Tax Court of Canada Judgments

Citation: 2005TCC527

Date: 20050825

Docket: 2005-1488(IT)I

BETWEEN:

THERESA YANKSON,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

INTERIM REASONS FOR JUDGMENT

Delivered from the Bench on August 8, 2005 (Edited)

Rip J.

[1]    The world has changed. Technology keeps on advancing. There are new ways of delivering education. In the meantime many provisions of the Income Tax Act ("Act") remain static, if not stagnant and this, I believe, will be confirmed from the facts in this appeal from an assessment for 2003 in which the appellant, Theresa Yankson, was denied a tuition credit of $18,393 pursuant to paragraph 118.5(1)(c) of the Act and an education credit of $4,000 pursuant to subsection 118.6(2) of the Act.

[2]    In 2002 Ms. Yankson applied for admission to the Bachelor of Midwifery program at the University of British Columbia, only one of three midwifery programs in Canada. The enrolment for the program at the University of British Columbiais fifteen students, there are about 300 applications. The other programs are a joint program offered at McMaster, Laurentian and RyersonUniversities, where there is a similar ratio of applications to acceptances; she applied to McMaster Universityas well. The third program is offered at the Universityof Quebec where the course is offered in the French language.

[3]    Ms. Yankson's applications to the Universityof British Columbia and to McMasterUniversitywere not accepted. She then applied to, and was accepted by, the Seattle Midwifery School ("SMS") located in Seattle, Washington, for the term starting in January 2003 and ending in December 2004. Ms. Yankson graduated from the program with a diploma on February 19, 2005.

[4]    At all relevant times Ms. Yankson resided in Calgary.

[5]    The program at SMS is described by Ms. Yankson as a "distance learning program" requiring her physical attendance at the school for a period each month accompanied by online and practical work. The SMS describes the program as "low residency". According to a letter from the school produced at trial, students "attend monthly intensive classes and return to their home communities where they complete their academic work online, while taking part in clinical training opportunities with midwives and other heath care providers".

[6]    As stated, Ms. Yankson's midwifery course was divided into three parts: attendance in Seattle, online studies and practical studies. At the beginning of the course she was required to be in Seattle for five days per month; as the course progressed over the two years her monthly attendance in Seattlewas gradually reduced to two days. When attending in Seattleshe would be at SMS from 8:00 a.m. to 8:00 p.m. each day.

[7]    The time spent online was also gradually reduced as the course progressed. During the early part of the course Ms. Yankson would be online 40 hours a week; the hours were gradually reduced to 10 hours per week.

[8]    At the start of her studies Ms. Yankson spent 10 hours a week working in a midwifery practice; the hours gradually expanded to 40 hours a week. The school required 1500 hours of practical work over the two year course.

[9]    Ms. Yankson performed the practical portion of her course primarily in Albertaand British Columbia but spent some time in St. Lucia. Some examinations, Ms. Yankson testified, are taken online and others are written at the school.

[10]Ms. Yankson paid to the SMS for tuition and fees the amount of $12,951.45US in 2003 and $11,459US in 2004. The SMS is not a degree granting institution. It is, however, accredited by the Midwifery Education Accreditation Council in the United States and is recognized by the United States Secretary of Education. In 2003 Ms. Yankson was eligible for financial assistance under the Canadaand Alberta Student Loan programs. According to the website of Human Resources Development, the SMS is a designated institution for purposes under the Canada Student Financial Assistance Act[1] and, therefore, according to subparagraph 118.6(1) of the Act [2] is presumed to be an eligible institution for purposes of paragraph 118.5(1)(c) if the "... institution in the United States [is] within commuting distance of Canada".

[11]Ms. Yankson's claim for a tuition credit is regulated by section 118.5 of the Act. Paragraph 118.5(1)(c) reads as follows:

(1) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted, ... (c) where the individual resided throughout the year in Canada near the boundary between Canada and the United States if the individual (i) was at any time in the year a student enrolled at an educational institution in the United States that is a university, college or other educational institution providing courses at a post-secondary school level, and (ii) commuted to that educational institution in the United States, an amount equal to ...

