Gaudreau v. R., 2004 CarswellNat 4775, 2004 TCC 840, 2005 D.T.C. 66, [2005] 1 C.T.C.

2701, 2004 CCI 840

(Tax Court of Canada [General Procedure])

Income tax --- Residence in Canada Individuals Ordinarily resident

Income tax --- Non-residents Tax treaties Residence
1 These are appeals from assessments made by the Minister of National Revenue (Minister) under the Income Tax Act ( Act ) for
the 1996, 1997, 1998 and 1999 taxation years. In filing his income tax returns for those years, the appellant claimed deductions
pursuant to subparagraph 110(1)( f )(i) of the Act for amounts exempt from income tax in Canada because of a provision contained
in a tax convention, namely Article 4 of the Canada-Egypt Income Tax Convention (Convention). The amounts so claimed are
$39,179

Gaudreau v. R.
Norman Gaudreau, Appellant and Her Majesty the Queen, Respondent
Citation: 2004 CarswellNat 4775, 2004 TCC 840, 2005 D.T.C. 66, [2005] 1 C.T.C. 2701, 2004 CCI 840
Tax Court of Canada [General Procedure]
Lamarre T.C.J.
Heard: April 29, 2004
Judgment: December 22, 2004
Year: 2004
Docket: 2002-1826(IT)G

Counsel: Paul Lefebrve, Edward Rowe for Appellant

Steven Leckie, Justine Malone for Respondent
Subject:
Income Tax (Federal)
Headnote
Income tax --- Residence in Canada Individuals Ordinarily resident
--- Taxpayer was Canadian citizen working for employer in Canada Employer offered taxpayer contract to work
in Egypt in 1996 Taxpayer left Canada in September 1996 after spending four months on contract at employers
Canadian office Under contract, employer paid taxpayer expatriation premium and taxpayer was subject to tax
equalization plan to avoid him paying more or less tax due to employment abroad Employer paid for air
transportation for taxpayer to Egypt, return trip home and back after 12 months and to home location at end of
contract Taxpayer maintained two Canadian bank accounts with his pay deposited into one Canadian bank
account Taxpayer maintained RRSP, credit cards and safety deposit box in Canada Taxpayer kept Canadian
passport and did not get Egyptian passport Taxpayer and wife leased apartment in Egypt on yearly basis but
maintained their home in Canada while in Egypt Canadian home was not rented since taxpayer and wife did not
want to put their keepsakes in storage Taxpayer and wife arranged for someone to look after Canadian house
regularly with all household bills paid from taxpayers Canadian bank account Taxpayer did not have social life
in Egypt working almost seven days a week with all spare time spent with wife Taxpayer and wife sold all their
furniture purchased in Egypt before returning to Canada Taxpayer returned to Canada in April 2000 when
contract was completed Taxpayer claimed deductions pursuant to s. 110(1)(f)(i) of Income Tax Act for amounts
exempt under Article 4 of Canada-Egypt Income Tax Convention in 1996 to 1999 taxation years Minister
concluded that taxpayer was resident of Canada and Egypt, but his personal and economic ties were closer with
Canada Minister assessed taxpayer for 1996 to 1999 taxation years disallowing deductions, adding amounts to
income for Egyptian tax paid by employer and allowing foreign tax credits in 1998 and 1999 Taxpayer appealed
Appeals allowed in part Both parties agreed taxpayers appeal for 1997 should be quashed due to taxpayers
failure to file notice of objection for 1997 Taxpayers purpose for accepting contract in Egypt was to earn living
and not to sever his ties to Canada Taxpayer was only in Egypt to work and did not demonstrate that he became
active in community in Egypt Taxpayers ties with Egypt were temporary and abandoned on his return to Canada
Taxpayer was ordinarily resident in Canada during period at issue based on principles from case law
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(Tax Court of Canada [General Procedure])

