Progressive Packaging Ltd. v. Minister of Finance (Ontario), [1998] OJ No. 4798 (Ct. J. (GD)), briefly aff'd [1999] OJ No. 3613 (CA)

The appellant, which was an Ontario resident corporation with an Ontario head office and an Ontario permanent establishment and no permanent establishment in the United States paid the remuneration of U.S. employees who provided services to it exclusively in the United States. LaForme J. found that the position of employee health tax on the remuneration paid to the U.S. employees qualified as a tax imposed within the province given that the tax was assessed against an employer "found" in the province as measured by the total amount of remuneration paid to its employees (i.e., the economic activity of an employment contract), and that it was irrelevant that the work was not carried out within the province because that was not the subject matter of the tax. The subject matter was the contract of employment and the obligations that flowed from it, including the payment of remuneration.

The appellant, which was an Ontario resident corporation with an Ontario head office, an Ontario permanent establishment and no permanent establishment in the United States, paid the remuneration of U.S. employees who provided services to it exclusively in the United States. LaForme J. found that the definition of total Ontario remuneration was unambiguous and included remuneration paid to all employees of an employer who are not required to report for work at a permanent establishment of the employer but whose remuneration is paid from a permanent establishment of the employer in Ontario, with the result that the amounts paid to the U.S. employees were subject to the health tax.