(1) Les montants suivants sont déductibles dans le calcul de l'impôt payable par un particulier en vertu de la présente partie pour une année d'imposition: ... c) si, tout au long de l'année, le particulier réside au Canada près de la frontière entre le Canada et les États-Unis et si : (i) d'une part, il est inscrit à un moment de l'année à un établissement d'enseignement situé aux États-Unis - université, collège ou autre - offrant des cours de niveau postsecondaire, (ii) d'autre part, il fait régulièrement la navette entre sa résidence et cet établissement, le produit de la multiplication ...

[12]Paragraph 118.6(1)(c) defines "designated educational institution" outside of Canada to mean:

(c) if the individual referred to in subsection (2) resided, throughout the year referred to in that subsection, in Canada near the boundary between Canada and the United States, an educational institution in the United States to which the individual commuted that is a university, college or other educational institution providing courses at a post-secondary school level;

c) établissement d'enseignement situé aux États-Unis - université, collège ou autre - offrant des cours de niveau postsecondaire si, tout au long de l'année mentionnée au paragraphe (2), le particulier mentionné à ce paragraphe réside au Canada près de la frontière entre le Canada et les États-Unis et qu'il fasse régulièrement la navette entre sa résidence et cet établissement.

[13]Ms. Yankson's claim for an educational credit pursuant to paragraph 118.6(2)(b) also requires that she be enrolled at a designated educational institution.

[14]During trial counsel for the respondent submitted that the appeal with respect to paragraph 118.5(1)(c) must fail because firstly, Ms. Yankson did not reside near the Canada-United States border and secondly, she did not commute to the SWS in Seattle.[3] There is no question that SMS is an educational institution for purposes of this appeal. I note in paragraph 118.5(1)(c) that the phrase in English, "resided ... near the boundary ..." in French is "réside ... près de la frontière ..." and the English phrase in subparagraph (ii), "commuted to that educational institution ..." reads "... fait régulièrement la navette entre sa résidence et cet établissement ...".

[15]I will deal with the question of "commute" first. The word "commute", in the context under consideration, has been defined as follows:

- travel by public or private conveyance between one's home and place of work; travel between regularly or frequently

                                                            Shorter OxfordEnglish Dictionary, vol. 1,     5th ed., 2002.

- travel back and forth regularly or frequently (commuting between London and New York)

                                                            Webster's Third New International     Dictionary, 1986.

[16]The words "faire la navette" are defined by Le Nouveau Petit Robert as:

faire régulièrement l'aller-retour entre deux lieux déterminés. « Il faisait la navette entre Londres et Vienne »

[17]It is significant that both Webster and Robert cite as examples a commute between two distant cities, New York and London and London and Vienna. One must also note that today it is not unusual for businesspeople to travel on a regular or frequent basis from the locality where they reside to a distant locality where their employer requires them to attend. This travel may be weekly, monthly or more or less frequent. In such circumstances the businesspeople commute to work and back. The word "commute" cannot describe only short distances, distances between downtown and a suburb, for example. The word "commute" describes the practices of the individual. If the individual is wont to travel from his or her residence to another locality hundreds of miles away on a regular or frequent basis, that person is commuting between the two places.

[18]In 2003 Ms. Yankson traveled to Seattle each month. Her travel was at least regular, if not frequent. She commuted between Calgary and Seattle.

[19]I must now consider whether Ms. Yankson resided near the Canada-United States boundary. In Van de Water v. M.N.R.[4], my colleague Dusseault J. held that a person residing some 75 to 80 kilometers from the border was not residing near the border because the distance lacked "the element of proximity, continuity or vicinity to the border zone".

[20]In the case at bar, the closest Canada-United States border crossing station to Calgary is approximately 330 kilometers (240 miles) south of Calgary at Coutts, Alberta and Sweet Grass, Montana. The distance from Coutts to Seattle is approximately 1180 kilometers (735 miles).

[21]The word "near" means "close to, to or at a short distance from (a place, thing, person, etc.) in space or time".[5] Robert defines the word "près" as an "adverbe marquant la proximité, indiquant une petite distance."

[22]Based on these dictionary definitions and the usual meaning of the word "near", it is clear that a person residing in Calgary does not reside near the Canada-United States border.