Taxpayers appeal for 1996 was allowed to allow taxpayer foreign tax credit, as conceded by Minister if taxpayer
was found to be resident of Canada, but taxpayers appeals for 1998 and 1999 were dismissed
Income tax --- Non-residents Tax treaties Residence
--- Taxpayer was Canadian citizen working for employer in Canada Employer offered taxpayer contract to work
in Egypt in 1996 Taxpayer left Canada in September 1996 after spending four months on contract at employers
Canadian office Under contract, employer paid taxpayer expatriation premium and taxpayer was subject to tax
equalization plan to avoid him paying more or less tax due to employment abroad Employer paid for air
transportation for taxpayer to Egypt, return trip home and back after 12 months and to home location at end of
contract Taxpayer maintained two Canadian bank accounts with his pay deposited into one Canadian bank
account Taxpayer maintained RRSP, credit cards and safety deposit box in Canada Taxpayer kept Canadian
passport and did not get Egyptian passport Taxpayer and wife leased apartment in Egypt on yearly basis but
maintained their home in Canada while in Egypt Canadian home was not rented since taxpayer and wife did not
want to put their keepsakes in storage Taxpayer and wife arranged for someone to look after Canadian house
regularly with all household bills paid from taxpayers Canadian bank account Taxpayer did not have social life
in Egypt working almost seven days a week with all spare time spent with wife Taxpayer and wife sold all their
furniture purchased in Egypt before returning to Canada Taxpayer returned to Canada in April 2000 when
contract was completed Taxpayer claimed deductions pursuant to s. 110(1)(f)(i) of Income Tax Act for amounts
exempt under Art. 4 of Canada-Egypt Income Tax Convention in 1996 to 1999 taxation years Minister concluded
that taxpayer was resident of Canada and Egypt, but his personal and economic ties were closer with Canada
Minister assessed taxpayer for 1996 to 1999 taxation years disallowing deductions, adding amounts to income for
Egyptian tax paid by employer and allowing foreign tax credits in 1998 and 1999 Taxpayer appealed Appeals
allowed in part Both parties agreed taxpayers appeal for 1997 should be quashed due to taxpayers failure to file
notice of objection for 1997 Tie-breaker rules of Art. 4 of Convention were to be considered given that taxpayer
was resident of Canada Taxpayer was deemed to be resident of contracting state in which his personal and
economic relations were closer pursuant to paragraph 2 of Art. 4 given that taxpayer had permanent home in both
states Taxpayer and wife never intended to give up their economic and personal relations with Canada
Taxpayer only maintained economic relations in Egypt to extent to meet his day-to-day living expenses Taxpayer
rented apartment on yearly basis, kept bank account in Egypt solely for his needs in Egypt, did not purchase car and
obtained Egyptian drivers licence only for ease of commuting to work Taxpayers centre of vital interests was
closer to Canada than Egypt during period in question Taxpayer was taxable in Canada on his income from
sources inside and outside Canada Taxpayers appeal for 1996 was allowed to allow taxpayer foreign tax credit,
as conceded by Minister if taxpayer was found to be resident of Canada, but taxpayers appeals for 1998 and 1999
were dismissed

Table of Authorities
Cases considered by Lamarre T.C.J.:
Boston v. R. (1997), 1997 CarswellNat 1482, 98 D.T.C. 1124, [1998] 1 C.T.C. 2217 (T.C.C.) distinguished
Crown Forest Industries Ltd. v. R. (1995), (sub nom. R. v. Crown Forest Industries Ltd.) 95 D.T.C. 5389, (sub
nom. Crown Forest Industries Ltd. v. Canada) [1995] 2 C.T.C. 64, (sub nom. Crown Forest Industries Ltd. v.
Canada) 125 D.L.R. (4th) 485, (sub nom. Crown Forest Industries Ltd. v. Minister of National Revenue) 183
N.R. 124, (sub nom. Crown Forest Industries Ltd. v. Minister of National Revenue) 97 F.T.R. 159, 1995
CarswellNat 707, [1995] 2 S.C.R. 802, 1995 CarswellNat 384, [1995] S.C.J. No. 56 (S.C.C.) referred to
Ferguson v. Minister of National Revenue (1989), [1989] 2 C.T.C. 2387, 89 D.T.C. 634, 1989 CarswellNat
378 (T.C.C.) considered
McFadyen v. R. (2000), 2000 CarswellNat 1968, [2000] 4 C.T.C. 2573, 2000 D.T.C. 2473 (T.C.C. [General
Procedure]) considered
McFadyen v. R. (2002), 2002 FCA 496, 2002 CarswellNat 3563, 2003 D.T.C. 5015, 2002 CAF 496, 2002
CarswellNat 3941, [2003] 2 C.T.C. 28 (Fed. C.A.) considered
Nicholson v. R. (2003), 2003 TCC 862, 2003 CarswellNat 3753, 2004 D.T.C. 2013, [2004] 2 C.T.C. 2310
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(Tax Court of Canada [General Procedure])

(T.C.C. [General Procedure]) distinguished

R. v. Reeder (1975), [1975] C.T.C. 256, 75 D.T.C. 5160, 1975 CarswellNat 163 (Fed. T.D.) followed
Snow v. R. (2004), [2004] 5 C.T.C. 2085, 2004 TCC 381, 2004 CarswellNat 1423, 2004 D.T.C. 2784, (sub
nom. Snow v. Canada) [2004] T.C.J. No. 267 (T.C.C. [Informal Procedure]) considered
Thomson v. Minister of National Revenue (1945), [1946] S.C.R. 209, 2 D.T.C. 812, [1946] 1 D.L.R. 689,
[1946] C.T.C. 51, 1945 CarswellNat 23 (S.C.C.) considered

