Dysert v. The Queen

Dysert v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2013-02-21
Neutral citation
2013 TCC 57
File numbers
2010-899(IT)G
Judges and Taxing Officers
Patrick J. Boyle
Subjects
Income Tax Act
Decision Content
Docket: 2010‑898(IT)G
BETWEEN:
BRUCE ELLIOTT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Larry Dysert (2010-899(IT)G) and Todd Pickett (2010-900(IT)G) on March 12, 13 and 14, 2012 at Edmonton, Alberta.
Before: The Honourable Justice Patrick Boyle
Appearances:
Counsel for the Appellant:
Kurt G. Wintermute
Counsel for the Respondent:
Mark Heseltine
____________________________________________________________________
JUDGMENT
The appeal from the assessments made under the Income Tax Act with respect to the Appellant’s 2005 and 2006 taxation years is allowed, with costs, and the matter is referred back to the Minister of National Revenue for reconsideration and reassessment, in accordance with the Reasons for Judgment attached hereto.
Signed at Ottawa, Canada this 21st day of February 2013.
"Patrick Boyle"
Boyle J
Docket: 2010‑899(IT)G
BETWEEN:
LARRY DYSERT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Bruce Elliott (2010-898(IT)G) and Todd Pickett (2010-900(IT)G) on March 12, 13 and 14, 2012 at Edmonton, Alberta.
Before: The Honourable Justice Patrick Boyle
Appearances:
Counsel for the Appellant:
Kurt G. Wintermute
Counsel for the Respondent:
Mark Heseltine
____________________________________________________________________
JUDGMENT
The appeal from the assessments made under the Income Tax Act with respect to the Appellant’s 2005 and 2006 taxation years is allowed, with costs, and the matter is referred back to the Minister of National Revenue for reconsideration and reassessment, in accordance with the Reasons for Judgment attached hereto.
Signed at Ottawa, Canada this 21st day of February 2013.
"Patrick Boyle"
Boyle J.
Docket: 2010-900(IT)G
BETWEEN:
TODD PICKETT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Bruce Elliott (2010-898(IT)G) and Larry Dysert (2010-899(IT)G) on March 12, 13 and 14, 2012 at Edmonton, Alberta.
Before: The Honourable Justice Patrick Boyle
Appearances:
Counsel for the Appellant:
Kurt G. Wintermute
Counsel for the Respondent:
Mark Heseltine
____________________________________________________________________
JUDGMENT
The appeal from the assessments made under the Income Tax Act with respect to the Appellant’s 2005 and 2006 taxation years is allowed, with costs, and the matter is referred back to the Minister of National Revenue for reconsideration and reassessment, in accordance with the Reasons for Judgment attached hereto.
Signed at Ottawa, Canada this 21st day of February 2013.
"Patrick Boyle"
Boyle J.
Citation: 2013 TCC 57
Date: 20130221
Docket: 2010-898(IT)G
BETWEEN:
BRUCE ELLIOTT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2010-899(IT)G
AND BETWEEN:
LARRY DYSERT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent;
Docket: 2010-900(IT)G
AND BETWEEN:
TODD PICKETT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Boyle J.
[1] The three taxpayers, Mr. Dysert, Mr. Elliott and Mr. Pickett, are American citizens who have been assessed Canadian income tax on their revenues from providing professional consulting services to Syncrude Canada Ltd. (“Syncrude”) in Edmonton and Fort McMurray, Alberta, in 2005 and 2006 pursuant to a two‑year contract (later extended to four years) between Syncrude and their US professional firm.[1]
[2] It is the taxpayers’ position that during the years in question, they were not residents of Canada nor deemed to be residents of Canada. It is their further position that, in any event, the so called “tie‑breaker rules” in Article IV of the Canada‑United States Income Tax Convention (the “Treaty”) would deem them to be residents of the United States (the “US”), not Canadian residents, with the result that they would be non‑residents of Canada for purposes of the Canadian Income Tax Act (“ITA”). The taxpayers’ position with respect to the Treaty’s tie‑breaker rules is that in the years in question (i) the taxpayers’ Edmonton apartments were not permanent homes, or (ii) that their centres of vital interests were in the US because their personal and economic relations were closer to the US, or (iii) that their habitual abodes were in the US.
