Grant Dorosh v. Her Majesty the Queen (Informal Procedure), [1995] 2 CTC 2568

Rip J.T.C.C.:-By assessment for 1992, notice of which is dated November 9, 1994, Grant Dorosh was assessed $63.53 with respect to Canada Pension Plan ("CPP") contribution on self-employed earnings in 1992 of $4,522.99: section 10 of CPP. The amount of $63.53 is an amount payable as or on account of tax under the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"): section 36 of the Income Tax Act.

Dorosh has appealed the assessment in the informal procedure rules of the Court on the basis that he was not a resident in Canada in 1992 and therefore was exempt from making contributions to CPP and, if he was resident in Canada, a substantial portion of the $4,522.99 was earned by him as an employee.

Residence

Dorosh testified in 1992 he lived in Canada parts of February, March, May and for a time during the period July to September. The total time was less than 180 days. All the other time was spent in the United States. In 1991 he said he was in Canada less than 60 days.

The appellant was married in Alberta in 1981. He is still married to Mrs. Dorosh who in 1992 lived, and continues to live, with their children in Stony Plain, Alberta. When in Canada, Dorosh lives with his wife and children at the family home. The bulk of his clothing is in Stony Plain. Dorosh maintains a bank account with the Alberta Treasury Branch. Through his wife, Dorosh said, he is insured by Alberta health insurance. Dorosh holds an Alberta driver’s licence. In his income tax return for 1992, he stated his residence was Alberta.

Dorosh claims he was resident in the United States in 1992 and remains a resident of the United States at time of trial. He has a "green card". He has a bank account in the United States and works in the United States. He keeps some clothing, a desk, a chair and books in his cousin’s home in the State of Washington. He does not have a room available to him at his cousin’s home nor does he maintain a residence elsewhere in the United States.

A person may have only one domicile but may have one or more residences and may be resident of more than one country: Cooper v. Calwalader (1904), 42 Sc. L.R. 117 (U.K. Scotland Ct. Sessions of Peace), 5 T.C. 101. Residence is a question of fact.

The Shorter Oxford English Dictionary on Historical Principles defines the word "residence":

to have one’s usual dwelling-place or abode; to reside.... The circumstance or fact of having one’s permanent or usual abode in or at a certain place.... The place where a person resides; his dwelling-place....

Black's Law Dictionary (6th ed.) defines "residence" at the

[p]lace where one actually lives or has his home...an abode....

In Levene v. C.LR., 13 T.C. 486, [1928] A.C. 217, a British subject gave up his rented flat in London and moved to the continent where he took a flat, making visits of four or five months’ duration to London. He was held to be "ordinarily resident" in the United Kingdom. At page 492 Lord Han worth M.R., in the Court of Appeal stated:

When you speak of a person residing, do you mean that he has attributed to himself a quality which makes him describable in that way with reference to a place, or do you mean that he really is there? For legal purposes, prima facie one thinks of "residence" as describing the quality of a person so that a person may be a resident in England and Scotland, too, at the same time in point of law, though at the moment of which you are speaking he may be actually living in Paris.

In Canada the leading case on the question of residence is Thomson, P.W. v. M.N.R., [1945] C.T.C. 63, 2 D.T.C. 684, a decision of the Exchequer Court of Canada. Thomson, a former Canadian, left Canada in 1923 and rented a house in Bermuda where he declared he had come to "establish his home and domicile", and where he declared that he intended to stay indefinitely. He obtained a British passport from the British Consulate at Savannah, Georgia. He rented a house in Bermuda for one or two years but never occupied it. In subsequent years he spent only six days in Bermuda in 1926, eight days in 1928 and six days in 1933. After 1933 he never stayed in Bermuda. He built a home at Pinehurst, North Carolina, in 1930, and moved his furniture and belongings there from Canada. During subsequent years he played golf in various places, spending 134 days in Canada in 1932, 138 days in 1933, 156 days in 1935, 158 days in 1936, 169 days in 1937, 145 days in 1938, 166 days in 1939 and 159 days in 1940. Up to 1934 he rented a place in Canada for his summer visits, but in that year he built a $90,000 house near Rothesay, New Brunswick. This house was furnished and he kept servants there the year round. From 1930 to 1940 Thomson paid tax to the United States as a non- resident, but since then he has been forced to pay tax to the U.S. Government as a resident. In 1941 the Canadian income tax authorities asked him to file a return in Canada as a resident. He refused and an arbitrary assessment was levied against him on an assumed income of $50,000. He appealed the assessment and the question before the Court was whether he was resident or ordinarily resident in Canada during the year 1940.

Thorson P. reviewed the leading United Kingdom cases on residence. He found, at page 77 (D.T.C. 689),

...settled that the question of whether a person is ordinarily resident in one country or in another cannot be determined solely by the number of days that he spends in each; he may be ordinarily resident in both if his stay in each is substantial and habitual and in the normal and ordinary course of his routine of life.