Statutes considered:
Can. Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.)
Generally referred to
s. 2 referred to
s. 2(1) considered
s. 6(1)(a) considered
s. 110(1)(f)(i) considered
s. 126 referred to
s. 126(1)(a) considered
s. 169(1) considered
s. 250(3) considered
Ont. Workers Compensation Act, R.S.O. 1990, c. W.11
Generally referred to
Treaties considered:
Treaties Canada-Egypt Income Tax Convention, 1983
Article 4 considered
Article 4 2 considered
Article 15 considered
Treaties OECD Model Double Taxation Convention on Income and Capital, 1977
Generally referred to

APPEAL by taxpayer from Ministers assessments of taxpayer, as resident, disallowing deductions, adding amounts to
income for Egyptian tax paid by employer and allowing foreign tax credits.
Lamarre T.C.J.:
1These are appeals from assessments made by the Minister of National Revenue (Minister) under the Income Tax Act
(Act) for the 1996, 1997, 1998 and 1999 taxation years. In filing his income tax returns for those years, the appellant
claimed deductions pursuant to subparagraph 110(1)(f)(i) of the Act for amounts exempt from income tax in Canada because
of a provision contained in a tax convention, namely Article 4 of the Canada-Egypt Income Tax Convention (Convention).
The amounts so claimed are $39,179 for 1996, $246,377 for 1997, $355,777 for 1998 and $292,404 for 1999.
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(Tax Court of Canada [General Procedure])

2In assessing the appellant, the Minister disallowed the deduction of these amounts claimed under subparagraph 110(1)(f)(i)
of the Act and also included in his income for those years the amounts of $7,379, $29,191, $46,975 and $47,930 respectively.
These latter amounts correspond to the income tax paid on the appellants behalf to the country of Egyptby his employer in
those years. Furthermore, the Minister allowed foreign tax credits under section 126 of the Act, in the amounts of $46,975
and $47,930 for the taxation years 1998 and 1999 respectively.
3In so assessing the appellant, the Minister took the position that the appellant was a resident of Canada during the years at
issue and was liable to tax on his income from sources inside and outside Canada. The Minister was also of the view that
although the appellant was a resident of Egypt as well in those years, his personal and economic relations (his centre of vital
interests) remained closer to Canada than Egypt and therefore he was liable to tax in Canada, and not in Egypt, by virtue of
Article 4(2) of the Convention. The Minister therefore assessed the appellant in accordance with section 2 of the Act. The
Minister was equally of the view that the appellant was properly assessed in accordance with paragraph 6(1)(a) of the Act as
a result of the payment of his Egyptian taxes by his employer in the same years.
4The appellant submits that he was not ordinarily resident in Canadawithin the meaning of subsection 250(3) of the Act
during the period in which he lived and worked in Egypt, from October 3, 1996 to April 1, 2000. The appellant also submits
that if he is considered a resident of Canada during those years, he is also deemed to be a resident of Egyptpursuant to Article
4(2) of the Convention by reason of the fact that his personal and economic relations (centre of vital interests) were closer to
Egypt than to Canadaat that time. Accordingly, the appellant submits that, pursuant to Article 15 of the Convention, he was
taxable only in Egypt during the period he was residing there. Finally, the appellant submits that if he is considered a resident
of Canada and, pursuant to Article 4 of the Convention, he is taxed as a resident of Canada rather than of Egypt, full foreign
tax credit relief should be accorded him pursuant to section 126 of the Act for all the taxation years that he worked in Egypt,
and not only for 1998 and 1999.
5On this latter point, the Minister concedes that the appellant should be allowed a foreign tax credit in the amount of $7,379
for 1996 if he is taxable in Canada.
6However, with respect to 1997 both parties agree that the appeal should be quashed because the appellant did not serve the
Minister with a notice of objection for that year, such service being under section 169 of the Act a condition precedent to the
filing of an appeal.
7The relevant portions of the statutory provisions relied upon by both parties herein are reproduced below.

INCOME TAX ACT

I INCOME TAX

DIVISION A - Liability for Tax

SECTION 2: Tax payable by persons resident in Canada.

(1) An income tax shall be paid, as required by this Act, on the taxable income for each taxation year of
every person resident in Canada at any time in the year.

SECTION 6: Amounts to be included as income from office or employment.

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(Tax Court of Canada [General Procedure])

(1) There shall be included in computing the income of a taxpayer for a taxation year as income from an
office or employment such of the following amounts as are applicable:
4 6(1)(a) 3
(a)Value of benefits - the value of board, lodging and other benefits of any kind whatever
received or enjoyed by the taxpayer in the year in respect of, in the course of, or by virtue of an
office or employment ...

DIVISION C - Computation of Taxable Income

SECTION 110: Deductions permitted.

(1) For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be
deducted such of the following amounts as are applicable:

4 110(1)(f) 3
(f)Deductions for payments - any social assistance payment made on the basis of a
means, needs or income test and included because of clause 56(1)(a)(i)(A) or
paragraph 56(1)(u) in computing the taxpayers income for the year or any amount
that is
(i)an amount exempt from income tax in Canada because of a provision
contained in a tax convention or agreement with another country that has
the force of law in Canada.

