INCOME TAX |
Non-Residents |
Allchin v. Canada
A-444-03
2004 FCA 206, Malone J.A.
27/5/04
8 pp.
Appeal from Tax Court Judge's decision not "sufficient permanency" in appellant's connections to United States to sever residential ties to Canada thus rendering Art. IV, para. 2 of Canada-United States Tax Convention Act, 1984, dealing with dual residency, not applicable--Appellant claimed to be resident of United States for taxation years 1993, 1994 and 1995 when held "green card" entitling her to permanently live and work in United States and therefore not subject to taxation in Canada--Lived in Windsor while selling hospital supplies throughout United States--Filed tax returns on worldwide income in United States--Tax Treaty to be given liberal interpretation with view to implementing true intention of parties--Literal or legalistic interpretations defeating basic objectives to be avoided--Treaty intended to benefit Canadians working in United States or vice versa, by protecting them from double taxation--Ancillary goal mitigation of administrative problems in having to file simultaneously tax returns in two uncoordinated tax systems --Tax Court Judge failed to consider appellant might be dual resident--Such concept involves possibility of residency being established in United States without having severed ties to Canada--Having found appellant resident in Canada, pursuant to Thomson v. The Minister of National Revenue, [1946] S.C.R. 209, Judge should have examined whether appellant also resident in United States for purposes of Treaty--Judge erroneously ignored fact appellant required to pay tax in United States regardless of physical residence-- Green card status "criterion of a nature" similar to United States residence so as to bring appellant within definition of "Resident of a Contracting State" under Art. IV, para. 1--In turn, Judge's factual findings establishing Canadian residency under Thomson analysis giving rise to dual residency and need for liberal analysis under Art. IV(2)--Failure to conduct analysis provided by Treaty clearly legal error--Appeal allowed--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1--Canada-United States Tax Convention Act, 1984, S.C. 1984, c. 20, Sch. 1, Art. IV "Resident of a contracting State".