The facts with respect to residence in the appeal at bar establish that Dorosh resided in Canada in 1992. I cannot agree with him he resided in the United States only. He may or may not have resided in the United States in 1992. I do not have to decide that question. His stays in Canada were not of a transient nature. He lived here permanently. His wife and children resided in Stony Plain throughout the year. They did not accompany him to the United States. Between jobs in the United States he returned to Stony Plain to be with his family. The family residence was in Stony Plain. He maintained an Alberta driver’s licence. He was insured by Alberta health services. Dorosh’s ties to Alberta were substantial. His residence at Stony Plain was in the course of regular and usual routine of his life. In 1992 Dorosh was a resident in Canada within the meaning of section 10 of CPP.

Employee vs. self-employed

Late in 1991 Dorosh obtained work with Equifax Canada Inc. ("Equifax") to complete inspections of properties on behalf of insurers who were clients of Equifax. As the appellant explained, an insurance company contracts with Equifax to carry out inspections of homes and Equifax engages the appellant to perform the inspections based on Equifax guidelines. Dorosh testified he completed an Equifax employment form and discussed his qualifications and references with Equifax officials before obtaining the work. He began the work in 1991 and completed the inspections in February 1992. He was given no assurance of future work. He acknowledges that he worked for Equifax up to February 1992 as an independent contractor.

In March 1992, Dorosh explained, Equifax obtained a contract to perform inspections for Wellington Insurance and offered him work. He was also given work for Co-operators Insurance. In Dorosh’s view he then became an employee of Equifax. He said he had to attend sales meetings and solicit sales for Equifax without pay. He had to perform 200 inspections in Vancouver as well as attend sales meetings. He completed 62 inspections.

Dorosh was paid for each inspection. All inspectors received the same fees. The pay depended on the insurable value of the risk, whether the risk was a low value or high value risk. For example, in Vancouver a property valued at less than $300,000 was a low value risk. A report for a high value risk property required a two to three page narrative, photographs and a calculation of replacement loss. A low value risk inspection report was simply completed on an Equifax form.

Equifax reviewed the reports submitted by Dorosh and if there were errors or omissions Dorosh would have to make corrections at his own time and expense.

Dorosh was free to make the inspections at his discretion subject to Equifax’s instructions not to make inspections before 9:00 a.m. or after 6:00 p.m. However there was a definite turn around time within which the properties (that is, the inspections) had to be inspected. A dress code was required by Equifax. Dorosh also wore an Equifax name tag and had business cards with an Equifax logo.

Originally Dorosh worked alone, later he was asked to train candidates. He was not paid for training.

The equipment used by Dorosh consisted of a camera, a wheel and measuring tape, all owned by him. Equifax had agreed, he said, to give him a car allowance for the Wellington inspections; the car allowance was $785.47.

Dorosh stated he did not complete the project for Wellington since he did not have sufficient funds to finance the project. The time between Dorosh submitting his accounts to Equifax and getting paid was substantial and he did not have money on which to subsist during that period.

The Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., [1986] 2 C.T.C. 200, 87 D.T.C. 5025, held that whether a person is in business for himself or is an employee must be determined by weighing all relevant factors, as outlined by Cooke J. in Market Investigations Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732, [1969] 2 Q.B. 173, at All E.R. 738-39. There is no one factor that determines whether a person is an employee or independent contractor. A judge must consider all the evidence, resolve what factors are relevant, determine the weight to be given to the relevant factors and come to a conclusion.

There is no doubt Wellington Insurance and Co-operators Insurance were clients of Equifax and not of the appellant. The appellant performed his services for Equifax. However once the appellant commenced working for Equifax it was he who determined what house to inspect and at what time. He worked without supervision. He was paid for each inspection. He sent invoices to Equifax for the services he performed. If Equifax found an inspection wanting, the appellant, at his own expense, had to amend the report. There is no evidence that the appellant was compelled to work for Equifax only, although if Equifax gave him sufficient work, he would not seek other jobs.

On the other hand, the appellant had to follow certain guidelines outlined by Equifax. The time the project was to be completed was also fixed by Equifax. So was the dress code. Attendance at meetings was also requested by Equifax. However I do not find factors such as these significant.

I cannot agree with the appellant that his employment state was as a temporary employee assisting on an as needed basis under a contract of service. He was not casual labour. As I view the facts of this appeal, Equifax was the primarily contractor with the insurance companies, Wellington and Co-operators, and the appellant was subcontracted by Equifax to perform the inspections. At no time was the appellant an employee of Equifax.

The appellant raised other points, some of which require comment. Appellant claimed that since he paid social security tax to the United States, he was protected by the Canada-United States Tax Convention from paying CPP contributions in Canada. Article II of the Convention describes the existing taxes to which the Convention applies. The CPP is not subject to the Convention; a CPP contribution is not a tax. United States Social Security taxes are subject to the Convention to a limited extent.

The appellant also argued that the calculations by the Minister of National Revenue ("Minister”) in determining his net business income is flawed. The Minister deducted the amount of $670.85 which he cannot identify. The Minister appears to have deducted from fees for services rendered in 1992 the amount of $1,328.49, an amount actually earned by the appellant in 1991; in fact $1,286.55 and not $1,328.49 should have been deducted from fees for 1992. However the errors, if they are errors, are to the appellant’s advantage. I cannot increase an assessment. The appellant has not proven the Minister’s calculation of his net business income ought to be lower.

The appeal is dismissed.

Appeal dismissed.