Reiner v. The Queen

Reiner v. The Queen Court (s) Database Tax Court of Canada Judgments Date 2005-02-10 Neutral citation 2005 TCC 115 File numbers 2004-2727(IT)I Judges and Taxing Officers David W. Beaubier Subjects Income Tax Act Decision Content Docket: 2004-2727(IT)I BETWEEN: PATRICIA REINER, Appellant, And HER MAJESTY THE QUEEN, Respondent. Appeal heard on January 26, 2005 at Kelowna, British Columbia Before: The Honourable Justice D.W. Beaubier Appearances: Agent for the Appellant: G.A. Marle and Mike Reiner Counsel for the Respondent: Amy Francis JUDGMENT The appeal from the reassessment made under the Income Tax Act for the 2002 taxation year is allowed, and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment. The Appellant is awarded her taxable costs and disbursements respecting this appeal. Signed at Calgary, Alberta, this 10th day of February 2005. "D.W. Beaubier" Beaubier, J. Citation: 2005TCC115 Date: 20050210 Docket: 2004-2727(IT)I BETWEEN: PATRICIA REINER, Appellant, And HER MAJESTY THE QUEEN, Respondent. REASONS FOR JUDGMENT Beaubier, J. [1] This appeal pursuant to the Informal Procedure was heard at Kelowna, British Columbia, on January 26, 2005. The Appellant's husband, Michael Reiner, testified. The Respondent called Michael Roberts, the Director of Human Resources, School District 23, Kelowna. [2] Because the question before the Court is largely a matter of statutory interpretation of the Income Tax Act (the "Act") and the Reply to the Notice of Appeal sets forth the concepts in question, the body of the Reply in paragraphs 1 to 14, is quoted in full: A. STATEMENT OF FACTS 1. He admits that the Appellant's employer did not reimburse any of her expenses relating to her post-secondary studies for the 2002 taxation year. 2. He denies that the Minister of National Revenue (the "Minister") disallowed the Appellant's entire claim for an Education Tax Credit for the 2002 taxation year and states that the Minister reduced the Appellant's Education Tax Credit from $4,800 to $800 on the basis that her post-secondary studies were connected with her employment as a teacher, except for the months of July and August of that year. 3. He denies the allegation of fact that the appeals officer allowed his decision to be fettered by the Department of Finance, in responding to the Appellant's Notice of Objection for the 2002 taxation year. 4. He has no knowledge of and therefore does not admit any remaining allegations of fact in the Notice of Appeal. 5. In computing non-refundable tax credits for the 2002 taxation year, the Appellant claimed an Education Tax Credit of $4,800 (the "Amount"), calculated at 12 months of studies at $400 per month. 6. The Minister assessed the Appellant's 2002 taxation year to allow the Amount in the computation of her non-refundable tax credits. Accordingly, a Notice was issued to the Appellant dated April 17, 2003. 7. The Minister reassessed the Appellant's 2002 taxation year to disallow the Amount. Accordingly, a Notice was issued to the Appellant on October 14, 2003. 8. By Notice dated January 13, 2004, the Appellant served on the Minister a Notice of Objection respecting the reassessment of her 2002 taxation year. 9. In response to the Appellant's objection, the Minister further reassessed the Appellant's 2002 taxation year to allow an Education Tax Credit of $800. Accordingly, a Notice was issued to the Appellant on March 29, 2004 (the "Reassessment"). 10. In reassessing the Appellant, the Minister assumed the following facts on the Reassessment: a) in 2002, the Appellant was employed as a full-time teacher by School District No. 23 (Central Okanagan); b) in 2002, the Appellant earned employment income of $49,731 at School District No. 23 for teaching; c) during 2002, the Appellant was enrolled in the Master's program at Gonzaga University ("Gonzaga"); d) Gonzaga is a degree granting university in the United States; e) the Appellant worked toward her Master's degree from Gonzaga through distance learning by attending local classes and through the internet, while she continued teaching full-time; f) School District No. 23 did not reimburse any of the Appellant's expenses related to her studies through Gonzaga; g) the Appellant did not teach during the months of July and August 2002; h) the Appellant did not receive any income from School District No. 23 for the two months in 2002 that she did not teach; and i) upon receiving her Master's degree, the Appellant is entitled to a pay raise based on her higher level of education. B. ISSUE TO BE DECIDED 11. The issue is whether the Appellant is entitled to an Education Tax Credit in excess of the amount allowed by the Minister, for the purpose of computing her non-refundable tax credits for 2002. C. STATUTORY PROVISIONS RELIED ON 12. He relies on subsections 118.6(1) and 118.6(2) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), as amended (the "Act"). D. GROUNDS RELIED ON ANDRELIEF SOUGHT 13. He submits that the Minister properly calculated the Appellant's Education Tax Credit for the 2002 taxation year under subsection 118.6(2) of the Act, in the amount of $800, on the basis that July and August 2002 were the only months in the year that the Appellant was in a "qualifying educational program", as defined in subsection 118.6(1) of the Act. 14. He submits that the Appellant was not enrolled in a "qualifying educational program" (as defined in subsection 118.6(1) of the Act) for the periods from January to June, 2002 and from September to December, 2002, inclusive, and therefore she is not entitled to an Education Tax