Date: 20000331
Docket: 97-3044-IT-G
BETWEEN:
MIN SHAN SHIH,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Mogan J.T.C.C.
[1] The taxation years under appeal are 1991, 1992, 1993 and 1994. During those years, the Appellant was employed in Taiwan and maintained an apartment there while his wife and three sons resided in Regina, Saskatchewan. In each of those years, the Appellant filed an income tax return in Canada reporting only small amounts of investment income and showing his address as the house where his wife and three sons resided in Regina. In August 1996, Revenue Canada issued reassessments to the Appellant for all four taxation years assessing tax on the assumptions that the Appellant was resident in Canada, and that the Appellant was taxable in Canada on his world income. The Appellant has appealed from those four reassessments. The only issue in these appeals is whether the Appellant was resident in Canada in all or any one of the years 1991, 1992, 1993 and 1994.
[2] At the commencement of the hearing, counsel for the Respondent acknowledged that the reassessment for the 1992 taxation year was issued outside the limitation period in subsection 152(4) of the Income Tax Act and, because the Appellant had not filed a waiver with respect to that year, the reassessment was statute-barred. Accordingly, the Respondent conceded that the appeal with respect to the 1992 taxation year must be allowed without regard to the result in the other three years.
[3] Immediately prior to the hearing, counsel met and agreed on certain facts. When the hearing commenced, counsel for the Appellant read in a list of facts which are summarized below:
1. In April of 1989, the Appellant made an application for permanent residence in Canada on behalf of himself, his wife and their three children.
2. The Appellant and his wife sold their home in the south of Taiwan prior to immigrating to Canada and rented an apartment from 1989 to 1991 in the north of Taiwan. The Appellant then rented a smaller apartment from 1991 until 1996 when he purchased a house in Taiwan.
3. The application for permanent residence in Canada was accepted and the Appellant, his wife and their three children were admitted to Canada as permanent residents on August 11, 1991.
4. On August 26, 1991 the Appellant and his wife purchased jointly for $117,000 the residential property located at 2711 Livingstone Bay, Regina, Saskatchewan (referred to as the "Family Residence").
5. From August 1991 and throughout 1992, 1993 and 1994, the Appellant was a registered joint owner of the Family Residence.
6. From August 1991 and throughout 1992, 1993 and 1994, the Appellant's wife and three children occupied the Family Residence.
7. During the years under appeal, the Appellant maintained a joint bank account with his wife in Regina, Saskatchewan at the Toronto-Dominion Bank; but all GIC investments were in the name of his wife Linda.
8. During the years under appeal, the Appellant owned an automobile in Canada which was registered in the Appellant's name.
9. The Appellant became a landed immigrant (with restrictions) on August 11, 1991. The restrictions were:
(a) that the Appellant establish, purchase or make a substantial investment in a business or commercial venture in Canada that will make a significant contribution to the economy and whereby employment opportunities in Canada are created or continued for one or more Canadian citizens or permanent residents, other than the Appellant and his dependants, and
(b) that the Appellant participate actively and on an on-going basis in the management of that business or commercial venture.
10. The Appellant's wife and three children acquired Canadian citizenship as of July 1, 1995.
11. During the years under appeal, the Appellant listed his address on his T1 General income tax returns as the Family Residence.
12. Evelina Enterprise Co. Inc. (referred to as the "Corporation") was incorporated under the laws of the Province of Saskatchewan on February 1, 1993. The Corporation's major business activity was the export of Saskatchewan agricultural nutritional products. The Appellant is listed as the sole shareholder of the Corporation and his wife is listed as the sole director. The Corporation's head office was the Family Residence and was operated at other leased premises located a No. 211 - 2505 11th Avenue, Regina, Saskatchewan.
13. On November 5, 1993, the conditions originally placed upon the Appellant's admission to Canada (see paragraph 9 above) were cancelled.
