Li v. M.N.R.
A-162-93
Isaac C.J., Robertson J.A. (dissenting)
5/11/93
24 pp.
Application for judicial review of Tax Court decision 1990 scholarship payment from Canadian university subject to taxation as income -- Applicant Chinese citizen resident in China before entry into Canada on visitor's visa to study in 1984 -- In 1987 married Canadian citizen -- To avoid being required to leave Canada upon completion of studies, and higher tuition fees demanded of "foreign" students, applied for landed immigrant status in August or September 1987 -- Landing granted July 13, 1990 -- Prior thereto, applicant renewing visa annually from 1985 to 1990 -- Evidence of renewals required by university as prerequisite to payment of bursaries -- Canada-China Income Tax Agreement Act, 1986, Art. 19 providing payments which student, who is or was immediately before visiting Contracting State, resident of other Contracting State and who is present in first-mentioned Contracting State solely for purpose of education, receives for purpose of education not taxable in Contracting State -- Respondent arguing Art. 19 applying only to persons resident in Canada temporarily and in 1990 applicant not temporary resident, having lost that status when applied to become landed immigrant -- Tax Court holding circumstances (marriage, application for landed immigrant status, length of stay in Canada, establishment of family home, indefinite term of stay) indicating applicant not temporarily present in Canada -- Application dismissed (Robertson J.A. dissenting) -- Purpose of Art. 19 avoidance of double taxation of Canadian, Chinese nationals in receipt of income while temporarily in state of which not national -- Use of "qui séjourne" in French version, clearly indicating temporary presence prerequisite to successful invocation of Art. 19 -- Application for permanent resident status indicating intention to remain in Canada permanently -- Intention actualized when granted landed immigrant status -- Tax Court properly giving "visiting" ordinary meaning of temporarily resident -- Ample evidence supporting conclusion of fact, applicant no longer temporarily resident in Canada in 1990 -- Robertson J.A. (dissenting) reasoning as follows: as non-residents subject to tax with respect to income derived from Canadian source, irrelevant whether applicant resident or non-resident for tax purposes -- Tax Court's conclusion Art. 19 exemption unavailable once individual found to be resident of this country for tax purposes because problem of double taxation no longer present fundamentally flawed -- Purpose of Art. 19 not to prevent double taxation, but to ensure money received for purpose of maintaining student rendered immune from taxation by contracting state in which student pursuing studies -- Art. 4 addressing paramountcy question -- Thus contextual approach to statutory interpretation dictating Art. 19 intended to serve another purpose -- Scholarship monies of student who is or was resident of China not subject to taxation in Canada -- Art. 19 implicitly, if not expressly, contemplating student no longer resident of China for tax purposes but classified as Canadian resident under Act -- Individual found to be resident of Canada for tax purposes not automatically precluded from claiming tax exemption under Art. 19 -- Must determine as matter of reasonable implication point in time applicant no longer visiting Canada solely for purpose of education -- Application for landed immigrant status not sufficient ground on which to exclude application of Tax Agreement as applicants for landed immigrant status having only mere hope or expectation government will look favourably upon request -- Given diverse reasons underlying decision to seek landed immigrant status, improper to conclude such applicant intending to forego benefits of existing citizenship -- Tax Court correctly concluding one of obvious purposes of Art. 19 to ensure exempted "income" truly student income -- Establishment of family ties irrelevant to question of applicability of Art. 19 -- If establishment of family ties changed anything, changed applicant's status from one of "non- resident" to one of "resident" -- Objection that effectively integrates two legislative regimes, Income Tax Act and Immigration Act disposed of readily -- Determination of residency under Act should not be presumed to be dependent on meaning of "residency" in context of another federal statute, although two federal statutes can be complementary -- Person who gains entry to Canada for limited purpose of attaining education prohibited from obtaining employment and whose presence remaining conditional on renewal of visa fulfilling spirit and intent of Art. 19 -- Immigration Act, 1976, S.C. 1976, c. 52 -- Canada-China Income Tax Agreement Act, 1986, S.C. 1986, c. 48, Part III, Sch. V, Arts. 3.2, 4, 19 -- Income Tax Act, S.C. 1970-71-72, c. 63, ss. 2, 3, 56(1)(n) (as am. by S.C. 1979, c. 5, s. 15; 1986, c. 6, s. 28; 1987, c. 46, s. 15; 1991, c. 49, s. 32), 115(2)(e)(ii)).