Date: 19980813

Dockets: 96-4538-IT-I; 96-4540-IT-I

BETWEEN:

RAYMOND J. FORTIN, ELIZABETH M. FORTIN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent,

Reasons for Judgment

Hamlyn, J.T.C.C.

[1] The appeals were heard by way of common evidence. The Appellants are husband and wife.

[2] In their respective income tax returns for the 1995 taxation year, the Appellants stated their province of residence was Newfoundland and calculated their provincial taxes in their 1995 income tax return accordingly.

[3] By Notices of assessment dated June 3, 1996, the Minister of National Revenue (the “Minister”) assessed the Appellants’ 1995 taxation year on the basis that their province of residence was Newfoundland.

[4] From the Appellant Elizabeth M. Fortin’s Notice of appeal, the following was adopted as part of both Appellants’ appeals:

For 17 years and 5 months, my residence was 1235 Huntingwood, #12, Agincort, Ontario. My husband and I also carried on a business Small Fort Enterprises, from mid 1985 to mid 1995, at that address. My life insurance, mutual funds, and RRSP’s are still with Toronto firms.

Due to unexpected early retirement in July 1995, it was decided to temporarily move to Cornerbrook to look after my business interests here. My rental house and apartment were seriously in need of repair and maintenance, and this work is still going on.

In summary the year 1995 was spent less than 5 months in Newfoundland (mid August to December 31) and seven months working and living in Ontario at a residence of more than 17 years. It would seem very logical therefore that Agincourt, Ontario was more my residence than Cornerbrook, Newfoundland and that for 1995 the Ontario rate of personal tax should apply.

ISSUE

[5] In what province were the Appellants resident for tax purposes in 1995?

FACTS

[6] Both Mr. and Mrs. Fortin moved from Ontario to Newfoundland in August of 1995.

[7] Both were resident of Newfoundland on December 31, 1995.

[8] There is no evidence that either earned income from a business with a permanent establishment outside Newfoundland in 1995.

[9] During 1995, the Appellants gave up their rental residential premises in Agincourt, Ontario, opened bank accounts in Cornerbrook, Newfoundland and gave up a business licence in Ontario.

[10] Mrs. Fortin left her employment in Toronto although her employer, it was suggested, could recall her.

ANALYSIS

[11] Subsection 120(4) of the Income Tax Act (the “Act”) defines “income earned in the year in a province” by reference to the Income Tax Regulations (the “Regulations”).

[12] Regulation 2600(1) states:

For the purpose of paragraph 120(4)(a) of the Act, “income earned in the year in a province” by an individual means the aggregate of his incomes earned in the taxation year in each province as determined in accordance with this Part.

[13] Regulation 2601(1) states:

Where an individual resided in a particular province on the last day of a taxation year and had no income for the year from a business with a permanent establishment outside the province, his income earned in the taxation year in the province is his income for the year.

[14] As the Appellants did not earn income from a business with a permanent residence outside Newfoundland, I find Regulations 2600(1) and 2601(1) govern tax liability in this situation.

[15] The phrase to be interpreted is what is the meaning of “resided in a particular province”.

[16] The judicial meaning of the term “reside” was dealt with at length by the Supreme Court of Canada in Thomson v. Minister of National Revenue, 2 DTC 812. In that case Estey J. wrote that a place where one ‘resides’ is one “where in the settled routine of his life he regularly, normally or customarily lives”, and contrasted this with a place where one ‘sojourns’ as “a place where he unusually, casually or intermittently visits or stays”.[1] In this case it is more accurate to say that the Appellants resided rather than sojourned in Newfoundland on December 31, 1995.[2]

DECISION

[17] The appeals are dismissed.

Signed at Ottawa, Canada, this 13th day of August, 1998.

“D. Hamlyn”

J.T.C.C.

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