Tax Court of Canada Judgments

Date: 19991210

Docket: 98-2277-IT-I

BETWEEN:

DESMOND FRIEDLAND,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Rowe, D.J.T.C.C.

[1] The appellant appeals from an assessment of income tax for the 1996 taxation year. In computing income for the taxation year, the appellant included in his claim for non-refundable tax credits tuition fees in the amount of $8,250.00 paid to the National Committee on Accreditation ("NCA"). The Minister of National Revenue (the "Minister") disallowed the tuition fees as a tax credit on the basis NCA was not a university, college or other educational institution providing courses at a post-secondary level and that NCA had not been certified by the Minister of Human Resources Development to be an educational institution providing courses that furnish a person with skills for, or improve a person's skills in, an occupation.

[2] The appellant testified he is a Barrister and Solicitor carrying on the practise of law in Richmond, British Columbia. He had been residing in South Africa until he emigrated to Canada in 1993. He graduated from a South African University in 1987 and had been called to the bar there in 1990 as an attorney - the equivalent of a solicitor. In Richmond, he found work as a legal assistant and began making inquiries of the Joint Committee for Accreditation ("Joint Committee") - as it then was - about the procedure involved in qualifying for membership in a provincial law society. He became aware the Joint Committee was comprised of representatives from all the law societies in Canada and that its purpose was to assess the qualifications of any foreign-trained lawyer. The appellant was advised by the Joint Committee that he would have to take law examinations in civil procedure, family law, income tax law, administrative law, constitutional law and three other subjects. As a consequence, he realized he had the option of enrolling in a law school in order to complete the required courses or he could study - by correspondence - certain material based on standards set at the University of Ottawa and then write the required examinations based on the study material. Because he had to earn a living in the interim, he decided he could not be a full-time law student even though it would have been the most efficient course of action to follow in that he would have been able to finish the required courses within one year. He began studying the required material through the correspondence program and was able to complete all of the courses within 12 months. He wrote the examinations over a four-month period and received a passing grade. As a result, he received a Certificate of Qualification - Exhibit A-1 - dated November 5, 1996 from the now-named National Committee on Accreditation. Having obtained that certificate, the appellant then contacted the Law Society of British Columbia and was permitted to find articles and to enrol in the Bar Admission Course. On December 1, 1997, the appellant was admitted to the Bar in British Columbia. The appellant stated he claimed the sum of $8,250.00 as a tuition fee tax credit on the basis the courses he studied at the direction of the NCA were university-level courses in the L.L.B. program and were recognized by the Law Society of British Columbia.

[3] In cross-examination, the appellant stated he paid the sum of $500.00 to the NCA in order to have his qualifications assessed. The amount paid for the various courses totalled $4,000.00 and the remainder of his claim was due to the cost of books and materials. The appellant agreed the application he had completed was substantially the same as the one filed as Exhibit R-1. When the appellant needed the results of his examinations - as part of the application process to the Law Society of British Columbia - he called the Administrative Assistant at NCA who advised him the professors chosen to mark the papers were attempting to complete them as soon as possible. Throughout, the appellant dealt with NCA in obtaining the required reading list, copies of previous examinations and always paid the necessary fees to NCA. He agreed he never received any credit from any Canadian Law School for the courses studied. He recalled receiving the letter dated September 4, 1997 - Exhibit R-2 - from Fran Russo, Administrative Assistant and was aware of the contents of the second paragraph, as follows:

"The National Committee does not provide official income tax receipts as we are not a teaching institution and the applicants prepare for exams on a self-study approach (this is similar to correspondence course study). All of the Committee's examinations are prepared and marked by qualified law professors most of whom currently work in Canadian common law faculties."

[4] The affidavit of Pierrette Thibodeau was filed for the purpose of demonstrating that the National Committee on Accreditation was not certified by the Minister of Human Resources Development in 1996 pursuant to sections 118.5 or 118.6 of the Income Tax Act (the "Act") and the appellant advised that this provision had never been an issue in his appeal.

[5] The appellant submitted the NCA was providing courses at a post-secondary school level and that it provided a list of suggested reading materials and the examinations were prepared and marked by professors working in Canadian law schools. In the appellant's view, the end result was the same as if he had enrolled at an educational institution in Canada on a full-time basis.

[6] Counsel for the respondent submitted the NCA was not an educational institution within the provisions of the Act and the accreditation process offered by it was not unlike people writing an Law School Admission Test in order to be eligible for admission to law school at a university.

[7] The relevant legislation is as follows:

"Section 118.5: Tuition credit

(1) For the purpose of computing the tax payable under this Part by an individual for the taxation year, there may be deducted,

(a) where the individual was during the year a student enrolled at an educational institution in Canada that is

(i) a university, college or other educational institution providing courses at a post-secondary school level, or

(ii) certified by the Minister of Human Resources Development to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for, or improve a person's skills in, an occupation,

an amount equal to the product obtained when the appropriate percentage for the year is multiplied by the amount of any fees for the individual's tuition paid in respect of the year to the educational institution if the total of those fees exceeds $100, except to the extent that those fees [...]"

[8] There are three prerequisites that must be established before the appellant is entitled to a tuition credit pursuant to subparagraph 118.5(1)(a)(ii). First, the individual must be a student enrolled at an educational institution in Canada. Second, that educational institution must be a university, college or other educational institution. Third, it must provide courses at a post-secondary school level.