Credit for those periods because her studying was undertaken during periods of time when she received income from teaching at School District No. 23 and the studying was connected with her employment. [3] Assumption 10 e) is wrong. The Appellant took her classes personally from professors from Gonzaga on Friday evenings and all day Saturday in classrooms provided by Okanagan University College at Kelowna and Vernon, British Columbia. These classroom hours totalled a minimum of 10 hours per week. Her employment was for 5 days per week at 6½ hours per day as a middle school full-time teacher at Constable Neil Bruce Middle School in School District No. 23. Assumption 10 i) is also wrong because the Appellant must apply for the pay raise to be "entitled" to it. The remaining assumptions are correct. [4] As a result of her studies, the Appellant was granted her Masters of Arts in Curriculum Instruction by Conzaga University on August 8, 2003 (Exhibit A-5). [5] The evidence is that, while the Appellant is paid on a monthly basis for the 10 months of the September to June school year, if she misses a day, she is docked pay at a per diem rate. [6] The parties agreed that none of the effects of the provisions of the Act are in dispute except for subsection 118.6(1) and the (b) portion of the definition of "qualifying educational program". In the year 2002 it reads, in English: (b) if the program is taken by the student (i) during a period in respect of which the student receives income from an office or employment, and (ii) in connection with, or as part of the duties of, that office or employment. In French: (b) soit que l'étudiant suit non seulement pendant une période pour laquelle il reçoit un revenu d'une charge ou d'un emploi, mais aussi en rapport avec cette charge ou cet emploi ou dans le cadre des fonctions y afférentes. [7] Respondent's counsel argued that the meaning of "in connection with" in subparagraph (b)(ii) should be taken from the words of Dickson, J., speaking for the entire Supreme Court of Canada in Gene A. Nowegijick v. The Queen, 83 DTC 5041 at 5045, when he said: The words "in respect of" are, in my opinion, words of the widest possible scope. They import such meanings as "in relation to", "with reference to" or "in connection with". The phrase "in respect of" is probably the widest of any expression intended to convey some connection between two related subject matters. On this basis, the Respondent's position is that the Appellant's program is "in connection with" her employment and is excepted from entitlement to be a "qualifying educational program" from September to June. But it should be noted that Dickson, J.'s usage of the phrase "in connection with" was obiter to the words "in respect of" which were before the Court in Nowegijick. [8] Within the context of the Act and the words of subparagraph (b), the following questions arise: 1. Is the "qualifying educational program" provision intended to benefit taxpayers? 2. What is the meaning of "in connection with" in the Act as a statutory whole? 3. What is the meaning of "in connection with" juxtaposed to the remaining words in (ii) "or as part of the duties of that office or employment."? (Italics supplied.) [9] It is clear that the provisions respecting a "qualifying educational program" are intended to benefit taxpayers. [10] The Appellant was studying to obtain a Master of Arts in Curriculum Instruction which was granted to her on August 8, 2003 (Exhibit A-5). Such a degree would enhance her qualifications as a teacher or, in distinction, her training for a position in another school district, in a private school, in a university, in government, or for other purposes, such as for writing or lecturing. [11] In other words, the program was not part of the duties of her employment. Nor was it in connection with her duties of employment. Rather, it was in connection with her profession. That profession - teaching - is not confined to School District No. 23. Nor is it even "in connection with" School District No. 23 any more than the calling of being a janitor is in connection with School District No. 23. That program was personal to Patricia Reiner as an individual who has her own duties and goals to and for herself. That is why she took it and paid for it herself. [12] The Shorter Oxford English Dictionary, 3rd Edition defines "connects": To join, fasten or link together. Const. to, with. Connection ("connexion") is: The action of connecting; the condition of being connected. That state respecting the Appellant is with her profession or calling as an individual and not with her employment. That is, the joining, fastening or linking together is with the Appellant's personal skills in today's mobile professional and trades' world, and not with her duties of employment for another person. [13] For these reasons the appeal is allowed and this matter is referred back to the Minister for reconsideration and reassessment in accordance with these Reasons. [14] The Appellant is awarded her taxable costs and disbursements respecting this appeal. Signed at Calgary, Alberta, this 10th day of February 2005. "D.W. Beaubier" Beaubier, J. CITATION: 2005TCC115 COURT FILE NO.: 2004-2727(IT)I STYLE OF CAUSE: Patricia Reiner v. The Queen PLACE OF HEARING: Kelowna, British Columbia DATE OF HEARING: January 26, 2005 REASONS FOR JUDGMENT BY: The Honourable D.W. Beaubier DATE OF JUDGMENT: February 10, 2005 APPEARANCES: Agent for the Appellant: G.A. Marle and Mike Reiner Counsel for the Respondent: Amy Francis COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada