Date: 20020710
Docket: 2001-1890-IT-I
BETWEEN:
GARY RENZ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Little, J.
FACTS
[1] The relevant facts are summarized in the Agreed Statement of Facts as follows:
1. The Appellant was a resident of Canada for the period January 1, 1998 to July 30, 1998, inclusive.
2. The Appellant, during his period of residency in Canada, was employed by the University of Regina in Regina, Saskatchewan.
3. On July 30, 1998 the Appellant emigrated from Canada, and became a non-resident of Canada.
4. The Appellant during the 1998 taxation year paid interest on student loans (the "Loans").
5. The Loans were made by two American student loan organizations. The Student Loan Corp. and EFG Technologies.
6. The interest paid on the Loans during the 1998 taxation year was $4,567.96 in American dollars.
7. The Appellant paid $4,517.48 in American dollars in interest to The Student Loan Corp. in 1998.
8. The Appellant paid $50.48 in American dollars in interest to EFG Technologies in 1998.
9. The Loans funded the Appellant's attendance at the University of California at Los Angeles.
10. The Appellant claimed $3,810.43 in Canadian dollars as a non-refundable tax credit on his 1998 personal income tax return.
11. By Notice of Assessment dated June 17, 1999, the Minister of National Revenue (the "Minister") assessed the Appellant's income tax return for the 1998 taxation year as filed.
12. By Notice of Reassessment dated December 29, 1999, the Minister reassessed the Appellant's income tax return for the 1998 taxation year and disallowed the interest paid on student loans as claimed by the Appellant.
13. The interest paid during the 1998 taxation year did not relate to a loan made to the Appellant under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a law of a Canadian Province.
14. The interest paid during the 1998 taxation year did not relate to an amount owing under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a law of a Canadian Province.
ISSUE
[2] The issue is whether the Appellant is entitled to claim a tax credit pursuant to section 118.62 of the Income Tax Act (the "Act") relating to the interest paid by him on his student loans during the 1998 taxation year. The interest was paid to two organizations in the United States namely the Student Loan Corp. and EFG Technologies.
ANALYSIS
[3] As noted in the Agreed Statement of Facts the Appellant agrees that the interest that he paid on the student loans during the 1998 taxation year did not relate to student loans made to him under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a law of a Canadian Province.
[4] The legal authority that provides for a tax credit for interest paid on a student loan is contained in section 118.62 of the Act. Section 118.62 of the Act reads as follows:
118.62. Credit for interest on student loan
For the purpose of computing an individual's tax payable under this Part for a taxation year, there may be deducted the amount determined by the formula
A × B
where
A is the appropriate percentage for the year; and
B is the total of all amounts (other than any amount paid on account of or in satisfaction of a judgement) each of which is an amount of interest paid in the year (or in any of the five preceding taxation years that are after 1997, to the extent that it was not included in computing a deduction under this section for any other taxation year) by the individual or a person related to the individual on a loan made to, or other amount owing by, the individual under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a law of a province governing the granting of financial assistance to students at the post-secondary school level.
[5] In order to quality for a tax credit, section 118.62 specifies that the interest that is paid must relate to student loans made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a law of a Canadian Province governing the granting of financial assistance to students at the post-secondary school level. In my opinion the words of section 118.62 are clear and unambiguous on this issue and the Appellant does not come within the wording of the section. Furthermore, since the words contained in section 118.62 are clear it is not necessary to resort to any aids to construction in order to interpret the words of the Act.
[6] The Appellant has stated in his written submission that enforcing the provisions of the Act against the Appellant violates section 346 of the North America Free Trade Agreement ("NAFTA") because it discriminates against foreigners by limiting the tax deductibility of interest paid on students to the type of loans specified in the Act.
[7] I do not agree with the Appellant's statement. In my opinion the words contained in section 118.62 of the Act apply equally to citizens of Canada and non-citizens of Canada.
[8] I also wish to note that NAFTA contains provisions designed to resolve disputes under NAFTA. I agree with the comments of counsel for the Respondent where he referred to NAFTA and said in paragraph 25 of his written submission:
The Respondent submits that these provisions for dispute resolutions are exhaustive for the purpose of dealing with disputes arising from NAFTA.
[9] The Appellant also argues that enforcing the provisions of the Act against him violates the non-discrimination provision found in article XXV of the Canada-United States Tax Convention.
[10] I do not agree. In my opinion there is no distinction created by section 118.62 between Canadian citizens and United States citizens. A Canadian citizen is subject to the same restrictions found in section 118.62 as a citizen of the United States.
[11] The Appellant also argues that a strict application of the provisions of section 118.62 of the Act is logically inconsistent with the underlining intent of the Canadian tax legislation.
[12] I do not agree. As I have noted above the words contained in section 118.62 of the Act are clear and unambiguous and the intent of Parliament in enacting those words is obvious. I also wish to note that the Technical Notes released by the Minister of Finance in October 1998 support the statement that I have made concerning the intent of Parliament in enacting section 118.62 (In this connection see Tab 4 of the Respondent's Record).
[13] The appeal is dismissed.
Signed at Vancouver, British Columbia, this 10th day of July 2002.
|
"L.M. Little" |
J.T.C.C.
COURT FILE NO.: 2001-1890(IT)I
STYLE OF CAUSE: Gary Renz and
Her Majesty the Queen
PLACE OF HEARING: by way of written submissions
DATE OF HEARING:
REASONS FOR JUDGMENT BY: The Honourable Judge L.M. Little
DATE OF JUDGMENT: July 10, 2002
APPEARANCES:
Agent for the Appellant:
Counsel for the Respondent:
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-1890(IT)I
BETWEEN:
GARY RENZ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
the Honourable Judge L.M. Little
JUDGMENT
This decision is based upon the Agreed Statement of Facts and the written submissions provided by the Appellant and the Respondent.
The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is dismissed in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 10th day of July 2002.
|
"L.M. Little" |
J.T.C.C.