14. During the years under appeal, the Appellant visited Canada 12 times.
[4] The Appellant is not fluent in the English language and so his oral testimony was given partly in halting English and partly through a qualified interpreter. I will attempt to summarize his evidence. In 1970, the Appellant graduated from a medical school in Taiwan with a degree in pharmacy. Upon graduation, the Appellant was employed by Wyeth-Ayerst International Pharmaceutical Companies. He started as a sales representative from 1971 to 1977; he became a supervisor from 1977 to 1983; and was made sales manager from 1983 to 1989. In 1989, the Nestle Corporation apparently acquired control of Wyeth-Ayerst and the Appellant became a sales manager in the Taiwan branch office of Nestle Corporation.
[5] The Appellant is a citizen of Taiwan and not a citizen of Canada. He holds both a driver's licence and a pharmacist's licence in Taiwan. Since 1971, he has been a member of the Pharmaceutical Society of Taiwan. Each month he pays the equivalent of $18.00 (CAN) to maintain his membership in the Pharmaceutical Society. Since 1985, he has been a member of the Taiwan Christian Church. He likes to play tennis and therefore belongs to a tennis club known as the "Community Society" in Taiwan.
[6] The Appellant's parents live in the southern part of Taiwan. He is their oldest son. In 1999, they were 79 years of age. He stated that as retired people, they had no medical insurance or government welfare. As the oldest son, in their culture he is responsible for the care of his parents; and each month he has to pay their regular living expenses. He visits them frequently at least once a month and sometimes every week.
[7] From 1991 to 1996, he lived in an apartment in Taepei (the capital of Taiwan) but in 1996 he purchased a house in Taepei. He has the use of a company car from his employer and he has a bank account in Taepei to which the employer deposits his salary. For communication purposes in Taiwan, he has a mailbox and he has a house address and he also has an e-mail address.
[8] When the Appellant and his wife and children first came to Canada in August 1991, he had applied for permanent residence as an "entrepreneur". Accordingly, he was required to sign an acknowledgement which was entered as Exhibit R-15 stating:
I, Shih Min Shah, acknowledge and am fully aware that my admission to Canada for permanent residence as an entrepreneur is based on the following terms and conditions as stipulated in section 23(d) (iv) A & B, of the Immigration Regulations, namely that within twenty-four months from the date of landing:
A) he establish, purchase or make a substantial investment in a business or commercial venture in Canada that will make a significant contribution to the economy and whereby employment opportunities in Canada are created or continued for one or more Canadian citizens or permanent residents, other than the entrepreneur and his dependants, and
B) he participate actively and on an on-going basis in the management of that business or commercial venture.
Dated at Richmond, BC on 11 August, 1991.
[9] Upon arriving in Canada, the Appellant and his wife and three children came to Regina because they had a friend already living in Regina. In the above summary of agreed facts, items 4, 5 and 6 describe the purchase and registration of the Family Residence at 2711 Livingstone Bay, Regina. He said that he was registered as one of the owners of the residence because that was the advice he received from a friend at the time. Exhibits R-1, R-2, R-3 and R-4 are photocopies of the Appellant's income tax returns for the respective taxation years 1991, 1992, 1993 and 1994. In each of those returns, the Appellant reported only investment income (interest) in the range of approximately $1,300 to $3,100. Those income tax returns do not report any of his employment income earned in Taiwan. On each income tax return, the Appellant has shown Saskatchewan as his province of residence at the end of the prior year. The Appellant stated that he filed income tax returns in Canada only because a friend in Canada told him that he was required to file them because he had certain income (interest paid to him from his bank in Canada) received in Canada. On that basis, he reported only the interest income. No one told him that if he was going to file tax returns in Canada, he may or should include any employment income earned in Taiwan.