[3] It is the Respondent’s position that the taxpayers were (i) resident in Canada, or deemed to be resident in Canada as sojourners, and (ii) under the tie‑breaker rules in the Treaty, deemed to be Canadian residents by virtue of them (a) having permanent homes in the years in Edmonton as well as in the US, and (b) either having closer personal and economic relations to Canada (centre of vital interests) or having their habitual abodes in Canada in the years in question.[2]
[4] Shortly before the week of trial, the Respondent abandoned the argument in its replies that the taxpayers’ US limited partnership, Conquest Consulting Group (“CCG”), carried on business in Canada through a fixed base. Thus, I do not need to address the issue of whether the presence and activities of the taxpayers in Canada as active partners of CCG constituted a fixed base or permanent establishment for treaty purposes.[3]
I. Facts
[5] The three appeals were heard together on common evidence over a period of three days. Each of the taxpayers testified. Their Canadian accountant was also called as a witness. The Respondent did not call any witnesses. All of the witnesses testified in a wholly credible fashion and were not challenged on credibility. There is no material disagreement regarding the facts.
[6] Each of the three taxpayers are certified cost and estimating professionals with lengthy and very successful careers in the cost engineering field at major international companies, including Fluor Engineering, Eastman Kodak and Intel. They are long‑time acquaintances and colleagues, two of them having worked together early in their careers at Fluor and all three of them at Eastman Kodak. Prior to undertaking work at Syncrude in 2004, all of their professional careers had been entirely in the US.
[7] Cost engineering as a professional service consists of a number of related activities including cost estimating, project planning and scheduling, project control and management, as well as other areas such as dispute resolution. In the business world, it is particularly important in the context of large projects and mega‑projects. Professional accreditation and education of cost management professionals is organized by AACE International, Inc., the Association for the Advancement of Cost Engineering International (“AACE”). AACE’s certifications are independently accredited by the Council of Engineering and Scientific Specialty Boards, the same council that accredits, among other things, the Professional Engineer or P. Eng. designation in Canada. Eastman Kodak was an early leader in the field and in the late 1980s and early 1990s had one of the world’s leading project estimating and management departments. Each of the taxpayers has held significant roles at AACE on boards and panels.
[8] Each of the taxpayers was born in the US and have been US citizens throughout their lives. With the exception of the years 2004 through 2008 during which they provided services to Syncrude, they had each lived their entire lives only in the US. By 2004, they each had married and had children. They had each acquired substantial family homes in the US. All of their adult children and their families lived in the US, often nearby, their dependent children lived at home or, if away at college, called their parents’ homes home. Their extended families, siblings and parents, et cetera, also all lived in the US. They had the personal effects one would expect of mid-to-late career successful professionals: multiple cars, a motorcycle, a motor home, acreage with horses, dog kennels for eight English Mastiff show dogs, art, recreational and exercise equipment, et cetera. They also had the financial assets one would expect, including significant retirement and other investment accounts with major US financial institutions. All of these remained sited in the US throughout.
[9] They also had personal and social involvement in their US home communities as one might expect, such as long‑time friends and long‑standing involvement with local charities, local theatre, et cetera. They held positions on AACE International, a US entity. At least one had very good personal friends in other parts of the US from the times he lived and worked in other states.
[10] In short, they were “all American”, well established in and only in the US in their personal lives and professional careers. Nothing in their lives was in any way related to Canada before their work in Alberta began.