DIVISION E - Computation Of Tax

SECTION 126: Foreign tax deduction.

(1) A taxpayer who was resident in Canada at any time in a taxation year may deduct from the tax for the
year otherwise payable under this Part by the taxpayer an amount equal to
(a)such part of any non-business-income tax paid by the taxpayer for the year to the
government of a country other than Canada (except, where the taxpayer is a
corporation, any such tax or part thereof that may reasonably be regarded as having
been paid by the taxpayer in respect of income from a share of the capital stock of a
foreign affiliate of the taxpayer) as the taxpayer may claim,
not exceeding, however ...
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(Tax Court of Canada [General Procedure])

DIVISION J - Appeals to the Tax Court of Canada and the Federal Court of Appeal

SECTION 169: Appeal.

(1) Where a taxpayer has served notice of objection to an assessment under section 165, the taxpayer may
appeal to the Tax Court of Canada to have the assessment vacated or varied after either
(a)the Minister has confirmed the assessment or reassessed, or
(b)90 days have elapsed after service of the notice of objection and the Minister has
not notified the taxpayer that the Minister has vacated or confirmed the assessment or
reassessed,
but no appeal under this section may be instituted after the expiration of 90 days from the day notice has
been mailed to the taxpayer under section 165 that the Minister has confirmed the assessment or
reassessed.

XVII Interpretation

SECTION 250
...
4 250(3) 3
(3) Ordinarily resident. In this Act, a reference to a person resident in Canada includes a
person who was at the relevant time ordinarily resident in Canada.

CANADA-EGYPT INCOME TAX CONVENTION

Article 4 - Resident
1.For the purposes of this Convention, the term resident of a Contracting State means any
person who, under the laws of that State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature.
2.Where by reason of the provisions of paragraph 1 an individual is a resident of both
Contracting States, then his status shall be determined as follows:
(a)he shall be deemed to be a resident of the State in which he has a
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(Tax Court of Canada [General Procedure])

permanent home available to him; if he has a permanent home available to

him in both States, he shall be deemed to be a resident of the State with
which his personal and economic relations are closer (centre of vital
interests);
(b)if the State in which he has his centre of vital interests cannot be
determined, or if he has not a permanent home available to him in either
State, he shall be deemed to be a resident of the State in which he has an
habitual abode;
(c)if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident of the State of which he is a national;
(d)if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.

Article 15 - Dependent Personal Services

1.Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar
remuneration derived by a resident of a Contracting State in respect of an employment shall be
taxable only in that State unless the employment is exercised in the other Contracting State. If
the employment is so exercised, such remuneration as is derived therefrom may be taxed in that
other State.
2.Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a
Contracting State in respect of an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if
(a)the recipient is present in the other Contracting State for a period or
periods not exceeding in the aggregate 90 days in the calendar year
concerned, and
(b)the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other State, and
(c)the remuneration is not borne by a permanent establishment or a fixed
base which the employer has in the other State.

Issue
8The question at issue is whether the appellant was ordinarily resident in Canadaduring the period from October 1996 to
April 2000, when he worked in Egyptunder a contract of employment with Babcock & Wilcox Industries Ltd. (Babcock &
Wilcox). In the affirmative, and because it is admitted by both parties that the appellant was a resident of Egypt during that
period, the tie-breaker rules in Article 4 of the Convention will apply, as the appellant would then have been a resident of
both countries. The question in that event will be whether the appellants personal and economic relations (centre of vital
interests) were closer to Canada than Egyptin that same period.
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(Tax Court of Canada [General Procedure])