[10] Exhibit R-14 is a photocopy of a document issued by Employment and Immigration Canada with the title "Immigrant Visa and Record of Landing". The document is signed by the Appellant and lists himself, his wife and their three sons as the persons entering Canada. The three sons were born in 1976, 1978 and 1982. Although the document is only a photocopy, it has many pages like the pages of a passport stamped to show the dates of arrival and departure in different countries. The last page of Exhibit R-14 is a schedule prepared in the Appellant's own handwriting with three columns showing: in the left column the date when he departed Taiwan; in the centre column the date he arrived in Taiwan; and in the right column the number of days in Canada. The schedule shows that the Appellant departed from Taiwan and returned on 12 different occasions in the period August 1991 to January 1995. The number of days in Canada in the right-hand column is a total of 166 days. This hand-written schedule has been typed and entered as Exhibit R-10 but the total in the right-hand column in Exhibit R-10 is 185 days. The Appellant confirmed in oral testimony that the total in Exhibit R-10 (185 days) is the correct total and not the total in Exhibit R-14. The dates in Exhibit R-10 confirm item 14 of the agreed facts: the Appellant visited Canada only 12 times during the years under appeal.
[11] Although he is not a citizen of Canada, the Appellant obtained a driver's licence in Saskatchewan because a friend there advised him to do so. Exhibit A-1 is a photocopy of the Appellant's driver's licence issued in Taiwan. Exhibit A-2 is a photocopy (in the Chinese language) of what the Appellant described as a rental agreement for the apartment which he maintained in Taepei from 1991 to 1996. The rental agreement had to be renewed every two years and the Appellant's signature appears on page 6. The Appellant explained that he does not live in Canada because he has to work and, as the oldest son, he has to take care of his parents. His father had colon cancer in 1987 and has many medical bills to be paid. The Appellant has a Saskatchewan health card but has never used the health care system in Canada. This is not surprising because the Appellant has spent little time in Canada.
[12] Exhibits R-12 and R-13 are documents connected with a loan which the Appellant made to his younger brother in 1991. Upon entering Canada in August 1991, the Appellant accepted the two restrictions set out in item 9 of the agreed facts with respect to his investment in a business or commercial venture in Canada. Evelina Enterprise Co. Inc. (see item 12 of the agreed facts) was the vehicle which the Appellant used to satisfy the conditions of his entry into Canada. He stated in oral testimony that his wife Linda looked after the acquisition of supplies from the suppliers in Canada while he looked for buyers in Taiwan. The business started in 1993 but stopped sometime in 1994. It operated for less than two years. Exhibit R-18 is a letter from the Canada Immigration Centre in Regina to the Appellant dated November 5, 1993 which had the effect of cancelling the conditions imposed upon him when he entered Canada as set out in Exhibit R-15. Exhibit R-21 is a letter from Wyeth-Ayerst (Asia) Ltd. confirming the Appellant's employment income in Taiwan for 1991.
[13] At the end of the Appellant's oral testimony, I asked him why, if he knew that he was going to continue working for his employer in Taiwan, he and his wife and three sons would come to Canada in August 1991 and apply for landed immigrant status. His answer was as follows given in halting English without the use of an interpreter:
Q. (His Honour) My question is this: if you knew you were going to continue working for this company in Taiwan, why did you come to Canada and apply for landed immigrant status?
A. (In English) Yeah. The major – I like to send my kids in Canada to learn in a more western educational system.
Q. (His Honour) You wanted your children to have a more western education. Any other reason?
A. (In English) No, that is the only one reason.
Q. (His Honour) And so you and your wife and the three sons came to Regina, bought a home and they started going to school in Regina?
A. (In English) Yes. (Transcript page 47)
Generally, the Appellant's wife stayed in Regina with their three sons but one or two times each year she would return to Taiwan with the Appellant for a brief visit. On those occasions, the three sons would stay in Regina alone. In the summer of 1994, however, the wife and three sons went to Taiwan for a visit of about six weeks.
