BETWEEN:
and
____________________________________________________________________
Appeal heard on April 20, 2005, at Calgary, Alberta
Before: The Honourable Justice R.D. Bell
Appearances:
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____________________________________________________________________
JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 2001 taxation year is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 2nd day of September 2005.
"R.D. Bell"
BETWEEN:
JEAN-CALVIN MBARGA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
All section number references are in respect of the Income Tax Act.
ISSUE
[1] Whether the sum of $21,930 is includable in income for the 2001 taxation year pursuant to the provisions of paragraph 56(1)(n). The Appellant's uncontradicted evidence was that Alberta Human Resources and Employment paid the amount of $22,430 to the University of Calgary for him to take a technology program to improve his skills and to help him find employment.
[2] The Appellant filed his income tax return for the 2001 taxation year without including any portion of the aforesaid amount of $22,430. He said that he was advised by Alberta Human Resources and Employment that there was no income tax on that amount. He said also that he personally received no money from that body.
[3] In the Reply to the Notice of Appeal the Respondent stated on eight occasions that the Appellant received the aforesaid sum.
ANALYSIS ANDCONCLUSION
[4] Paragraph 56(1)(n) read as follows:
56(1) Amounts to included in income for year - Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
...
(n) Scholarships, bursaries, etc. - the amount, if any, by which
(i) the total of all amounts ... received by the taxpayer in the year, each of which is an amount received by the taxpayer as or on account of a scholarship, fellowship or bursary, or a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer (other than a prescribed prize),
exceeds
(ii) the taxpayer's scholarship exemption for the year computed under subsection (3);
Subsection 3 reads, in part, as follows:
(3) Exemption for scholarships, fellowships, bursaries and prizes - For the purpose of subparagraph (1)(n)(ii), a taxpayer's scholarship exemption for a taxation year is the greatest of
(a) $500,
(b) the lesser of
(i) $3,000 and
(ii) the total of all amounts each of which is the amount included under subparagraph 1(n)(i) in computing the taxpayer's income for the year in respect of a scholarship, fellowship or bursary received in connection with the taxpayer's enrolment in an educational program in respect of which an amount may be deducted under subsection 118.6(2) in computing the taxpayer's tax payable under this Part for the year, and
(c) ...
[5] The initial question is whether the amount of $22,430 was received by the Appellant. The Reply, as stated above, stated as a fact, that the amount had been received by the Appellant. That is a conclusion of law, not of fact, because the amount had been paid not to the Appellant but to the University of Calgary. In this regard, the law is clear that "receipt" includes constructive receipt. The case of Morin v. The Queen 75 DTC5061 sets forth at 5064 that:
... the word 'receive' obviously means to get or to derive benefit from something, to enjoy its advantages without necessarily having it in one's hands.
See also Jones v. Canada 2002 DTC 3875.
[6] Accordingly, the said sum, although paid by Alberta Human Resources and Employment to the Universityof Calgary, was received by the Appellant.
[7] The next question is whether it was received
... on account of a scholarship, fellowship or bursary, or a prize for achievement in a field of endeavour ordinarily carried on by the taxpayer (other than a prescribed prize).
[8] The New Shorter Oxford English Dictionary defines "scholarship", in part:
The status or emoluments of a scholar given financial support for education in reward for academic merit by a school, college, or university;
"Emolument" as defined in that dictionary includes "benefit, comfort". Its more traditional definition is "Profit or gain arising from office or employment; reward, remuneration."
A "fellowship" is defined, in part as "the status or emoluments of a fellow in a college...".
The amount above may or may not fall within the definitions of scholarship and fellowship and certainly is not a "prize for achievement in a field of endeavour ordinarily carried on by the taxpayer" Further, it was not a "prescribed prize". That term is described in Income Tax Regulation 7700 as being:
Any prize that is recognized by the general public and that is awarded for meritorious achievement in the arts, the sciences or service to the public but does not include any amount that can reasonably be regarded as having been received as compensation for services rendered or to be rendered.
However, it does fall within the meaning of the word "bursary", which is defined in that dictionary as:
An endowment given to a student.
[9] Having determined that the amount of $22,430 was received by the Appellant as a bursary, the next question is whether that amount, within the above definition, exceeds the Appellant's "scholarship exemption for the year computed under subsection (3)". Under that provision, set out above, one is required to refer to subsection 118.6(2) to determine whether any portion of the $22,430 may be deducted thereunder. It provides that there may be deducted a formula determined amount:
... if the enrolment is proven by filing with the Minister a certificate in prescribed form issued by the designated educational institution and containing prescribed information and, in respect of a designated educational institution described in subparagraph (a)(ii) of the definition "designated educational institution" in subsection (1), the individual has attained the age of 16 years before the end of the year and is enrolled in the program to obtain skills for, or improve the individual's skills in, an occupation.
The Appellant did not file any such certificate with the Minister. Accordingly, there is no amount under subparagraph 56(3)(b)(ii) in respect of which an amount may be deducted under subsection 118.6(2). Zero, being less than $3,000, there is no need to compute any amount under paragraph 56(3)(c), the greatest of $500 set out in (a) and zero, determined under (b), being $500.
[10] Therefore, the Appellant must include the $22,430 minus the statutory exemption of $500, being a total of $21,930 in his income for the 2001 taxation year. Accordingly the appeal is dismissed.
Signed at Ottawa, Canada, this 2nd day of September 2005.
"R.D. Bell"
Bell, J.
COURT FILE NO.: 2004-3899(IT)I
STYLE OF CAUSE: Jean-Calvin Mbarga v. The Queen
PLACE OF HEARING: Calgary, Alberta
DATE OF HEARING: April 20, 2005
REASONS FOR JUDGEMENT BY: The Honourable Justice R.D. Bell
DATE OF JUDGMENT: September 2, 2005
APPEARANCES:
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For the Appellant: |
The Appellant himself
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Counsel for the Respondent: |
Lesley Askt |
COUNSEL OF RECORD:
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Ontario