[11] In late 2003, Syncrude was in need of enhancing its project estimating and project control management capabilities. It was preparing to commence another major upgrader facility/project in Fort McMurray. Its previous upgrader project came in late and significantly over estimated costs - in the 100% range, measured in billions of dollars. Syncrude was not satisfied with the assessment and ranking of its estimating capabilities by Independent Project Analysis (“IPA”), a benchmarking firm for businesses undertaking projects. Syncrude and IPA were planning a mapping session for March 2004 to identify its gaps and needed enhancements, and to plan how they were to be resolved and addressed.
[12] In 2004, Mr. Elliott was still the long‑time head of Eastman Kodak’s world wide Capital Estimating Department, a group he had started and built up. However, Eastman Kodak’s fortunes by then had been in decline for some time. His group, which had 23 estimators a decade previous, had been pared back to 8 by 2004, but he and his team were still regarded as leaders in the sector. Eastman Kodak’s decline led to attempted headhunting of the group’s members on a regular basis. Mr. Dysert had left the group in early 2003 and became lead estimator at Intel in Oregon.
[13] In November, 2003, Syncrude had IPA contact Mr. Elliott to see if he would be interested in the opportunity to work with Syncrude to improve its estimating and project control capabilities. To this point, he had never heard of Syncrude, although he recognized many of its corporate owners/participants/venturers. He left it that they should speak again after the November/December US Thanksgiving/Christmas holiday period had ended.
[14] A Syncrude officer called him during the second week of January 2004 to invite him to Fort McMurray in early February to discuss Syncrude’s situation further. He went to Fort McMurray for one and one‑half days in early February. Syncrude discussed its interest in enhancing its estimating and project control capabilities. Mr. Elliott was only interested in the estimating aspect. Syncrude’s project management of the Fort McMurray upgrader project was some form of joint venture between Syncrude and Colt Engineering, an engineering consulting firm, functioning as a department of Syncrude under the name CoSyn. CoSyn was headed by Mr. Elliott’s contact at Syncrude and its offices were in Edmonton. After the one and one-half days of Fort McMurray meetings, Mr. Elliott went to meet more of the CoSyn team at its Edmonton offices. Mr. Elliott was invited to participate in Syncrude’s March mapping session to be facilitated by IPA that would be addressing Syncrude’s concerns. He suggested that Mr. Dysert and Mr. Pickett should come to that session as well. This suggestion was well received as they were well-known individuals in the cost engineering sector.
[15] This led to renewed discussion among the three Appellants of establishing their own professional consulting firm. They attended the Alberta March mapping session together.
[16] Following their return to the US, they received an information packet from Syncrude outlining the work that it wanted the Appellants’ firm to do. CCG submitted a proposal and draft contracts were sent back and forth. Among other things CCG scaled back both the scope and duration of the work Syncrude wanted them to perform. The contract included a provision requiring Syncrude to bear their costs of returning to their US homes upon completion of the work.
[17] The Appellants established CCG as their professional firm in 2004. It was originally established as a US limited liability company (“LLC”), but converted into a US limited liability partnership (“LLP”) upon the advice of their US advisors in order to be certain CCG itself qualified for Treaty benefits. CCG’s business office, records and bank accounts et cetera were all located in the US. All of the management, business, financial, contract negotiation, and client development work of CCG was done by the Appellants throughout while they were in the US. Syncrude made payments to CCG under the contract in the US. CCG had other very significant clients generating very significant professional fees from projects around the world during the period in question. Since the three Appellants were committed to working primarily on the Syncrude contract, they had CCG recruit other professional estimators to work for it to complete most of this other work in the years in question. The Appellants would take care of other CCG work when home on home visits under the Syncrude contract or by returning to the US during the course of their Syncrude work for CCG related business travel.
