received fair market value proceeds on the basis that s. 17(2) was deemed by s. 17(7) not to apply where s. 20(4) was applicable. The latter provision maintained historical capital cost and undepreciated capital cost where a depreciable property "has, by one or more transactions between persons not dealing at arm's length, become vested in a taxpayer".

In rejecting this position Hall J. stated (at p. 6274):

"It is clear that s. 20(4) is concerned with taxpayers entitled to a deduction, not with persons who are not subject to assessment under Part I. A non-resident not carrying on business in Canada is not a person entitled to such a deduction and therefore s. 20(4) cannot be properly be said to be 'applicable' to him."

Furthermore, the exigibility of withholding tax on rents paid to the Bermudan company did not make the Bermudan company a taxpayer as such withholding tax was "a tax on gross receipts in Canada by a resident for a non-resident."

See Also

Marino v. The Queen, 2020 TCC 50 (Informal Procedure), aff'd 2022 FCA 115

an individual not within s. 2(1) or (3) was not a taxpayer who could generate a tuition tax credit

An individual with no connection to Canada paid a lot in tuition fees while in attendance at U.S. universities prior to 2012 then, on immigrating to Canada, claimed his purported unused tuition tax credits as a deduction from Canadian tax. Given that the tax credit provisions referred to an individual’s “taxation year,” the Crown successfully argued the Oceanspan principle that “a non-resident with no source of income in Canada, was not a ‘taxpayer’ and therefore did not have a taxation year” (para. 29). Monaghan J rejected the taxpayer’s position that s. 250.1 had the effect of deeming any non-resident to have a taxation year - and instead indicated (at para. 38) that this provision only “applies where a non-resident must have a taxation year if a provision of the Act is to operate as it is intended to operate, including in respect of another taxpayer,” for example, respecting a non-resident trust with a resident beneficiary recognizing income under s. 104(13) based on when that trust has a taxation year end.

She also found against the taxpayer on the ground that the tuition tax credit provision (s. 118.5(1)(b)) “applies for one purpose only: ‘for the purpose of computing the tax payable by an individual for a taxation year.’,” so that (para. 53):

[A] person will not be an individual for purposes of section 118.5 in a particular year unless that individual is a taxpayer in that year because the individual is described in subsection 2(1) or 2(3) and is potentially liable to tax in Canada under Part I.

The taxpayer was described in neither s. 2(1) nor (3) prior to 2012.

Words and Phrases
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.5 - Subsection 118.5(1) - Paragraph 118.5(1)(b) tuition paid prior to becoming subject to tax under Part I was not to be recognized under s. 118.5(1)(b) 455
Tax Topics - Income Tax Act - Section 250.1 - Paragraph 250.1(a) s. 250.1 applies only to persons who would not be taxpayers under Oceanspan 276

King George Hotels Ltd. v. MNR, 68 DTC 635 (TAB)

An incorporated charitable foundation was found to be a "taxpayer" notwithstanding that it was not taxable under s. 62(1)(f) of the pre-1972 Act.

Administrative Policy

16 December 2005 External T.I. 2005-0150411E5 F - Roll-over Provisions and Partnership

partnership with non-resident partners is a taxpayer for s. 51(1), 85.1(1) or 86(1) rollover purposes

Are the rules in ss. 51(1), 85.1(1) or 86(1) (which refer to a "taxpayer") available to a partnership in a reorganization where it exchanges shares of a Canadian corporation, even though those provisions refer to a "taxpayer"? CRA responded:

Based on … subsection 96(1), the CRA's practice is to treat a partnership as a person and a taxpayer when calculating income at the partnership level under Division B of Part I … .

… [A] partnership would generally be considered a "taxpayer" for the purposes of subsections 51(1), 85.1(1) and 86(1) and would therefore be entitled to rely on the rules contained therein … . [T]he fact that one of the members of the particular partnership is a non-resident of Canada would not change this.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) partnership is a taxpayer for s. 51(1), 85.1(1) or 86(1) exchange purposes 121
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(a) partnership is taxpayer for income computation purposes even if it has non-resident partners 36

23 December 2003 External T.I. 2003-0014655 F - article 125.5

province is a “taxpayer” exempt from tax
Also released under document number 2003-00146550.

In finding that the exclusion from “eligible production corporation” status where the corporation was “controlled directly or indirectly in any manner whatever by one or more persons all or part of whose taxable income is exempt from tax under [Part I]” applied to control (through another corporation) by the province, CCRA stated:

Braithwaite, 70 DTC 6001 … stated: “Her Majesty is just as capable … of being a "person taxable" as is an ordinary person … as is evidenced by the fact that there are various federal statutes that do impose direct and indirect taxes on Her Majesty in one way or another.” … We believe that Her Majesty in right of a province is a person and a taxpayer for the purposes of the Act. …

[T]he exemption from tax under Part I of the Act referred to in paragraph (d) of the definition … refers not only to persons whose taxable income is exempt because of section 149 but also to persons whose taxable income is exempt because of, inter alia, the immunity from tax enjoyed by certain persons such as Her Majesty in right of a province.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 125.5 - Subsection 125.5(1) - Eligible production corporation - Paragraph (d) exclusion under para. (d) applies where there is indirect control by the province 270


A non-resident trust that does not carry on business in Canada, does not hold taxable Canadian property and is not subject to s. 94 of the Act will not be a "taxpayer" for purposes of ITAR 26(3) based on the Oceanspan (87 DTC 5102) and Holiday Luggage (86 DTC 6601) cases.

18 January 1993 External T.I. 5-921718

A loan by a non-resident individual to a Canadian partnership secured by a second mortgage on a building owned by the partnership, that provided for the payment on maturity of 10% of the appreciation in value of the building in addition to interest at a rate of 11% per annum, would constitute an interest in real property situated in Canada for purposes of s. 115(1)(b) under the broad definition in s. 115(3). "In our view, the non-resident's interest in the building, which includes a right to participate in the appreciation of the building, is not 'an interest as security only'" as contemplated in s. 248(4).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(4) 127

23 September 1991 Memorandum (Tax Window, No. 8, p. 22, ¶1429)

In determining the number of shares under the 25% test in s. 115(1)(b)(iv), options held by the non-resident person or non-arm's length person are treated as having been exercised.

IT-176R2 "Taxable Canadian Property - Interest in and Options on Real Property and Shares"

84 C.R. - Q.16

"taxpayer" in s. 20(1)(j) is considered to include a partnership where a loan previously has been included in the partnership's income.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(2) 24


Segal, "Dispositions of Interest in and Options on Real Property and Shares by Non-Residents of Canada", 1994 Canadian Tax Journal, Vol. 42, No. 2, p. 327