Date: 20011018
Docket: 2000-3121-IT-I
BETWEEN:
RODOLFO JOSÉ SLOBODRIAN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasonsfor Judgment
(delivered orally from the bench onJune 26, 2001, at Québec, Quebec,
and amended for greater clarity)
Archambault, J.T.C.C.
[1] Mr. Slobodrian is appealing income tax assessments for the 1996, 1997 and 1998 taxation years (relevant taxation years). The Minister of National Revenue (Minister) disallowed charitable donation tax credits in relation to alleged gifts of $41,160 in 1996, $41,160 in 1997 and $47,040 in 1998. Essentially, the Minister disallowed these credits on the basis that no property was gifted by Mr. Slobodrian in the relevant taxation years and that no prescribed receipts were provided pursuant to subsection 118.1(2) of the Income Tax Act (Act).
[2] At the beginning of the hearing, Mr. Slobodrian admitted all of the facts outlined in paragraph 6 of the Reply to the Notice of Appeal, except those set out in subparagraphs d) and e). Paragraph 6 reads as follows:
In so assessing the Appellant for the taxation years in litigation, the Minister made the following assumptions of fact:
a) in filing his Income Tax Returns for the taxation years in litigation, the Appellant claimed charitable donations tax credits in relation, among other things, to the amounts of $41,160, $41,160 and $47,040 respectively for the 1996, 1997 and 1998 taxation years, for the unpaid time spent for researches with Laval University (hereinafter, the "employer");
b) the Appellant did not charge anything to the employer;
c) the amounts mentioned in the subparagraph a) above, were not included on the forms T4 prepared by the employer;
d) for the taxation years in litigation, the Appellant has not shown that he gave something, in terms of property, to the employer;
e) for the taxation years in litigation, the Appellant did not provide the Minister with official receipts issued by a registered organization, as prescribed by the section 3501 of the Income Tax Regulations;
f) the Appellant filed with the Tax Court of Canada a Notice of Appeal for the 1995 taxation year, concerning the same litigation;
g) this Notice of Appeal was registered by the Tax Court of Canada under the number 97-812(IT)I;
h) by Judgment rendered by the Honorable judge Louise Lamarre-Proulx, dated May 15th, 1998, the appeal was dismissed.
[3] I do not intend to describe in detail the facts of this appeal because they are essentially similar to those set out in the reasons of Judge Lamarre Proulx published in [1998] 3 C.T.C. 2654. I would add, however, that the same research contract (research contract) was renewed in 1996, 1997 and 1998. Mr. Slobodrian was the person who took the first steps to secure that contract between Public Works and Government Services Canada (Public Works) on behalf of the Canadian Space Agency and the Université Laval.
[4] Under the contract, several researchers were to be hired to perform the services necessary to carry out the research project. According to Mr. Slobodrian, it was clearly understood that university professors were not to be paid for services performed under such a contract with Public Works. Here, Mr. Slobodrian acknowledged that he was a retired professor and stated that, given the limited funds obtained to finance the research project, Université Laval would not have been in a position to remunerate his services. So he generously agreed to provide them free of charge.
[5] As result of the services performed by the team of researchers supervised by Mr. Slobodrian, papers and reports were furnished to Public Works. Mr. Slobodrian took the position that intellectual property resulted from his research efforts, that this property was donated to Public Works and that this gift qualified for the purposes of the charitable donation tax credit. However, it was stipulated in the research contract that any intellectual property arising out of the research project would vest in Canada and not in Université Laval or any of the members of the research team.
[6] In support of his position before this Court, Mr. Slobodrian filed a letter from Université Laval which confirmed that he had supervised students' thesis work in 1996 and had also acted as principal researcher under the research contract. This letter also confirmed that Mr. Slobodrian did not receive any remuneration for his teaching and research work done for the benefit of Université Laval. In addition, the director of the "Faculté des sciences et génie, département de physique" (Faculty) gave a monetary evaluation of Mr. Slobodrian'sservices. For 1996, he estimated their value at $41,160, which represented 1,960 hours at $21 per hour. This hourly rate of $21 was the rate paid to Mr. Slobodrian's first assistant and, according to the director, it represents the lower limit of the value to be assigned to Mr. Slobodrian's work. Similar letters were prepared for 1997 and 1998. The only difference for 1998 is that the hourly rate was increased from $21 to $24.