[18] The Appellants arrived in Edmonton in April and May 2004. They arrived with only their suitcases and briefcases. They obtained their initial Canadian work permits at the Edmonton airport. The first to arrive rented a car for a short period. They checked into a local hotel for short periods to settle into their Syncrude work and to find appropriate long-term accommodation. This involved leaving virtually all of their assets in the US. They each leased modest 2 bedroom apartments in the same complex. They negotiated leases that allowed them to leave on much abridged notice in the event their local work ended during the term (this was required by Syncrude under the terms of the housing allowance). They equipped their apartments as men staying alone could be expected to, a bed from The Brick, sparse modest furnishings from IKEA, a work desk or table, and a good-sized television. When they completed their work for Syncrude in 2008, 90% of their Canadian furnishings went to Goodwill or the trash and only their clothes, books and technical manuals, and filing cabinets returned home to the US with them.
[19] They each leased Toyotas from the same dealer. They maintained their US drivers’ licences and did not seek to obtain Alberta licences. AAA coverage was maintained and CAA coverage was not sought.
[20] They maintained their cell phones with their US carriers. They had land lines in their apartments as these were required to allow guests’ entry through the building’s front door. There was insignificant use of the land lines.
[21] The Appellants maintained all of their US health and life insurance. They obtained the provincial health insurance coverage that Alberta makes generally available to otherwise out-of-province workers in such temporary work circumstances, and which Syncrude made all such workers aware of. At least one of the Appellants arranged for US insurance which would cover the cost of air ambulance back to a US hospital if he was hospitalized while in Canada.
[22] The Appellants left all of their US banking, financial, investment, pensions, and retirement savings in place. The only financial arrangements by them in Canada were a single checking account each used for day-to-day living expenses in Canada.
[23] During the term of their Syncrude work the Appellants each took home visits to the US, generally monthly as provided in the Syncrude contract. In addition, they would schedule time off from their Syncrude commitments for other CCG business to be completed in the US.
[24] There were only a very few visits to Alberta by their family members and for very short periods of time. These were typically for such things as visiting Banff, skiing the Rockies and attending the Stampede, although there was reference to a five day stay in Edmonton in January.
[25] It is not disputed that the Appellants were physically present in Canada for more than 183 days in 2005 and 2006.
[26] These arrangements all continued in place unchanged in all material respects throughout. The initial Syncrude contract was extended for a further two year period. During the negotiation of the extension, the Appellants insisted on certain further key changes to the scope of work, reporting arrangements and length of renewal term, including keeping it shorter than Syncrude wanted.
II. Law
The relevant provisions of the ITA are in sections 2, 248 and 250 and set out below:
Tax payable by persons resident in Canada
2. (1) An income tax shall be paid, as required by this Act, on the taxable income for each taxation year of every person resident in Canada at any time in the year.
[…]
248(1) Definitions – In this Act,
[…]
“non-resident” means not resident in Canada
[…]
250(1) Person deemed resident -- For the purposes of this Act, a person shall, subject to subsection (2), be deemed to have been resident in Canada throughout a taxation year if the person
(a) sojourned in Canada in the year for a period of, or periods the total of which is, 183 days or more;
[…]
(3) Ordinarily resident -- In this Act, a reference to a person resident in Canada includes a person who was at the relevant time ordinarily resident in Canada.
[…]
(5) Deemed non-resident [by treaty] -- Notwithstanding any other provision of this Act (other than paragraph 126(1.1)(a)), a person is deemed not to be resident in Canada at a time if, at that time, the person would, but for this subsection and any tax treaty, be resident in Canada for the purposes of this Act but is, under a tax treaty with another country, resident in the other country and not resident in Canada.
Impôt payable par les personnes résidant au Canada
2. (1) Un impôt sur le revenu doit être payé, ainsi qu’il est prévu par la présente loi, pour chaque année d’imposition, sur le revenu imposable de toute personne résidant au Canada à un moment donné au cours de l’année.
[…]
248. (1) Définitions -- Les définitions qui suivent s'appliquent à la présente loi.
[…]
«non-résident» Qui ne réside pas au Canada.
