2008 FCA 335
CORAM: LINDEN J.A.
REASONS FOR JUDGMENT OF THE
from the Bench at Halifax, Nova Scotia, on October 29, 2008)
is an appeal from a decision of Justice Campbell of the Tax Court, dismissing
Mr. Kilbride’s appeal from an assessment by the Minister of National Revenue
for the 2001 and 2002 taxation years. The Minister disallowed the deduction of
the appellant’s claimed business expenses, on the basis that he was an
employee, and not an independent contractor, of a company called Thermaray
is a Fredericton-based family corporation that is in the business of
manufacturing heating systems. The appellant’s father and brother are President
and Vice-President of Operations, respectively. The appellant is a minority
shareholder in Thermaray, and holds the title of Secretary-Treasurer.
appellant performed bookkeeping and technical support services for Thermaray.
The trial judge found that he was responsible for the “installation, configuration
and maintenance of computer systems and general accounting functions”. He also
attended industry events on behalf of the company and met with customers. There
was evidence that some of Thermaray’s customers may have considered Mr.
Kilbride the Chief Financial Officer of the corporation, although it was denied
that he actually held that title.
was no written contract of employment between Thermaray and the appellant,
although the trial judge accepted that all parties intended that the appellant
would be an independent contractor, working as a management consultant. He had
considerable flexibility in his hours of work, and spent much of his time
working in a home office, although he was not required by the company to
maintain one. Thermaray provided the appellant a work space at its offices,
complete with the software and other equipment he required to perform his
duties. The evidence was that the appellant attended at Thermaray’s offices
almost every day, although he characterized this as a “practical” requirement.
He also served as a back-up in the office when his father and brother were
Tax Court Judge found that during the relevant period, Thermaray was the
appellant’s only source of income. He did not receive any benefits, sick days,
or vacation time, as did other employees. While he was free to solicit outside
business, he did not advertise, and did not in fact have any other clients for
his consulting services.
the appellant alleges that the Tax Court Judge employed the wrong test in
deciding whether the appellant was an independent contractor, we cannot agree.
appellant further argues that that the trial judge erred in her application of
the four-in-one test from Wiebe Door Services Ltd. v. Minister of National
Revenue, 87 DTC 5025 (F.C.A.), as confirmed in 671122 Ontario Ltd. v.
Sagaz Industries Canada Inc., 2001 SCC 59. He alleges that Justice Campbell
ignored relevant evidence suggesting that the appellant was an independent
contractor, and considered facts not relevant to the Wiebe Door test.
These are questions of mixed fact and law, and this court will not interfere
with the court below in the absence of palpable and overriding error (Housen
v. Nikolaisen, 2002 SCC 33).
four criteria, although not exhaustive, from Wiebe Door are degree of
control, ownership of tools, chance of profit, and risk of loss. Justice
Campbell concluded that while the control test was inconclusive, if the
appellant were an employee, he would be one at a high executive level, given
his degree of control over his hours of work. She found that the remaining
three factors suggested that the appellant was an employee. Although the
integration test may have fallen out of favour with some courts, the trial
judge found that if she was obliged to consider it, this factor also strongly
suggested that the appellant was an employee.
appellant takes exception with the trial judge’s application of the control
test. He argues that Justice Campbell considered irrelevant factors, noting
that the appellant ran the Thermaray office as backup when his father and
brother were absent, that he met with company clients, and that he received
nearly identical pay to his brother for several years.
do not consider these facts irrelevant. They demonstrate that despite the
appellant’s contention that he had total flexibility to work when and where he
chose, that the company often required him to attend at the office during
business hours, and approved his attendance at industry events and meetings as
a representative of Thermaray. The appellant’s hours of work and rate of pay
show that, although he was allegedly free to choose whatever hours he wanted,
that indeed he worked regular hours and was paid at a consistent rate, largely
in the same way as his brother, who was definitely an employee.
is not a close case where the Wiebe Door test is inconclusive, requiring
the court to give greater weight to the intention of the parties. Although the
trial judge found that the parties may have intended the appellant to be an
independent contractor, she concluded that the actual relationship did not
reflect that understanding and their subjective intention must be disregarded
(see Royal Winnipeg Ballet v. Minister of National Revenue, 2006 DTC
6323 at para. 61 (F.C.A.)).
find that the rest of the errors alleged by the appellant regarding the Wiebe
Door test amount to an invitation to this court to re-weigh the evidence,
which was canvassed extensively by the trial judge in her reasons. This is not
the province of an appellate court (Housen, supra at paras. 23-24).
concluded that the Tax Court Judge did not err in finding that the appellant
was an employee rather than an independent contractor, we also conclude he was
not entitled to deduct the claimed expenses. As an employee, he is not entitled
to deduct expenses pursuant to section 18(1)(a) of the Income Tax Act,
R.S.C. 1985, c. 1, as they were not incurred for the purposes of earning income
from a business. The appellant did not argue that he was entitled to deduct
these expenses pursuant to section 8, which applies to expenses incurred for
the purposes of earning income from an office or employment. Even if he had,
the appellant failed in his evidentiary burden. A taxpayer bears the onus of
demonstrating that an assessment by the Minister was wrong (Johnson v.
Minister of National Revenue,  S.C.R. 486). The trial judge found
that the appellant had not adduced sufficient documentation to justify his
expenses, and this conclusion was eminently reasonable in light of the record.
appeal should be dismissed with costs.