[7] In addition to pointing to the fact that he had provided his services free of charge, Mr. Slobodrian referred to expenses (additional expenses) that he incurred during the relevant taxation years. These expenses essentially represent the cost of scientific books, dues and fees, the cost of supplies such as software and hardware products and the cost differential for out-of-home meals, estimated at $4 per day over 240 working days for 1998[1]. They also represent travelling costs which include the costs for travelling to the university campus and the costs for parking on such campus. Also included in the travelling expenses are the costs for round trips to Toronto, Ottawa and Calgary. Mr. Slobodrian indicated that these expenses were not incurred specifically in carrying out the research project. They were expenses that he had incurred in attending conferences covering subjects of interest for a physicist such as him.
[8] It should be noted that under the research contract funding was provided to Université Laval for supplies and materials and travelling and living allowances, in addition to labour costs and general administration fees. Such travelling expenses would include, for instance, expenses for attending meetings with NASA in Houston. The additional expenses that Mr. Slobodrian incurred were not covered by the research contract.
Analysis
[9] The issue raised by these appeals is essentially whether all the conditions required under the Act for claiming charitable donation tax credits have been met. The Minister contends that no property was gifted by Mr. Slobodrian through the performance of his services. Furthermore, there were no official receipts that met the requirements of section 3501 of the Income Tax Regulations (Regulations). As I mentioned before, the same issues were dealt with by Judge Lamarre Proulx in Mr. Slobodrian's appeal for the 1995 taxation year. In her decision, she held that, in order for one to qualify for a charitable donation tax credit, property had to be gifted. She relied, at paragraph 23, on the following dictum of Chief Justice Jackett of the Federal Court of Appeal in Rapistan Canada Ltd. v. M.N.R, 74 DTC 6426:
. . . as far as I know, under no system of law in Canada, does knowledge, skill or experience constitute "property" that can be the subject matter of a gift, grant or assignment . . . As I understand the law, knowledge or ideas, as such, do not constitute property.
[10] In paragraph 26 of her decision, Judge Lamarre Proulx applied this principle to the case of Mr. Slobodrian and came to the following conclusion:
In the circumstances of the present appeal, the Appellant contributed his knowledge, skill and talents in the form of services to the university. While these added value to, and ultimately resulted in a work capable of ownership, hence property, the services themselves were not capable of ownership and therefore should not be considered property. Not being property, services cannot be the object of a gift.
I am in complete agreement with her conclusion and I believe that it is equally applicable to the years under appeal here.
[11] Before concluding, I would like to add two comments. First, even if property had been donated by Mr. Slobodrian to Her Majesty in Right of Canada or to a registered charity, he did not file with the Minister, as required by subsection 118.1(2) of the Act, receipts which contained the information prescribed under section 3501 of the Regulations. Therefore, Mr. Slobodrian would not be entitled to any tax credit for charitable donations. Second, the letter attached to the tax returns filed by Mr. Slobodrian does not provide a fair market value of "property" given by Mr. Slobodrian: it only provides an evaluation of the minimum value of the "services" that he performed for Université Laval. No evidence was provided of the fair market value of the property that Mr. Slobodrian claims he transferred to Université Laval and ultimately to the Government of Canada. Thus, Mr. Slobodrian's appeals cannot succeed because not only there is no evidence that any property was given by him to the Government of Canada but, even if such property had been given, there is no evidence of its value.
[12] So for all of these reasons I come to the conclusion that Mr. Slobodrian did not succeed in establishing that the Minister made an error in assessing him for the three relevant taxation years, and his appeals are dismissed.
Signed at Ottawa, Canada, this 18th day of October 2001.
"Pierre Archambault"
J.T.C.C.
COURT FILE NO.: 2000-3121(IT)I
STYLE OF CAUSE: RODOLFO JOSÉ SLOBODRIAN
v. The Minister of National Revenue
PLACE OF HEARING: Québec, Quebec
DATE OF HEARING: June 26, 2001
REASONS FOR JUDGMENT BY: The Honorable Judge Pierre Archambault
DATE OF JUDGMENT: August 8, 2001
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Anne Poirier
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-3841(IT)I
BETWEEN:
REID OLIVER SANDERS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on May 7, 2001 at Toronto, Ontario, by
the Honourable Judge M.J. Bonner
Appearances
Agent for the Appellant: Concetta Sanders
Counsel for the Respondent: Kimberly Moldaver
JUDGMENT
The appeal from the assessment of income tax for the 1996 taxation year is allowed and the assessment is referred back to the Minister of National Revenue for reassessment on the basis that the Appellant is entitled to deduct the sum of $3,500 paid pursuant to paragraph 4 of the Order of October 8, 1996.
The appeals from the assessments for the 1997 and 1998 are dismissed.
Signed at Ottawa, Canada, this 18th day of October 2001.
|
"M.J. Bonner" |
J.T.C.C.