[…]
250(1) Personne réputée résider au Canada -- Pour l'application de la présente loi, une personne est réputée, sous réserve du paragraphe (2), avoir résidé au Canada tout au long d'une année d'imposition si :
a) elle a séjourné au Canada au cours de l'année pendant une période ou des périodes dont l'ensemble est de 183 jours ou plus;
[…]
(3) Résident habituel -- Dans la présente loi, la mention d'une personne résidant au Canada vise aussi une personne qui, au moment considéré, résidait habituellement au Canada.
[…]
(5) Personne réputée non-résidente [en vertu d’un traité fiscal] -- Malgré les autres dispositions de la présente loi (sauf l'alinéa 126(1.1)a)), une personne est réputée ne pas résider au Canada à un moment donné dans le cas où, à ce moment, si ce n'était le présent paragraphe ou tout traité fiscal, elle résiderait au Canada pour l'application de la présente loi alors que, en vertu d'un traité fiscal conclu avec un autre pays, elle réside dans ce pays et non au Canada.
The relevant provisions of the Treaty are set out in Article IV:
Convention Between Canada and the United States of America
With Respect to Taxes on Income and on Capital
Article IV
Residence
1. For the purposes of this Convention, the term "resident" of a Contracting State means any person that, under the laws of that State, is liable to tax therein by reason of that person's domicile, residence, citizenship, place of management, place of incorporation or any other criterion of a similar nature […]
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both States or in neither State, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interests cannot be determined, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither State, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and
(d) if he is a citizen of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
Convention entre le Canada et les États-Unis d'Amérique
En matière d'impôts sur le revenu et sur la fortune
Article IV
Résidence
1. Au sens de la présente Convention, le terme « résident » d'un État contractant désigne toute personne qui, en vertu de la législation de cet État, est assujettie à l'impôt dans cet État en raison de son domicile, de sa résidence, de sa citoyenneté, de son siège de direction, de son lieu de constitution ou de tout autre critère de nature analogue […]
2. Lorsque, selon les dispositions du paragraphe 1, une personne physique est un résident des deux États contractants, sa situation est réglée de la manière suivante:
a) Cette personne est considérée comme un résident de l'État contractant où elle dispose d'un foyer d'habitation permanent; si elle dispose d'un foyer d'habitation permanent dans les deux États ou ne dispose d'un tel foyer dans aucun des États, elle est considérée comme un résident de l'État contractant avec lequel ses liens personnels et économiques sont les plus étroits (centre des intérêts vitaux);
b) Si l'État contractant où cette personne a le centre de ses intérêts vitaux ne peut pas être déterminé, elle est considérée comme un résident de l'État contractant où elle séjourne de façon habituelle;
c) Si cette personne séjourne de façon habituelle dans les deux États ou si elle ne séjourne de façon habituelle dans aucun des États, elle est considérée comme un résident de l'État contractant dont elle possède la citoyenneté; et
d) Si cette personne possède la citoyenneté des deux États ou si elle ne possède la citoyenneté d'aucun d'eux, les autorités compétentes des États contractants tranchent la question d'un commun accord.
III. The Analytical Matrix or Grid to Determine the Appellants’ Residence
A. The first issue to be decided is whether the Appellants were resident in Canada for purposes of the ITA. This question potentially has two components:
(i) were they factually resident here as that term has been interpreted for purposes of the ITA; and
(ii) if they were not factually resident in Canada, are they deemed to have been resident in Canada under paragraph 250(1)(a) of the ITA applicable to those who sojourn in Canada for 183 days or more in a given year.
B. If the Appellants were not resident in Canada in the years in question, the entire analysis ends there and the Appellants are successful.
