Paragraph 250.1(a)
Cases
Marino v. Canada, 2022 FCA 115
An individual with no connection to Canada paid significant tuition fees while in attendance at U.S. universities prior to 2012 then, on immigrating to Canada, claimed his “unused” tuition tax credits as a deduction from Canadian tax. Those provisions referred to an individual’s “taxation year.” The Tax Court applied 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). The Tax Court rejected the taxpayer’s position that s. 250.1(a) had the effect of deeming any non-resident to have a taxation year - and instead indicated 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.
In the Court of Appeal, Stratas JA stated (at para. 3) that “Oceanspan is … directly on point … [and] binds us, just as it bound the Tax Court.” He further stated (at para. 4):
The appellant contends that section 250.1 of the Act, added after Oceanspan, supersedes Oceanspan and has the effect of deeming every non-resident person to have a taxation year in Canada. We disagree for the reasons expressed by the Tax Court at paragraphs 35-40.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxation Year | Oceanspan principle indicates that a non-resident who does not compute income from any source for ITA purposes does not have a taxation year | 264 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) | s. 104(13) requirement to compute the income of a non-resident trust with a Canadian beneficiary is an example of s. 250.1(a) application | 284 |
See Also
Marino v. The Queen, 2020 TCC 50 (Informal Procedure), aff'd 2022 FCA 115
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(a) 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. In this regard, she further stated (at para. 38):
[P]aragraph 250.1(a) applies only to those non-residents for whom a taxation year must be identified for a purpose mandated by the Act (including for the purpose identified in paragraph 250.1(b)) but who are not taxpayers and therefore would not otherwise have a taxation year for purposes of the Act. … It does not operate to give every non-resident a taxation year thereby allowing every non‑resident to bring themselves within the scope of the Act.
| 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 248 - Subsection 248(1) - Taxpayer | an individual not within s. 2(1) or (3) was not a taxpayer who could generate a tuition tax credit | 293 |
Paragraph 250.1(b)
Administrative Policy
2 October 2012 External T.I. 2012-0448021E5 - Distribution by a non-resident trust
Given that "[p]aragraph 250.1(b) of the Act generally provides that where income is to be determined under the Act for a non-resident person, it will be done in accordance with the provisions of the Act... income of [a] non-resident trust, will be determined in accordance with paragraph 3(b) of the Act," so that only 1/2 of capital gains will be included in its income.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) | income of non-resident trust determined under ITA principles (inclusion of 1/2 capital gains) | 107 |