[23]On this basis Ms. Yankson's appeal should fail.

[24]However, at least one of the appellant's submissions requires further consideration. When paragraph 118.5(1)(c) became law in 1972, the only way a student could meet attendance requirements in the United States educational institution was by his or her physical attendance at the institution; for a Canadian student to attend at the institution regularly he or she would have to reside near the border. Today, Ms. Yankson argues, that is not necessary. There are new academic programs that take advantage of the internet and therefore do not require physical attendance at the educational institution. Physical attendance may be required on a regular basis and this would permit any Canadian to regularly commute to the educational institution for courses on a regular and periodic basis, say monthly, for example, as Ms. Yankson did. In the meantime, the student is in attendance at the educational institution when he or she is online. The person's residence near the border is irrelevant.

[25]Actual physical attendance at the educational establishment is no longer necessary because the student is actively pursuing the course by way of the internet. The student may read or even listen to the course lectures online, the student may pose questions online, the student takes exams online. There is no need for the student taxpayer to reside near the border to take advantage of educational facilities in the United States. Why should a person residing in Calgary, Saskatoon, Thompson, Sudbury or Chicoutimi not have the same tax advantage as someone in Vancouver or Windsor, Ontario? It is quite possible that a person in Sudbury and a person in Windsor may be taking the same course from the same institution in Detroit that requires monthly physical attendance but the bulk of the course lectures is online; one would get the advantage of paragraph 118.5(c), the other would not.

[26]The importance of residing near the border, presumably to facilitate attendance at the educational institution is no longer valid.[6]

[27]Technology has done away with many traditional methods of education and replaced the old with new means, including online education. A student studying online may be in no particular disadvantage to a student physically at the institution taking the same course. The Act should be amended to take this into account. The Act should avoid any statutory anachronisms.

[28]On the facts described in these reasons, if I must discuss Ms. Yankson's appeal, I recommend that consideration be given to issuing an order of remission of tax to Ms. Yankson pursuant to the Financial Administration Act.

[29]Based on the present provisions of paragraphs 118.5(1)(c) and 118.6(1)(c) it would appear that I would have to discuss the appeal. However, it has occurred to me that perhaps the Canadian Charter of Rights and Freedoms ("Charter") may assist Ms. Yankson. While delivering these reasons I requested a memorandum from each of the parties whether, on the facts I described, Ms. Yankson's rights under subsection 15(1) or some other provision of the Charter, section 7 perhaps, may have been violated. At the moment I think not, but because of the discrimination based solely on her physical residence, it should be canvassed.

[30]Paragraphs 118.5(1)(c) and 118.6(1)(c) are not similar to provisions such as section 110.7 which grant an advantage to taxpayers because of the high cost of living in the north; an attempt is made to level the playing field, so to speak. With paragraphs 118.5(1)(c) and 118.6(1)(c), Parliament is discriminating for no good reason.

[31]I also suggested to Ms. Yankson that she may wish to get in touch with the Faculty of Law at the University of Calgary to assist her in preparing her memorandum. Perhaps others may offer her some assistance as well. The memoranda should be sent to me by September 30, 2005. However, if either party requires a reasonable extension of time, please let the Registrar of the Court know and I will extend the time.

       Signed at Ottawa, Canada this 25^h day of August 2005.

"Gerald J. Rip"

CITATION:                                        2005TCC527

COURT FILE NO.:                             2005-1488(IT)I

STYLE OF CAUSE:                           Theresa Yankson v. Her Majesty the Queen

PLACE OF HEARING:                      Calgary, Alberta

DATE OF HEARING:                        August 8, 2005

INTERIM REASONS FOR

JUDGEMENT BY:                              The Honourable Justice Gerald J. Rip

DATE OF INTERIM

REASONS FOR JUDGMENT:           August 25, 2005

APPEARANCES:

For the Appellant:	The Appellant herself
Counsel for the Respondent:	Marla Teeling

COUNSEL OF RECORD:

       For the Appellant:

                   Name:                             

                   Firm:

       For the Respondent:                     John H. Sims, Q.C.

                                                          Deputy Attorney General of Canada

                                                          Ottawa, Ontario

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