C. If the Appellants are found to have been resident in Canada for purposes of the ITA, the analysis must then turn to the Treaty and in particular to Article IV. A finding that they are taxable under the ITA based upon their being resident or being deemed to be resident in Canada will make them residents of Canada for purposes of the Treaty by virtue of paragraph 1 of Article IV. However, Article IV continues with its so called “tie-breaker rules” if a person is a resident of both treaty countries. It is conceded in this case that the Appellants are each residents of the US for purposes of paragraph 1 of Article IV of the Treaty. Therefore, the application of the tie-breaker rules in paragraph 2 of Article IV of the Treaty will need to be considered and applied.
(i) The hierarchy of the paragraph 2 tie-breaker rules begins by deeming a dual resident to be a resident of the country in which he had a “permanent home available to him”. It is conceded that each Appellant had a permanent home available to him in the US. The first issue to be decided under the Treaty is whether the Appellants also had permanent homes available to them in Canada. If their Alberta living arrangements did not constitute permanent homes, they will be deemed to be residents of the US, and not Canada, for purposes of the Treaty and the Treaty analysis will end there.
(ii) If their Alberta living arrangements are found to have also been permanent homes available to them, then paragraph 2(a) requires the Court to next determine whether their “centres of vital interest”, being the country with which their “personal and economic relations were closer”, can be determined. If it can be determined they will be deemed to have been residents of that country, and not the other country, and the Treaty analysis will end there.
(iii) If their centres of vital interest cannot be determined, the Court must determine whether they had an “habitual abode” in either or both countries. If they had an habitual abode in one country and not in the other, they will be deemed to have been residents of the former country, and not the latter, and the Treaty analysis will end there.
(iv) If they had “habitual abodes” in both Canada and in the US, or in neither country, the Appellants will be deemed to have been residents of the US, and not residents of Canada, for purposes of the Treaty by virtue of their sole US citizenship and no further inquiry need be made.
D. If the Appellants are determined by the tie-breaker rules under “C” above to have been residents of Canada for purposes of the Treaty, after having first been found under “A” above to have been resident in Canada for purposes of the ITA, the result is they remain properly taxable as Canadian residents under the ITA and the Appellants are unsuccessful.
E. If the Appellants are determined by the tie-breaker rules under “C” above to have been residents of the US for purposes of the Treaty, then subsection 250(5) deems them not to be resident in Canada for purposes of the ITA and the Appellants are successful.
IV. Analysis
A. Were the Appellants Factually Resident in Canada under the ITA?
[27] The determination of whether one is or is not resident in Canada, including ordinarily resident in Canada, is a question of fact highly dependent upon the person’s particular circumstances. Further, the terms resident and ordinarily resident are not defined in the ITA, either by bright line tests or otherwise. There are a number of leading and oft-quoted cases dealing with the meaning to be given to the terms resident and ordinarily resident and some are quoted from, below. In addition to those which give general definitions of resident and ordinarily resident and/or identify the relevant factual criteria to be considered, discussed below are also several cases that apply those legal considerations to the facts of particular taxpayers wherein there are similarities in the facts of those cases to those involving the Appellants in this case or in which the Court had to address similar issues.
[28] The leading Canadian authority on the meaning of ordinarily resident is the Supreme Court of Canada decision in Thomson v. Minister of National Revenue, [1946] S.C.R. 209. In Thomson the following paragraphs address the issue of factual residence:
Rand, J.
47 The gradation of degrees of time, object, intention, continuity and other relevant circumstances, shows, I think, that in common parlance "residing" is not a term of invariable elements, all of which must be satisfied in each instance. It is quite impossible to give it a precise and inclusive definition. It is highly flexible, and its many shades of meaning vary not only in the contexts of different matters, but also in different aspects of the same matter. In one case it is satisfied by certain elements, in another by others, some common, some new.
48 The expression "ordinarily resident" carries a restricted signification, and although the first impression seems to be that of preponderance in time, the decisions on the English Act reject that view. It is held to mean residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application.
49 For the purposes 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 circumstance, but also accompanied by a sense of transitoriness and of return.
50 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".
Estey, J.
