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Citation: 2004TCC345
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Date: 20040518
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Dockets: 2003-1647(EI)
2003-1648(CPP)
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BETWEEN:
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SHAHEENA AKHTER,
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Appellant,
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And
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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____________________________________________________________________
REASONS FOR JUDGMENT
Sheridan, J.
[1] This is an appeal from a
determination by the Minister of National Revenue that the
Appellant, Shaheena Akhter, was not engaged in insurable[1] or pensionable[2] employment for the
period May 2, 2001 to April 5, 2002. Ms. Akhter's position is
that she was an employee hired under a contract of service and,
accordingly, her employment ought to be insurable and pensionable
as defined by the relevant legislation. To succeed in her appeal,
Ms. Akhter has the burden of proving that the assumptions upon
which the Minister relied were incorrect.
[2] During the period in question, Ms.
Akhter was working as a childcare provider out of her own home in
Toronto. In preparation for her career, Ms. Akhter completed
the COSTI "Home Childcare Provider Program" in May 1998. Included
among the courses she studied was "Starting a Home Based
Business" where she learned, generally, how to set up a daycare
business. On March 16, 2001, she signed a one-year renewable
contract with a government licensed agency, Muppets Private Home
Daycare Agency, pursuant to which she would provide childcare in
her home for children referred to her by the Agency. The contract
described her as "a self-employed individual providing home
daycare" and required her to comply with Ontario's Day
Nurseries Act.
[3] This case came about when, after
the birth of her fourth child in April 2002, Ms. Akhter sought
parental leave benefits. By that time, she had been working with
the Agency for just under a year. After initially being approved,
it was later determined by the Minister that she was not entitled
to the benefits. Ms. Akhter appealed. The only issue to be
decided is whether she was an employee of the Agency working
under a contract of service, or an independent contractor working
under a contract for services. This is a question of fact.
[4] Before starting her work, Ms.
Akhter was obliged to take, without pay, the Agency's one-week
orientation program and to obtain, at her own expense, medical
and police clearance certificates. After the Agency had inspected
her home to ensure it met the standards of the provincial
legislation, children began to be placed in Ms. Akhter's care.
She worked out of her own home and received no reimbursement from
the Agency for its use or for the heating, telephone service,
smoke detectors or other safety devices required by the contract.
She also provided, at her own expense, the children's food,
beverages, tissues, crayons and other necessities. Through the
Agency's lending service, Ms. Akhter could borrow, at no cost,
certain larger items such as playpens or strollers.
[5] Under the contract, Ms. Akhter had
the right to choose which days, if any, she would be available to
receive children. If she was unable or unwilling to accept
children on a certain day, she received no payment. If Ms. Akhter
took holidays, she received no payment during that time. When she
was available, she had to be ready to receive children Monday to
Friday from 7:00 a.m. to 6:00 p.m. If a child failed to show
up as scheduled, the parents were still obliged to pay that day's
fees unless they had properly notified the Agency in advance of
the child's absence. If a child was removed from her care, for
example, during family holidays, even though she was still
available, Ms. Akhter would not be paid. The only exception to
this occurred when the parents elected to continue to pay
childcare fees in order to hold the child's place in her home. It
was this payment that Ms. Akhter referred to as "holiday
pay" in her testimony. Such payments, however, are not holiday
pay in the legal sense of the term.
[6] While the children were in her
care, Ms. Akhter worked without Agency supervision although, from
time to time, an Agency representative would make an unannounced
visit, a sort of "spot check", at the home. But as long as the
Agency was satisfied that Ms. Akhter was meeting the Day
Nurseries Act requirements, she essentially ran her own show.
She kept a monthly attendance record for each child showing the
days in her care. After obtaining the parents' approval of the
attendance record, Ms. Akhter would submit it to the Agency at
the end of each month. From the fees she then received, the
Agency made no deductions for income tax, employment insurance or
Canada Pension Plan. In February of each year, the Agency issued
to Ms. Akhter a "Statement of Gross Income". The contract
referred Ms. Akhter to a Revenue Canada (now Canada Revenue
Agency) publication entitled "Using Your Home for Day Care". Ms.
