Date: 19990319
Docket: 98-49-IT-I
BETWEEN:
ODETTE PÉPIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for judgment
Tardif, J.T.C.C.
[1] This is an appeal for the 1995 taxation year. The Minister of National Revenue (the “Minister”) denied the appellant a non-refundable tax credit of $1,139 ($6,700 x 17 percent) in respect of tuition fees.
[2] The facts are relatively easy to summarize.
[3] The appellant began a course of study to earn a nursing diploma. In December 1995, she had a skiing accident and suffered as a result a temporary total disability for a brief period of time and a partial disability, also temporary, for a longer period.
[4] Through the use of a wheelchair, the appellant was able to take her theory courses. Following those courses, she was to complete her training with a mandatory internship but could not do so on account of the physical disability caused by her skiing accident.
[5] Her failure to do her internship had serious consequences. As she was unable to earn her diploma, she risked losing the job that had been guaranteed her at the Hôpital Maisonneuve Rosemont (the “Hospital”). Furthermore, as a result of certain program changes at the Collège Bois-de-Boulogne (the “College”), she would have to wait a number of months before being able to do or redo her internship. Lastly, the fact that she was a single parent during this period added to the already considerable difficulty of being able to eventually complete her education so that she could become financially self-sufficient.
[6] In view of all these constraints and disastrous consequences, she decided to resort to the only available solution that would enable her to complete her studies by the scheduled date: pay $6,700 for a private instructor to provide her with the coaching she required, which would be in lieu of the internship.
[7] According to the evidence, the instructor was hired with the approval of the College and the Hospital, the appellant’s eventual employer.
[8] The appellant says she also consulted an accountant concerning the deductibility of the required outlays.
[9] The appellant indicated that she was the only student who enjoyed this kind of cooperation from the College and Hospital.
[10] Under the agreement approved by the College, she signed a contract with Marie-Stella Turbide (Exhibit I-1). The Collège Bois-de-Boulogne was neither a party to nor an intervener in this contract.
[11] However, the appellant indicated that Marie-Stella Turbide was an accredited member of the College’s teaching staff.
[12] Relying in particular on section 118.5 and more specifically on paragraph 118.5(1)(a) of the Income Tax Act, the Minister contended that the appellant was not entitled to the credit.
[13] The respondent argued that the credit cannot be granted since payment was not made directly to the College and the receipt was not issued by it.
[14] The amount of the tuition fees was of course not paid to the College. However, it was paid to a member of the College’s teaching staff. Furthermore, that amount was paid for training provided by the College in question. Lastly, although neither a party to nor an intervener in the contract (Exhibit I-1), the Collège Bois-de-Boulogne gave its approval and recognized the validity of the content of the contract, since the performance of that contract enabled the appellant to obtain her diploma at the same time as all the other students who had been able to take the normal program of courses and internships provided by the College. In other words, the Collège Bois-de-Boulogne approved the hiring of the private instructor since it recognized the worth and qualifications of that instructor by agreeing to include the appellant in the process leading to the awarding of the diploma.
[15] The diploma awarded represented confirmation, as it were, of the quality of instruction received, but also, and above all, recognition that all the diploma prerequisites had been successfully met.
[16] It would of course have been preferable for the appellant to pay the fees in issue directly to the educational institution. And it would definitely have been advantageous for the appellant to obtain a receipt issued by the College. However, I do not believe that the appellant should be penalized merely because all the parties concerned wanted, in good faith, to avoid the administrative complexities involved in a payment to the College, which would clearly then have handed the money over to the instructor, Ms. Turbide.
[17] There is no doubt in my mind that the amount in issue was paid in respect of fees for tuition received and for recognized and accredited training, which training was an essential prerequisite for the diploma which the appellant moreover obtained. Furthermore, the teacher to whom the amount was paid was, according to the evidence adduced, a servant of the Collège Bois-de-Boulogne; the receipt that she issued could therefore be considered, in the very particular circumstances of this case, as having been issued by the College.
[18] For these reasons, I allow the appeal.
Signed at Ottawa, Canada, this 19th day of March 1999.
“Alain Tardif”
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 27th day of January 2000.
Erich Klein, Revisor