[14] Considering that the Appellant filed an income tax return in Canada for each year under appeal showing his address as being in Regina and indicating that his province of residence was Saskatchewan, it is not surprising that Revenue Canada issued notices of reassessment to the Appellant for each year under appeal assessing tax on the assumption that he was a resident of Canada in those years. The Appellant, however, is not bound or estopped by the statements in his income tax returns with respect to residence. On appeal, he is entitled to argue that he was not resident in Canada at any time in the years under appeal; and that the statements in his tax returns are only evidence. The issue in these appeals for 1991, 1993 and 1994 (the Respondent having conceded 1992) is whether the Appellant was in fact and in law a resident of Canada in any one of those years.
[15] The leading case in determining the residence of an individual is the decision of the Supreme Court of Canada in Thomson v. M.N.R. [1946] S.C.C. 209. In that case, Rand J. stated at pages 224-225:
For the purpose of income tax legislation, it must be assumed that every person has at all times a residence. It is not necessary to this that he should have a home or a particular place of abode or even a shelter. He may sleep in the open. It is important only to ascertain the spatial bounds within which he spends his life or to which his ordered or customary living is related. Ordinary residence can best be appreciated by considering its antithesis, occasional or casual or deviatory residence. The latter would seem clearly to be not only temporary in time and exceptional in circumstances, but also accompanied by a sense of transitoriness and of return.
But in the different situations of so-called "permanent residence", "temporary residence", "ordinary residence", "principal residence" and the like, the adjectives do not affect the fact that there is in all cases residence; and that quality is chiefly a matter of the degree to which a person in mind and fact settles into or maintains or centralizes his ordinary mode of living, with its accessories in social relations, interests and conveniences at or in the place in question. It may be limited in time from the outset, or it may be indefinite, or so far as it is thought of, unlimited. On the lower level, the expressions involving residence should be distinguished, as I think they are in ordinary speech, from the field of "stay" or "visit".
In the passage quoted above, there are two clauses which I regard as particularly important: (i) "the spatial bounds within which he spends his life or to which his ordered or customary living is related"; and (ii) "the degree to which a person in mind and fact settles into or maintains or centralizes his ordinary mode of living with its accessories and social relations, interests and conveniences". When applying those clauses to a particular case, the facts are important because an individual may be resident in two or more jurisdictions. In Schujahn v. M.N.R., 62 DTC 1225, Noel J. stated at page 1227:
It is quite a well settled principle in dealing with the question of residence that it is a question of fact and consequently that the facts in each case must be examined closely to see whether they are covered by the very diverse and varying elements of the terms and words "ordinarily resident" or "resident". It is not as in the law of domicile, the place of a person's origin or the place to which he intends to return. The change of domicile depends upon the will of the individual. A change of residence depends on facts external to his will or desires. The length of stay or the time present within the jurisdiction, although an element, is not always conclusive. Personal presence at sometime during the year, either by the husband or by the wife and family, may be essential to establish residence within it. A residence elsewhere may be of no importance as a man may have several residences from a taxation point of view and the mode of life, the length of stay and the reason for being in the jurisdiction might counteract his residence outside the jurisdiction. ...
[16] Although an individual may at one time have two or more residences from a taxation point of view, most individuals will have only one residence and, if it is in country A, there would have to be special circumstances for a particular individual to have at the same time a residence in country B. The assessments under appeal were issued on the assumption that the Appellant was resident in Canada without regard to the question of whether he might in the same years be resident in some other jurisdiction. The Appellant's case was argued on the basis that he was resident only in Taiwan. It is apparent from the Appellant's testimony and Exhibit R-10 that he spends much more time in Taiwan than in Canada. Therefore, I propose to consider first the Appellant's argument to see if a case can be made for the Appellant's residence in Taiwan.