9Both parties agree that if this is the case the appeals should be dismissed for 1998 and 1999, and allowed for 1996 only to
the extent of allowing the foreign tax credit of $7,379 under section 126 of the Act. It should be remembered here that the
appeal for 1997 will be quashed on procedural grounds.
10The respondent concedes that if the appellant shows that his personal and economic relations were closer to Egyptthan
Canadaduring the period at issue, the appeals should be allowed for the taxation years 1996, 1998 and 1999.
Facts
11The appellant is a Canadian citizen. He is a mechanical engineer who has been working for the past 20 years for businesses
specializing in the building of power plants and desalination plants. In that connection, he said he had worked in Saudi
Arabiafor many years in the past.
12In the spring of 1996, he was working for Babcock & Wilcox on the construction of a plant in Windsor, Ontario, when he
was asked by his employer to work on a contract in Egyptas a consortium site manager. After spending four months on the
Egyptian contract in the employers office in Canada, he left this country in September 1996 for Egyptand returned to
Canadain April 2000, when the contract was completed.
13On August 6, 1996, the appellant signed an employment agreement that was filed as Exhibit A-1, Tab 19. On the
agreement the space for the name of the employer is blank. The first condition states that the term of the employment is for
an indefinite period. However, under the employers representatives signature, it is indicated that the date of return will be in
approximately four years.
14The same agreement stipulates that in case of illness or injury the appellant will have coverage at least equal to that
provided by the Workers Compensation Act of the provinceof Ontario. The appellant also acknowledged, in this agreement,
his responsibility for payment of income taxes for both Canadaand Egypt. He was, moreover, subject to the employers plan
of tax equalization, which attempted to provide, as far as practicable, that Canadian expatriates pay neither a greater nor
lesser tax as a result of the employment abroad than if they had remained in Canada. Under the terms of the agreement, the
appellant was paid an expatriation premium equivalent to 15 per cent of his base pay as an allowance for accepting foreign
duty. This premium was to be paid for the duration of the foreign assignment. The agreement also provided that the employer
would furnish air transportation for the appellant as follows: at the beginning of the contract, from his home location to his
new work location; during his assignment, after 12 months, round-trip transportation to his home location and back; and at
the end of the contract, transportation to his home location.
15The appellant also filled out for the employer in July 1996 a questionnaire (Exhibit A-1, Tab 18) in which he stated that the
duration of the assignment in Egypt would be 48 months. He indicated in the questionnaire that he owned a house and a
vacant land in Canada and that he would keep his Canadian driving permit and was eligible for provincial health insurance in
Canada.
16At the hearing, the appellant said that he and his wife owned a paternal house in Timmins, Ontario, inherited from his
wifes parents, who made them promise that they would pass down the house to their own children. When he and his wife left
for Egypt, they did not lease the house. They owned a lot of keepsakes (artefacts and mementos purchased in different
countries over the years) that they did not want to put in storage. They left all their furniture in their house in Timmins. They
did not keep their telephone directory listing but the house was protected with an alarm system that was hooked up to a phone
line in the house. The appellant and his wife had people who would look after the house regularly. These people had a power
of attorney to pay the bills. There was someone who would cut the grass in summer and someone who would shovel the snow
in wintertime. The mail was rerouted to the people looking after the house.
17The appellants wife, who moved with her husband to Egypt, came back at least twice in the summertime for a period of
two to three weeks and stayed in their house in Timmins. She said in her testimony that it was too hot to stay in Alexandriain
summer, where they rented a semi-furnished apartment on a yearly basis. Before coming back to Canadafor good, they sold
whatever they had purchased for their apartment in Alexandria.
18During his stay in Egypt, the appellant did not really have a social life. He was working almost seven days a week and
spent his spare time with his wife. They have three adult children who live in Canada and one of them went to visit once
during the assignment in Egypt. The appellant kept his two Canadian bank accounts. His salary was deposited in one of these
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(Tax Court of Canada [General Procedure])

accounts by his employers Canadian branch. The appellant said that this salary was, however, charged back to the
employers branch in Egypt. (I note, however, that there is no indication to that effect in the employment agreement (Exhibit
A-1, Tab 19), which does not even mention the name of the employer.) All Canadian bills were paid through this Canadian
bank account. The appellant also had an expense account for work and a personal account in Egypt in which he kept a very
small amount of money. He did not own a car there, as his employer provided him with one, and he obtained his Egyptian
drivers licence in the fall of 1997. He himself did not own a car in Canadabut his wife did and it was stored at the house in
Timmins. The car was insured for fire and theft but not for third party liability. He also had a Registered Retirement Savings
Plan (RRSP), credit cards and a safety deposit box in Canada. While in Egypt, he received Canada Pension Plan and
Canadian Old Age Security payments (see tax returns filed for 1998 and 1999 in Exhibit A-1, Tabs 2 and 3). The appellant
always kept his Canadian passport and it is my understanding that he did not ask for an Egyptian passport.
19The appellant filled out questionnaires for the determination of residency status (Form NR73) for each year he was abroad
and these were filed with his tax returns in Canada. In these questionnaires, he indicated that he was going to live outside
Canada for four years and that he would retire in Canadaafter his assignment. He also indicated in the first questionnaire
(1996) that he would be maintaining eligibility for provincial hospitalization and medical insurance coverage and at the same
time would have medical/hospitalization coverage abroad provided by his employer (Exhibit A-1, Tab 14). In the other
questionnaires, he only indicated that he was covered under his employers insurance while living outside Canada(Exhibit A1, Tabs 15 and 16 and Exhibit A-2).
20The appellant did not recall coming back to Canada during his stay in Egypt, but it seems from the way he filled out the
NR73 questionnaires that he returned to Canada at least once for a period of 20 to 30 days (Exhibit A-1, Tab 16).
21In April 2000, the employer closed down its office in Egyptand the appellant did not look for another job in that country
but returned to Canada.
Analysis

