Section 122.3

The taxpayer was employed as an instructor at the College of the North Atlantic (the "CNA") on a campus in Qatar ("CNA-Q"). The program the taxpayer taught was designed to prepare students for maintenance and operator positions in the oil industry. More than half of the students were sponsored by local businesses, which covered their full tuition and other costs. Campbell J. found that the taxpayer qualified for a s. 122.3(1) exemption on his income on the basis that the taxpayer worked with respect to "the exploration for or exploitation of petroleum, natural gas, minerals or other similar resources." He reasoned (at para. 22) that the words "with respect to" are inherently broad and stated (at para. 24):

It could be argued that the first stage in the exploitation process must begin with the teaching stage because, unless the relevant skills and knowledge are taught to the professionals that work in these industries, natural resources could not be extracted and eventually sold for profit. The teaching phase for future engineers and technicians is an integral and necessary stage which is preliminary to their involvement in the actual exploration or exploitation process.

Humber (also involving a CNA-Q instructor) was distinguished on the basis that there the connection between CNA's activities and oil exploitation had not been adequately established.

In finding that CNA's business of teaching engineering could also be characterized as being "with respect to an engineering activity" under s. 122.3(1)(b)(i)(B), Campbell J stated (at para. 27) that "the teaching of engineering also constitutes an engineering activity."

The taxpayer supplied personnel for ships, oil rigs, and other offshore businesses. Applying Dunbar (2005 TCC 269 , 2005 DTC 1807), Webb J. found that the taxpayer's provision to its workers of health benefits, injury insurance, and payroll, and its continuing contact with the employees during their work terms, suggested that the taxpayer's business was not mere placement of employees, but amounted to supplying drilling services. The taxpayer therefore carried on business outside of Canada for purposes of s. 122.3(1).

The employer of the taxpayer, which operated and administered a college of applied arts and technology in Qatar, whose activities included the teaching of engineering, was not engaged in a business "with respect to ... any ... engineering activity" as required by s. 122.3(1)(b)(i)(A).

The taxpayer's Canadian employer provided the services of captains for various shipping services including, in this case, transporting crude by super tanker ("VLCC") from Saudi Arabia to New Brunswick.

Miller J. first found that given that "all stages necessary to take the natural resource to its maximum value for the pursuit of profit is part of the exploitation process" (p. 1810) the transportation of crude to a refinery was part of the process of "exploitation of petroleum". He then went on to note, with respect to the requirement that the taxpayer's employer carry on business outside Canada, that although "if the Canadian company's business is solely that of a placement agency, the business is not being carried on outside Canada simply by virtue that the personnel placed, conducted their activities outside Canada ... if, however, the business is providing services by way of subcontracting to a contractor, which services must necessarily be provided outside Canada, then the business can be considered to be carried on outside Canada". He found that the arrangements here were "more akin to a subcontractor providing services of specialized personnel to sell VLCCs as opposed to simply a placement agency", so that this requirement for the credit being available also was satisfied.

The taxpayer, who lived in Windsor, Ontario, was employed by a Canadian firm that carried on the business of supplying engineering services, and as employee he provided such services on behalf of his employer to an American car manufacturer. In finding that the credit was available to the taxpayer, Bowie J. rejected the Crown's submission that because the taxpayer's employer was providing services of its personnel, and therefore was in a personnel business, it should not be characterized as being in a business with respect to engineering activities.

A services contract between a Canadian-resident corporation ("Cheyenne") that Sheridan J. later found to be a genuine drilling services subcontractor rather than merely an employment agency, and "Jeff Adams of Adams Family Enterprise Ltd." was held to be a services contract with the individual taxpayer (Jeff Adams) rather than his family company, with the result that the services of the taxpayer were with a specified employer, and qualified for the credit.

The taxpayer accepted an assignment with a company ("Elbit") in Venezuela to work on the maintenance of fighter aircraft and, in order to limit personal liability, incorporated a company to perform the work for Elbit. In finding that, but for the incorporated company, the taxpayer would have been an employee of Elbit, Margeson, J. noted that the taxpayer was working on one project only, was not free to do work for any other party, was told by Elbit when to do the work and the number of hours to work in a week, and that the workers who reported to the taxpayer were provided by Elbit through the Venezuelan air force. He also stated (at para. 30), after noting that the taxpayer was performing very technical work that "it is no longer acceptable to find that a worker who is not told how to do a job makes that worker an independent contractor".