71 A reference to the dictionary and judicial comments upon the meaning of these terms indicates that one is "ordinarily resident" in the place where in the settled routine of his life he regularly, normally or customarily lives. One "sojourns" at a place where he unusually, casually or intermittently visits or stays. In the former the element of permanence; in the latter that of the temporary predominates. The difference cannot be stated in precise and definite terms, but each case must be determined after all of the relevant factors are taken into consideration, but the foregoing indicates in a general way the essential difference. It is not the length of the visit or stay that determines the question. Even in this statute under section 9(b) the time of 183 days does not determine whether the party sojourns or not but merely determines whether the tax shall be payable or not by one who sojourns.
Kerwin, J.
2 There is no definition in the Act of "resident" or "ordinarily resident" but they should receive the meaning ascribed to them by common usage. When one is considering a Revenue Act, it is true to state, I think, as it is put in the Standard Dictionary, that the words "reside" and "residence" are somewhat stately and not to be used indiscriminately for "live", "house" or "home". The Shorter Oxford English Dictionary gives the meaning of "reside" as being "To dwell permanently or for a considerable time, to have one's settled or usual abode, to live, in or at a particular place". By the same authority "ordinarily" means "1. In conformity with rule; as a matter of regular occurrence. 2. In most cases, usually, commonly. 3. To the usual extent. 4. As is normal or usual". On the other hand, the meaning of the word "sojourn" is given as "to make a temporary stay in a place; to remain or reside for a time".
[29] In The Queen v. Kenneth F. Reeder, 75 DTC 5160, Mahoney, J. of the Federal Court, Trial Division wrote:
13 While the Defendant here is far removed from the jet set, including any possible imputation of a preconceived effort to avoid taxation, the factors which have been found in those cases to be material in determining the pure question of fact of fiscal residence are as valid in his case as in theirs. While the list does not purport to be exhaustive, material factors include:
(a) past and present habits of life;
(b) regularity and length of visits in the jurisdiction asserting residence;
(c) ties within that jurisdiction;
(d) ties elsewhere;
(e) permanence or otherwise of purposes of stay abroad.
[30] In Gaudreau v. The Queen, 2005 DTC 66, Lamarre J. wrote:
33 I adopt the reasoning of Mahoney, J. in the Reeder case, at page 5163:
The Defendant was at a stage in life when he was highly mobile. He was able, willing, even eager, to travel. In that, he was not atypical of his contemporaries and the relevant factors must be considered in that context. It is not contested that he was, before March 29, 1972 and has, since December 1, 1972, been resident in Canada. Throughout, his ties of whatever description have all been with Canada, save only those ties, undertaken during the term of his absence, which were necessary to permit him and his family to enjoy an acceptable and expected lifestyle while in France. That absence was temporary even though, strictly speaking, indeterminate in length. The ties in France were temporarily undertaken and abandoned on his return to Canada.
I am satisfied that had the Defendant been asked, while in France, where he regularly, normally or customarily lived, Canada must have been the answer. I find that the Defendant was resident in Canada throughout all of 1972.
34 In my view, the same can be said here. Throughout his sojourn in Egypt, the appellant's ties were all with Canada, save only those ties, undertaken during the term of his absence, which were necessary to permit him and his wife to enjoy an acceptable and expected lifestyle while in Egypt. As a matter of fact, the ties in Egypt were temporarily undertaken and abandoned on his return to Canada. As Rip, J. stated in the above cited passage from Snow, supra, a person's temporary absence from Canada does not necessarily lead to a loss of Canadian residence when close personal and economic ties are maintained in Canada. I therefore conclude that the appellant was ordinarily resident in Canada during the years at issue.
Other aspects of the Gaudreau decision were considered by the Federal Court of Appeal and upheld at 2005 FCA 388.