I. Was the appellant ordinarily resident in Canadaduring the relevant period?

22The leading case on the matter of the residency of an individual for income tax purposes is the decision of the Supreme
Court of Canada in Thomson v. Minister of National Revenue (1945), [1946] S.C.R. 209 (S.C.C.). I will refer to some extracts
from this case that are relevant here. Estey J. defined the expression ordinarily resident as follows at pages 231-32:
A reference to the dictionary and judicial comments upon the meaning of these terms indicates that one is
ordinarily resident in the place where in the settled routine of his life he regularly, normally or
customarily lives. One sojourns at a place where he unusually, casually or intermittently visits or stays.
In the former the element of permanence; in the latter that of the temporary predominates. The difference
cannot be stated in precise and definite terms, but each case must be determined after all of the relevant
factors are taken into consideration, but the foregoing indicates in a general way the essential difference.
It is not the length of the visit or stay that determines the question....
It is well established that a person may have more than one residence

23Rand J., expressed himself as follows at pages 224-25:

The expression ordinarily resident carries a restricted signification, and although the first impression
seems to be that of preponderance in time, the decisions on the English Act reject that view. It is held to
mean residence in the course of the customary mode of life of the person concerned, and it is contrasted
with special or occasional or casual residence. The general mode of life is, therefore, relevant to a
question of its application.
For the purposes of income tax legislation, it must be assumed that every person has at all times a
residence. It is not necessary to this that he should have a home or a particular place of abode or even a
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(Tax Court of Canada [General Procedure])

shelter. He may sleep in the open. It is important only to ascertain the spatial bounds within which he
spends his life or to which his ordered or customary living is related. Ordinary residence can best be
appreciated by considering its antithesis, occasional or casual or deviatory residence. The latter would
seem clearly to be not only temporary in time and exceptional in circumstance, but also accompanied by
a sense of transitoriness and of return.
But in the different situations of so-called permanent residence, temporary residence, ordinary
residence, principal residence and the like, the adjectives do not affect the fact that there is in all cases
residence; and that quality is chiefly a matter of the degree to which a person in mind and fact settles into
or maintains or centralizes his ordinary mode of living with its accessories in social relations, interests
and conveniences at or in the place in question. It may be limited in time from the outset, or it may be
indefinite, or so far as it is thought of, unlimited. On the lower level, the expressions involving residence
should be distinguished, as I think they are in ordinary speech, from the field of stay or visit.
24Accordingly, as suggested by counsel for the appellant, the question is to determine where, during the period at issue, the
appellant, in his settled routine of life, regularly, normally or customarily lived. One must examine the degree to which the
appellant in mind and fact settled into, maintained or centralized his ordinary mode of living, with its accessories in social
relations, interests and conveniences, at or in the place in question.
25This is mainly a question of fact. In R. v. Reeder (1975), 75 D.T.C. 5160 (Fed. T.D.), referred to by the appellant, the court
listed some factors considered to be material in determining the question of fiscal residence, at page 5163:
... While the list does not purport to be exhaustive, material factors include:
a.past and present habits of life;
b.regularity and length of visits in the jurisdiction asserting residence;
c.ties within that jurisdiction;
d.ties elsewhere;
e.permanence or otherwise of purposes of stay abroad.
The matter of ties within the jurisdiction asserting residence and elsewhere runs the gamut of an
individuals connections and commitments: property and investment, employment, family, business,
cultural and social are examples, again not purporting to be exhaustive. Not all factors will necessarily be
material to every case. They must be considered in the light of the basic premises that everyone must
have a fiscal residence somewhere and that it is quite possible for an individual to be simultaneously
resident in more than one place for tax purposes.
26In his submissions, counsel for the appellant put much reliance on the case of Boston v. R. (1997), 98 D.T.C. 1124 (T.C.C.).
In that case, the taxpayer resided in Canada until he moved to Malaysiain 1988 to take up a new position with his employer.
He left for Malaysiaalone, and his wife, with whom he was having marriage difficulties, stayed in their house in Edmonton,
Alberta, with their son. The taxpayer remained on his Canadian employers payroll but his salary was charged back to his
employer in Malaysia. He moved into a house owned by his employer, for which he was charged rent. He purchased a car in
Malaysiaand acquired a Malaysian drivers license. He had real estate and other investments in Canada. Although the original
contract was for a minimum three-year period, the taxpayer stayed in Malaysiafor his employer for seven years. Judge Mogan
of this Court concluded that the taxpayer was not ordinarily resident in Canada. Judge Mogan considered the decision by
Judge Sarchuk of this Court in Ferguson v. Minister of National Revenue (1989), 89 D.T.C. 634 (T.C.C.), in which the
taxpayer went to Saudi Arabiaunder a series of one-year contracts and was found to be resident in Canada. In Boston, supra,
Judge Mogan distinguished Ferguson, supra, from the appeal before him on the basis that (at page 1128):
... the Appellant went to Malaysia for a minimum period of three years; he had significant employment
responsibilities there; he hoped to stay on after three years if he became manager of the Port Dickson
Refinery; and he became active in the residential community of Port Dickson.
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Gaudreau v. R., 2004 CarswellNat 4775, 2004 TCC 840, 2005 D.T.C. 66, [2005] 1 C.T.C. 2701, 2004 CCI 840
(Tax Court of Canada [General Procedure])