Akhter called as a witness her husband, Mr. Alam, who prepared
his wife's income tax return for 2001. His evidence was that he
had submitted along with Ms. Akhter's return a T4A in relation to
her work with the Agency. He further testified that Ms. Akhter
claimed as a business expense her costs in running her home
daycare; she testified that this amount included expenses
incurred for both Agency and privately placed children.
[7] The Minister relied on the test in
Sagaz Industries Canada Inc. v. 671122 Ontario Limited[3] as applied
in Precision Gutters Ltd. v. Canada[4].
In that case, the Federal Court of Appeal held that "...the
central question to be decided in cases such as these is whether
the person who has been engaged to perform the services is
performing them as a person in business on his own account or is
performing them in the capacity of an employee. In order to make
this determination, the four criteria set out in Wiebe Door
Services Ltd. v. M.N.R.[5] are factors to be considered." These four
factors are: (1) control; (2) ownership of the tools; (3)
chance of profit; (4) risk of loss.
[8] In presenting argument on behalf
of his wife, Mr. Alam referred to these criteria. He contended
that the evidence showed the Agency controlled Ms. Akhter's
work: setting the hours of work, doing spot checks on the home,
specifying the kinds of activities for the children, limiting the
number of children and determining the rate of pay. He urged the
Court to find that Ms. Akhter was an employee. With respect,
I do not think the evidence leads to this conclusion. The control
that the Agency exerted over Ms. Akhter had to do with ensuring,
as it was required to do, that Ms. Akhter, as one of its
contractual childcare providers, was complying with the Day
Nurseries Act and municipal childcare bylaws. Apart from
these obligations, however, Ms. Akhter was not under the control
of the Agency as an employee would be. She was free to work or
not work and performed her day-to-day tasks with the children as
she saw fit. The Agency made no guarantee of wages or the
provision of children on any given day. Ms. Akhter received no
sick pay or vacation pay.
[9] As for the other criteria, the
primary "tool"[6]
and quite a major one, was her home which she provided at her own
expense. In addition, she provided everything necessary for the
proper care of the children, except for some larger equipment
which she borrowed, at own her risk, from the Agency. Regarding
"chance of profit" and "risk of loss", under
the contract with the Agency, Ms. Akhter was at liberty to seek
her own private daycare clients while also accepting Agency
children. Such freedom is typical of an independent contractor
working under contract for services.
[10] A final consideration is the intention
of the parties[7].Ms. Akhter is described in the contract as
"self-employed". While this in itself would not be sufficient to
establish her status as an independent contractor, when
considered with all of the other evidence, it becomes
significant. Mr. Amarshi, the Agency representative, testified
that when the contract was signed, he and Ms. Akhter discussed
the home-based daycare business provisions. Ms. Akhter
admitted that she knew from taking the COSTI course that
different rules applied for daycare providers running their own
business. Ms. Akhter testified that she was aware that no income
tax, EI or CPP deductions were being made by the Agency. In spite
of this, she did not ask why this was not being done, nor did she
object to it. Her husband, at her direction and knowing the
details of her work out of their home, filed a T4A for Ms. Akhter
and claimed the expenses incurred in her daycare work. Clearly,
Ms. Akhter cannot have it both ways: it is not possible to have
the benefit of deducting business expenses from self-employed
income while at the same time claiming the parental leave
benefits of an employee.
[11] Ms. Akhter has not been successful in
disproving the assumptions upon which the Minister's
determination was based. It is clear from the evidence presented
that Ms. Akhter was in a contract for services with the Agency;
accordingly, her employment is not insurable or pensionable.
Accordingly, the appeal must be dismissed.
Signed at Ottawa, Canada, this 18th day of May 2004.
Sheridan, J.
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