Ernest G. Stickel (Appellant)
v.
Minister of National Revenue (Respondent)
Court of Appeal, Jackett C.J., Sheppard and
Bastin D.JJ.—Edmonton, March 15, 1973.
Income tax—Canada-U.S. Reciprocal Tax Convention,
Article VIII A—U.S. resident teaching in Canada for two
years but remaining afterward—Whether exempt from
Canadian tax—"Resident", meaning.
Appellant, a resident of the United States, came to
Canada with his family in 1967 for the purpose of teaching
at the University of Alberta under a two-year contract. At
the expiration of the two-year term, he ceased teaching but
stayed in Canada for several months longer doing other
work. He claimed an exemption from Canadian income tax
for 1967 and 1968 under Article VIII A of the Canada-U.S.
Reciprocal Tax Convention.
Held (reversing Cattanach J.), he was entitled to the
exemption.
Appellant fell within the language of Article VIII A of the
Convention. He was "a professor ... resident [of the
United States] ... who temporarily visits [Canada] for the
purpose of teaching, for a period not exceeding two years, at
a university"... .
The word "resident" in Article VIII A cannot be so
narrowly construed as to exclude appellant because he
brought his family with him during his absence from the
United States.
Article VIII A is not limited in application to visits not
exceeding two years.
APPEAL from Cattanach J. [1972] F.C. 672.
COUNSEL:
P. G. C. Ketchum for appellant.
G. W. Ainslie, Q.C. for respondent.
SOLICITORS:
Crockett, Hattersley, Ketchum and Niziol,
Edmonton, for appellant.
Deputy Attorney General of Canada for
respondent.
Judgment of the Court was delivered by
JACKETT C.J. (orally)—This is an appeal from
a judgment of the Trial Division dismissing the
appellant's appeals from his assessments under
Part I of the Income Tax Act for the 1967 and
1968 taxation years.
The appeals were brought to have decided the
question whether the appellant was exempt
from income tax during those taxation years on
his remuneration as an Associate Professor at
the University of Alberta. The exemption was
claimed under an article in the Canada-United
States of America Tax Convention, which has
the force of law by virtue of chapter 21 of the
Statutes of Canada, 1943-44, and chapter 27 of
the Statutes of Canada 1950.' The article is
Article VIII A of the Tax Convention as amend
ed and reads as follows:
A professor or teacher who is a resident of one of the
contracting States and who temporarily visits the other
contracting State for the purpose of teaching, for a period
not exceeding two years, at a university, college, school or
other educational institution in such other State, shall be
exempted by such other State from tax on his remuneration
for such teaching for such period.
Two questions arise on this appeal. The first
is whether the appellant was a person who fell
within the words "A professor ... who is a
resident of" the United States. The second is
whether the appellant was a person who fell
within the words "A professor ... who tem
porarily visits" Canada "for the purpose of
teaching, for a period not exceeding two years,
at a university ...".
The learned trial judge decided the second
question against the appellant and did not find it
necessary therefore to decide the first question.
We, therefore, consider the second question
first.
The appellant came to Canada to teach at the
University of Alberta under a two year term
contract. At the expiration of that two year term
of employment, the appellant did cease to teach
but he stayed in Canada for several months
longer doing other work. On these facts, the
learned trial judge held that Article VIII A did
not apply because he interpreted Article VIII A
as not applying where the duration of the visit
was, in fact, in excess of two years. We do not
so read Article VIII A.
The question of interpretation turns on
whether the words "for a period not exceeding
two years" modify the word "visits" or are an
integral portion of the expression "for the pur
pose of teaching ... at a university ...".
Once it is appreciated that the words that
constitute the second condition precedent to the
application of Article VIII A are
who temporarily visits the other contracting State for the
purpose of teaching, for a period not exceeding two years, at
a university .. .
and not merely
who temporarily visits the other contracting State for the
purpose of teaching, for a period not exceeding two years,
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.
On that view of the matter it becomes a
question of fact as to whether the appellant was
a person who was at the relevant time a "resi-
dent" of the United States and was a person
who temporarily visited Canada for the purpose
of teaching at a university for a period not
exceeding two years.
We do not think that it is necessary to review
the evidence at length. It has been carefully
reviewed by the learned trial judge although he
did not find it necessary to make any findings
on the questions that become relevant on the
view that we have taken as to the meaning of
the Article.
In our view, the balance of probability on the
evidence is that the appellant, who was resident
in the United States, had given some thought to
the possibility of moving to Canada before he
obtained an opportunity to take a two year term
appointment at the University of Alberta, that
he discussed the project with his family, who
were not enthusiastic about the prospect of a
permanent move to Canada, and that they
reached a joint decision to go to Canada for the
two year appointment only but on the under
standing that during that two year period they
might reconsider the possibility of making their
permanent home in Canada. On those facts,
having regard to the necessity of interpreting
the words "temporarily visits" as including
visiting for the purpose of teaching for a period
as long as two years, we are agreed that the
appellant was a person who temporarily visited
Canada for the purpose of teaching at a univer
sity for a period not exceeding two years.
A more difficult question is whether the
appellant was "a resident" of the United States
at the time contemplated by Article VIII A. The
respondent's position is that this contemplates
residence in the sense given to that word when
it is a basis for liability to income tax and that it
is a condition of the Article that a person must
have been so resident throughout the period of
the exemption. If that be so, it is difficult to
envisage what tax relief is accorded by Article
VIII A in the case of professors and teachers
that would not otherwise be available in the
case of all taxpayers by virtue of the foreign tax
credit provisions which are, it is believed, also
contemplated by the Tax Convention in
question.
We do not find it expedient to attempt to
formulate any definition of what is implied by
the words "is a resident" in their context in
Article VIII A. No matter how narrowly the
expression is construed, it would certainly
embrace the appellant if he had been sufficient
ly affluent and hard hearted to have left his
family in a family home in the United States for
the two year period and to have continued to
incur the expense of maintaining his community
and social relationships there during the period
of his two years' absence. This would be so in
the case of a mariner or soldier who had to
absent himself from his home for such a period
and the work performed while away does not
constitute a relevant distinction. If that would
have been so in the case of a person who could
afford to maintain his family in the United
States while away, and was willing to do, we are
of the view that a person who is on a two year
"temporary" visit to teach in a foreign universi
ty was equally a "resident" of his native land
for the purposes of Article VIII A even though
he took his family with him and did not continue
to incur the expense of maintaining his com
munity and social relationships in his native
land.
The appeal will, therefore, be allowed with
costs and the assessments will be referred back
for re-assessment.
' Article VIII A is printed in Schedule A to chapter 27 of
the Statutes of 1950.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.