[17] Using Exhibits R-14 and R-15 as evidence that the Appellant and his wife and their three children arrived in Canada on August 11, 1991, and using Exhibit R-10 as evidence of the number of days that the Appellant spent in Canada during the four years under appeal, I have prepared the table below to compare the days the Appellant spent in Canada with the days he spent in Taiwan:
|
Year |
Total Days |
Days in Canada |
Days in Taiwan |
Time in Canada |
|
1991 |
142* |
32 |
110 |
22.5% |
|
1992 |
366 |
59 |
307 |
16.1% |
|
1993 |
365 |
51 |
314 |
14.0% |
|
1994 |
365 |
43 |
322 |
12.0% |
* August 11 to December 31 = 142 days
[18] The above table speaks for itself but certain facts are worth noting. In each year 1992, 1993 and 1994, the Appellant spent more than 300 days in Taiwan. By comparison, his time in Canada ranged from 12% to 16.1%. In 1991, his time in Canada was 22.5% but that part year was special because the Appellant had to bring his family to Canada; purchase a house in Regina; and register his children in Regina schools. Notwithstanding those obligations, from August 11 to the end of December 1991 the Appellant spent 77.5% of his time or 110 days in Taiwan.
[19] Having regard to the "spatial bounds" within which the Appellant spends his life, he has held uninterrupted employment in Taiwan from 1971 to 1996 all with the same company. He was promoted from time to time and, from 1991 to 1996, held the position of sales manager. The Appellant's parents live in Taiwan; his younger brother lives in Taiwan; and he (as the oldest son) supports his parents. The Appellant has always resided in Taiwan. In the years under appeal, he rented an apartment in Taepei from 1991 to 1996 as evidenced by the rental agreement which was entered as Exhibit A-2. He appears to have entered into that rental agreement at the time when his wife and three children came to Canada. The Appellant is a member of a professional association (the Pharmaceutical Society) in Taiwan. He pays taxes in Taiwan and receives his mail there. He has a Taiwan driver's license; he drives a company car in Taiwan; and his employer deposits his salary in his bank account in Taiwan. He belongs to a tennis club in Taiwan and a church in Taiwan.
[20] Counsel for the Respondent did not seriously argue that the Appellant was not resident in Taiwan in the years under appeal. I find that the Appellant was resident in Taiwan throughout the years 1991 to 1994. Such a finding does not mean that the Appellant was not resident in Canada in those years. It simply satisfies the requirement that every person has at all times a residence.
[21] Having found that the Appellant was resident in Taiwan in the years under appeal, I must now consider whether he was also resident in Canada in those years. I would be prepared to find, if necessary, that his wife and three sons resided in Regina from and after August 11, 1991. Indeed, for the purpose of this decision, I assume that they did so reside in Regina. If the Appellant's family is restricted to himself, his wife and their three sons, then I would conclude that the family home was in Regina from and after August 1991. If I consider the Appellant's full-time employment and the resulting salary which was necessary to support the Appellant in Taiwan, his wife and children in Canada, and his aged parents in Taiwan, then I would conclude that the Appellant had a personal home in Taepei (where he ate, slept, kept his clothes and took refuge from the weather) and a family home in Regina. Apart from the presence of his wife and children in Regina, did the Appellant have other connections in Regina which would cause him to be resident there?
[22] In paragraph 13 above, there is an extract from the transcript in which the Appellant explained that he and his wife brought their sons to Canada so that they would be educated in the western world (i.e. North America). This is a most believable statement. The Appellant and his wife were doing what they thought was in the best interests of their sons. They were responding to the universal concerns of all responsible parents. I found the Appellant to be a very credible witness, and I believe him when he stated that the education of the three sons was the only reason for coming to Canada. There is no evidence of any ulterior motive. The Appellant has never attempted to seek employment in Canada. The business which the Appellant and his wife attempted to start through Evelina Enterprise Co. Inc. (item 12 in the agreed facts) was intended to comply with the conditions of his entry into Canada (Exhibit R-15). Soon after those conditions were cancelled (Exhibit R-18), the business in Evelina was abandoned.