27The Boston case was considered in McFadyen v. R., 2000 D.T.C. 2473 (T.C.C. [General Procedure]), by Chief Judge Garon
and distinguished on the basis that in Boston the taxpayer had spent more than six years abroad, while Mr. McFadyen lived in
Japan for only about three years. In McFadyen, this Court came to the conclusion that the taxpayer maintained ties with
Canada that were largely economic but partly personal (family ties, real property, furniture and appliances, bank accounts, a
safety deposit box, an RRSP, credit cards, and a provincial drivers licence), and hence considered him to have been
ordinarily resident in Canada during the period he was in Japan. The McFadyen decision was confirmed by the Federal Court
of Appeal (McFadyen v. R. (2002), 2003 D.T.C. 5015 (Fed. C.A.)).
28The appellant also referred to Nicholson v. R. (2003), 2004 D.T.C. 2013 (T.C.C. [General Procedure]), a case in which the
taxpayer was recruited by a corporation from the United States to work in the United Kingdom (UK) where he was to take
over the employer corporations business operations in Europe. The issue was whether the taxpayer was resident in
Canadaduring the period (11/2 years) he lived in the UK. The Court concluded that although he maintained his participation in
the provincial health program and kept the matrimonial home, he was not a resident of Canadaduring that period. The Court
based its decision on the fact, among others, that the taxpayer had no intention to return to Canada when he accepted the
position in the UK. He anticipated rather an eventual move to the United States. He and his first wife were separated and he
kept his Canadian bank account from which he made periodical payments to her. He lived with his new wife in the UKwhere
her child attended school.
29I find the Nicholson case to be distinguishable from the present situation. Indeed, on the basis of the above case law, I am
of the view that the appellant was ordinarily resident in Canadaduring the period at issue.
30As Rip J. said in his recent decision in Snow v. R., [2004] T.C.J. No. 267 (T.C.C. [Informal Procedure]), at paragraph 18:
18 A person may be resident of more than one country for tax purposes. The nature of a persons life
and the frequency he or she comes to Canada are important matters to consider in determining ones
residence.1 The words ordinarily resident in s.s. 250(3) refer to the place where, in the persons settled
routine of life, the person normally or customarily lives.2 The intention of a taxpayer, while obviously
relevant in determining the settled routine of a taxpayers life, is not determinative. 3 A persons
temporary absence from Canada does not necessarily lead to a loss of Canadian residence if a family
household remains in Canada, or possibly even if close personal and business ties are maintained in
Canada.4
31In the present case, I recognize that, according to the evidence presented before me, the appellant did not frequently come
to Canadawhile he was working in Egypt. However, it is clear from the evidence that the appellant and his wife left Canadaon
a temporary basis only.
32It is clear from the employment agreement that the appellant was given an assignment in Egyptfor which he was even paid
an expatriation premium for the duration thereof. The agreement provided for air transportation back and forth between the
appellants home location and his work location. The appellant kept all his assets in Canada and before leaving Canada made
all the necessary arrangements to have someone look after those assets. His purpose in accepting the contract in Egyptwas not
to give up his ties with Canadabut mainly to earn a living. The appellant agreed to go there on a contractual basis and did not
sever his attachments to, or his links with, Canada. The appellant did not in mind and fact abandon his general mode of life in
Canada. As a matter of fact, the house in Timminswas available at all times as a place in which he could customarily live. To
use the words of Rand J. in the Thomson case, he and his wife maintained their ordinary mode of living, with its accessories
in social relations, interests and conveniences, in Canada. If I may distinguish the present case from the Boston case, the
duration of the contract here was a lot shorter and the appellant did not demonstrate that he became active in the community
in which he lived in Egypt. He was only there to do his work. Finally, the Boston case was considered but not followed in the
McFadyen case, which was affirmed by the Federal Court of Appeal.
33I adopt the reasoning of Mahoney J. in the Reeder case, at page 5163:
The Defendant was at a stage in life when he was highly mobile. He was able, willing, even eager, to
travel. In that, he was not atypical of his contemporaries and the relevant factors must be considered in
that context. It is not contested that he was, before March 29, 1972 and has, since December 1, 1972,
been resident in Canada. Throughout, his ties of whatever description have all been with Canada, save
only those ties, undertaken during the term of his absence, which were necessary to permit him and his
family to enjoy an acceptable and expected lifestyle while in France. That absence was temporary even
though, strictly speaking, indeterminate in length. The ties in France were temporarily undertaken and
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Gaudreau v. R., 2004 CarswellNat 4775, 2004 TCC 840, 2005 D.T.C. 66, [2005] 1 C.T.C. 2701, 2004 CCI 840
(Tax Court of Canada [General Procedure])

abandoned on his return to Canada.