[31] In Mahmood v. The Queen, 2009 TCC 89, Hogan, J. wrote, in considering some similar overlapping factual considerations:
[60] The evidence does show that the Appellant had some ties to Canada in the years in question. His mother lived in a condominium which he owned. He stayed in the condominium when he came to Canada. One of his sons also lived there, along with his sister, who stayed there from time to time. The Appellant used the Canadian financial system to deposit funds, exchange currency and ultimately pay the foreign suppliers of his business. He attended the local mosque near the condo that he owned in Canada. He had a car available to him that was parked at the condo. He went on camping trips with friends and visited Niagara Falls at least seven times.
[61] In my view, these facts are not sufficient to make the Appellant a resident of Canada for the purposes of the Act. The condominium, while owned by the Appellant, was really his mother’s home and not his own. His mother has lived there the entire time. The Appellant lives at the family home in Guyana with his wife and his three children.
[62] The Appellant’s Canadian activities are similar to the activities of other non‑residents carrying on business in Canada. One can be a non-resident of Canada and own real estate in Canada at the same time. Section 116 of the Act and Part XIII deal with these cases. The former provision applies when a non-resident sells property and the latter when a non-resident collects, among other things, rental income.
[63] In the event that I am wrong and Canada is the Appellant’s home in the same way Guyana is, I find that the tiebreaker rule in paragraph 4(2)(a) of the Convention makes him a resident of Guyana for the purposes of the Act. The Appellant’s family and economic interests are more closely tied to Guyana than to Canada.
[32] Similarly relevant are the decisions of Paris, J. involving international work assignments in McFadyen v. The Queen, 2000 DTC 2473 and in Johnson v. The Queen, 2007 DTC 1022.
[33] Based upon the facts presented as summarized above, and the meanings given to the terms resident and ordinarily resident, I find that none of the Appellants were resident or ordinarily resident in Canada in the circumstances. They continued to have and maintain their extremely deep and extensive family, personal, business and financial ties to the US. They did not give up any of their ties to the US, except their physical presence while needed in Edmonton to fulfill their Syncrude obligations. Further, they virtually only took on such ties to Canada as were reasonably needed to fulfill the CCG business contract with Syncrude in an economically reasonable and commonsensical, practical manner such as (i) rented apartments with early termination provisions (ii) locally leased cars (iii) modest furnishings most all of which were donated to neighbourhood charitable thrift shops before leaving Canada; and (iv) single local chequing account used for local living expenses. They never intended to remain in Canada beyond the period of the Syncrude contract which, while renewed once, was intentionally kept to definite terms by the Appellants.
[34] A determination of residence depends upon and requires consideration of the overall particular facts of the individual involved.[4] The fact that, from all outward appearances, the Appellants might each appear to other Edmontonians to live there in the same manner as others, is simply not the test. Similarly, the fact that a middle aged professional may be expected to have a more settled way of life and very different past habits of life than young university graduates moving out of their parents’ homes and starting one of their first jobs does not mean I should ignore any such factual differences where they exist (though different factors may be given different weight in different cases).
B. Were the Appellants Deemed to be Resident in Canada under the ITA?
[35] Paragraph 250(1)(a) of the ITA provides that persons will be deemed to be resident in Canada for purposes of the Act if they sojourn in Canada for 183 days or more in a year. The word sojourn is not defined in the ITA however its meaning for purposes of the ITA has been addressed by Canadian courts as set out below.
[36] It appears clear from the Supreme Court of Canada’s comments in Thomson (especially in paragraphs 2, 49 and 71 quoted above) that to sojourn generally means to temporarily stay, visit, reside or remain, in a place for a time. The nature of sojourning is an unusual intermittent stay, and is marked by a sense of transitoriness and of return to one’s usual, ordinary residence.
[37] In Dixon v. The Queen, 2001 FCA 216, the Federal Court of Appeal wrote:
6 The Supreme Court of Canada, many years ago, defined the word sojourn in the case of Thomson v. Minister of National Revenue (1946) 2 DTC 812 at 813 as follows:
A reference to the dictionary and judic