[23] The education of the three sons was the raison d'être for the Appellant and his wife coming to Regina in 1991. In my view, their conduct was like a decision to send their sons to a boarding school in Canada. The difference was that instead of having the sons boarding at the school premises, the Appellant and his wife purchased a house in Regina where the sons could board with their mother as the "housemistress", comparable to a housemaster at a traditional boys' boarding school. The Appellant himself did not change his life pattern with respect to his continuous employment in Taiwan, continuing his professional connection with the Pharmaceutical Society, continuing his social connections at his church and tennis club, and finding a new dwelling in 1991 (Exhibit A-2) where he could eat, sleep, store clothes and take refuge. These circumstances may change after 1994 if the sons decide to stay in Canada after completing their education but, in the years under appeal, I cannot find any evidence that the Appellant had any connection with Regina other than it being the home of his wife and three sons. He had no employment in Regina. He did not belong to any social clubs in Regina. There is no evidence that he came to Regina for any purpose other than to visit with his wife and children.
[24] The next-of-kin and family connections of an individual are relevant and important factors in determining the residence of that individual. I have already assumed that the Appellant's wife and three sons resided in Canada from and after August 11, 1991. When that assumed fact is coupled with statements in the Appellant's income tax returns (Exhibits R-1, R-2, R-3 and R-4), it would be easy to conclude that the Appellant thought of himself as resident in Canada in the years under appeal. But once the Appellant realized the consequences of being resident in Canada (i.e. taxable in Canada on his world income with certain credits for foreign income tax) and decided to dispute the question of whether he was in fact and in law resident in Canada in the years under appeal, the de facto residence of his wife and children in Regina and the statements in his income tax returns are only evidence in resolving the question of his residence.
[25] Counsel for the Respondent referred to the decision of my colleague Bowman J. in Fisher v. The Queen, 95 DTC 840. In Fisher, Bowman J. quoted the poet Robert Frost at page 845:
Home is the place where, when you have to go there, they have to take you in.
The Respondent argued that after August 1991, Regina was the place where a stranger could say to the Appellant "they have to take you in". That quotation was particularly appropriate in Fisher because, in that case, the taxpayer was born in Canada; he grew up in Canada; and in later years he tried to claim that he was not resident in Canada when he visited Canada frequently but had no other discernible residence outside Canada. I would not challenge the pithy truth of Robert Frost but the situation is different in these appeals when the Appellant has never had a permanent connection with Canada but has lived all of his life in only one other country, Taiwan.
[26] Counsel for the Respondent also argued that the table in paragraph 17 above does not work only for the Appellant because it demonstrates that the Appellant came to Canada regularly; 12 times in four years. Also, the immigrant visa (Exhibit R-14) gave the Appellant the absolute right to enter and leave Canada. In other words, Canada could not keep him out. Those facts are unassailably true but I am looking at the degree to which the Appellant settled into or maintained or centralized his ordinary mode of living with its accessories in social relations, interest and convenience. In Thomson, Rand J. distinguished residence from "stay" or "visit".
[27] On the evidence before me, I cannot find enough connections between the Appellant and Regina (or Canada) to conclude that the Appellant resided in Canada in any of the years under appeal. When he came to Canada three or four times each year, he came to "stay with" or "visit" his wife and sons. Regina may have been their family home but he was not there often enough or long enough to establish any personal connections with the various communities in Regina whether they be commercial, educational, cultural, recreational or social. The evidence of the Appellant's actual pattern of living overwhelms the statements in his income tax returns. On the evidence, the Appellant was a stranger to Regina (and Canada) throughout the years under appeal even though he probably was a much loved husband and father to his wife and children when he came to visit with them. He not only resided in Taiwan but he also maintained a personal home there. He was not a resident of Canada in the years under appeal. The appeals are allowed with costs.
Signed at Ottawa, Canada, this 31st day of March, 2000.
"M.A. Mogan"
J.T.C.C.