[9] The first matter to be addressed is whether the National Committee on Accreditation is an educational institution. There does not appear to be any standard definition of educational institution in various federal and provincial acts dealing with schools, student loans and education.

[10] The Oxford English Dictionary defines "education" as:

"3. the systematic instruction, schooling or training given to the young in preparation for the work of life; by extension similar instruction or training obtained in adult age. Also, the whole course of scholastic instruction which a person has received. Often with limiting words denoting the nature or the predominant subject of the instruction or kind of life for which it prepares, as classical, legal, medical, technical, commercial, art education.

and "institution" as:

"7. an establishment, organization, or association, instituted for the promotion of some object, esp. one of public or general utility, religious, charitable, educational, etc., e.g. a church, school, college, hospital, asylum, reformatory, mission or the like; [...] The name is often popularly applied to the building of the appropriated to the work of a benevolent or educational institution."

[11] In Re Seafarers Training Institute and Township of Williamsburg (1982), 138 D.L.R. (3d) 407, Judge Smith determined that it was necessary to define the word "education" which the courts had not done so before in the context of the Assessment Act, and stated at 414:

"...The word "education" should then be given the kind of broad interpretation which it has in common parlance. If a place has students, physical facilities, teachers or instructors, a curriculum designed to further the advancement in life of those in attendance so that they might better pursue their vocation or life's work, it should be held to be an institution (seminary) for educational purposes."[1]

[12] Black's Law Dictionary defines "educational institution" as follows:

"A school, seminary, college, university, or other educational establishment, not necessarily a chartered institution. As used in zoning ordinance, the term may include not only buildings, but also all grounds necessary for the accomplishment of the full scope of educational instruction, including those things essential to mental, moral, and physical development."[2]

[13] The Dictionary of Canadian law defines "educational institution" as:

"1. An institution of learning that offers courses at a post-secondary level. 2. A technical or vocational school, a university, college or other school of higher education. See DESIGNATED; SPECIFIED."

[14] The Canadian Tax Reporter states the following with respect to "educational institutions":

"An educational institution generally includes a college or university, a professional organization providing courses to its members where all members have graduated from a secondary school, and an institution designated as a "specified educational institution" under either the Canada Student Loans Act or the Quebec Student Loans and Scholarships Act."[3]

[15] It is clear the NCA does not regard itself as a teaching institution and its name - in French - is: "Comité National Sur Les Équivalences Des Diplômes De Droit".

[16] In my opinion, that is more expressive of the function than the English version, National Committee on Accreditation. Further, the NCA was not the subject of any designation that would otherwise qualify it as an educational institution or other educational institution pursuant to the Act.

[17] Next, I will consider whether the NCA was providing courses at the post-secondary level. In my view, the mandate of the NCA is to certify that an applicant has an understanding and knowledge of Canadian law and the education and training equivalent to that provided by an approved Canadian law school. The NCA evaluates students on an individual basis and considers various matters such as the nature of the academic institution attended, the length of the academic law program, academic performance and professional legal experience. Upon review, the NCA recommends the applicant pass examinations in specified areas of Canadian law, take specified courses at a Canadian law school or complete a Canada L.L.B.. The appellant stated the NCA gave him as much assistance and guidance as he had anticipated but that does not constitute "providing courses" at a post-secondary level. In Revenue Canada's view, examination fees paid to the Medical Council of Canada and the Educational Commission for Foreign Medical Graduates are not considered tuition fees. In Technical Interpretation, Business and General Division, June 20, 1994, Revenue Canada stated:

"It is Revenue Canada's view that examination fees would qualify as tuition fees only where the fees were incurred as part of a course of study. The fee charged by the Medical Council of Canada is "to conduct examinations testing medical competence and leading to qualifications for licensing by provincial medical councils or colleges" and is not part of a course of study."

[18] While not bound to do so, I consider this position to be reasonable and adopt it as it pertains to the within appeal. The fact the study undertaken by the appellant was through correspondence is not determinative because courses can still be eligible for the tax credit if they are taken from an educational institution in Canada. However, the NCA was the obligatory first contact for any person wishing to pursue a legal career in Canada in that the evaluation of the applicant's educational and professional legal experience and the fulfilment of any recommendation (emphasis is mine) flowing from the NCA is a mandatory requirement for advancement to the Bar Admission Program of the Law Society of the Canadian Provinces, except for Alberta which undertakes its own evaluation process. The provision of examinations - including marking them - was still part of the original evaluation and assessment process within the mandate of the NCA.

[19] It is doubtful that the appellant was "enrolled" for the purposes of paragraph 118.5(1)(a). From a Technical Interpretation, Business and General Division, issued December 19, 1991, Revenue Canada is of the opinion that a student is considered to be enrolled in an educational institution if the student is registered with the registrar of the institution such that the student is contractually liable for any tuition fees required to be paid to the institution with respect to the chosen course of study. A deposit in respect of tuition fees would not qualify for the tuition tax credit if the student decides not to attend the institution, even if the deposit is not refundable.

[20] In my opinion, the appellant was not enrolled in a course of study and the money paid by him to the NCA was not tuition but was payment for the process of assessment, evaluation, recommendation relating to required courses, suggested study materials, setting and marking the examinations.

[21] For the reasons stated above, the assessment of the Minister is correct and the appeal is dismissed.

Signed at Sidney, British Columbia, this 10th day of December 1999.

"D.W. Rowe"

D.J.T.C.C.

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