I am satisfied that had the Defendant been asked, while in France, where he regularly, normally or
customarily lived, Canada must have been the answer. I find that the Defendant was resident in
Canadathroughout all of 1972.
34In my view, the same can be said here. Throughout his sojourn in Egypt, the appellants ties were all with Canada, save
only those ties, undertaken during the term of his absence, which were necessary to permit him and his wife to enjoy an
acceptable and expected lifestyle while in Egypt. As a matter of fact, the ties in Egypt were temporarily undertaken and
abandoned on his return to Canada. As Rip J. stated in the above cited passage from Snow, supra, a persons temporary
absence from Canadadoes not necessarily lead to a loss of Canadian residence when close personal and economic ties are
maintained in Canada. I therefore conclude that the appellant was ordinarily resident in Canadaduring the years at issue.
II. Tie-breaker rules: Article 4(2) of the Convention
35The appellant having been a resident of Canada and of Egyptduring the period at issue, the tie-breaker rules of Article 4 of
the Convention, referred to previously in these reasons, must be considered.
36The parties do not dispute the fact that the appellant had a permanent home available for use in both countries. Under
paragraph 2 of Article 4 of the Convention, since he had a permanent home available to him in both states, he shall be
deemed to have been a resident of the state with which his personal and economic relations (centre of vital interests) were
closer during the relevant period.
37The OECD Model Tax Convention on Income and on Capital has received worldwide recognition as a basic reference
document in the application and interpretation of tax conventions (see Crown Forest Industries Ltd. v. R. (1995), 95 D.T.C.
5389 (S.C.C.), at page 5398). In its condensed version of January 28, 2003, it is stated in paragraph 15 of the Commentary
on Article 4 that:
15. If the individual has a permanent home in both Contracting States, it is necessary to look at the facts
in order to ascertain with which of the two States his personal and economic relations are closer. Thus,
regard will be had to his family and social relations, his occupations, his political, cultural or other
activities, his place of business, the place from which he administers his property, etc. The circumstances
must be examined as a whole, but it is nevertheless obvious that considerations based on the personal acts
of the individual must receive special attention. If a person who has a home in one State sets up a second
in the other State while retaining the first, the fact that he retains the first in the environment where he has
always lived, where he has worked, and where he has his family and possessions, can, together with other
elements, go to demonstrate that he has retained his centre of vital interests in the first State.
38Thus, if a person who has a home in one state sets up a second in the other state while retaining the first, the fact that he
retains the first in the environment where he has always lived, where he has worked, and where he has his family and
possessions, can, together with other elements, go to demonstrate that he has retained his centre of vital interests in the first
state.
39Here, it is true that the appellant said that he had worked abroad for a number of years during his career, but it is my
understanding that it was in circumstances similar to those that took him to Egypt. He and his wife always kept their house
and all their possessions in Canada. Their family always lived in Canada. It is my perception that they never intended to give
up their economic and personal relations with Canada. In fact, the appellant did not really maintain any economic relations
with Egyptapart from those he needed to have in order to meet his day-to-day living expenses. He rented an apartment there
on a yearly basis, kept a bank account solely for his needs over there, did not purchase a car, and obtained his drivers licence
simply so as to be able to commute to work in Egypt. That the appellant agreed to work in Egypt on an approximately fouryear contract does not alter the fact that his centre of vital interests remained in Canada.
40I therefore conclude, considering all the facts, that the appellants centre of vital interests was closer to Canada than Egypt
during the years 1996, 1998 and 1999.
41The appellant was therefore taxable in Canadaon his income from sources inside and outside Canada. He was granted a
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Gaudreau v. R., 2004 CarswellNat 4775, 2004 TCC 840, 2005 D.T.C. 66, [2005] 1 C.T.C. 2701, 2004 CCI 840
(Tax Court of Canada [General Procedure])

foreign tax credit under section 126 for 1998 and 1999. As conceded by the respondent, he is entitled as well to a foreign tax
credit of $7,379 for 1996.
42The appeal for the 1996 taxation year is therefore allowed and the assessment is referred back to the Minister for
reconsideration and reassessment on the basis that the appellant is entitled to a foreign tax credit of $7,379 pursuant to section
126 of the Act.
43The purported appeal for the 1997 taxation year is quashed.
44The appeals for the 1998 and 1999 taxation years are dismissed with costs to the respondent.
Appeals allowed in part.
Footnotes
1

Thomson, supra, 213-4, per Kerwin, J. [Thomson v. M.N.R., [1946] S.C.R. 209.]

Thomson, supra, 231 per Estey, J.

Peter W. Hogg, Joanne E. Magee and Jinyan Li, Principles of Canadian Income Tax Law, 4th ed. p.p. 60-62, Carswell:
Toronto.

Hogg, supra, p. 62.

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