Shankar a Yelaja v. Minister of National Revenue, [1978] CTC 2535

The Chairman:—This is the appeal of Shankar A Yelaja from income tax assessments by which the Minister of National Revenue disallowed an amount of $2,672.82 in 1973 and an amount of $2,658.47 in 1974, claimed by the appellant as expenses of carrying on a business on the grounds that the said amounts were income from employment.

The Evidence:

The appellant, the holder of a Master’s Degree and a Doctorate in Social Work was, in the pertinent years, a full time member of the faculty at Wilfrid Laurier University in the field of social work.

His work at the university consisted of teaching, doing research in social work, advising students, training of undergraduates and advising social agencies under contract with the university.

From 1970 to 1975 the appellant was personally under contract with the Ontario Ministry of Correctional Services for services to be rendered at the Grand View Training School in Cambridge, a correctional school for girls under eighteen years of age. The girls at the school were committed there by the Juvenile Court under the Ontario Delinquent’s Act because of psychological or social problems.

The school’s program comprised normal high school academic studies but included considerable therapeutics in vocational, psychological and recreational training. The school’s staff, other than the high school teachers, consisted of psychologists, psychiatrists, psychiatric nurses, recreational workers and social workers, some of whom were full time, while others worked part time, all under the Executive Director, Dr Douglas Penfold, a psychiatrist.

The appellant was hired as a consultant in the field of social services as part of the school’s rehabilitation team and, as such, worked with the behavioural problems of the girls,, interpreted the problems to professionals in other fields and experimented with family therapy as a possible means of rehabilitating the delinquent girls.

Attached to the notice of appeal, and submitted as Exhibit A-2, is a letter dated November 14, 1973, addressed to the Assessment Section of the Department of National Revenue signed by Mr T J Loker, Superintendent of the Ministry of Correctional Services, which confirms generally the evidence given by the appellant at the hearing.

Exhibit A-1 is a letter addressed to the appellant by Douglas Penfold, the Superintendent of the Grand View School, setting the conditions under which the appellant would provide social work services at the school.

By letter of April 17, 1970, the appellant asked the Ontario Ministry of Correctional Services for automobile travelling expenses for travelling from Waterloo to Galt, but his request was refused, (Exhibit R-1).

Exhibits R-2 to R-10 are a series of documents entitled “Appointment of Unclassified Service’’ signed by Mr T J Loker, the Branch Head of the Department of Correctional Services and the appellant. These documents were admitted by the appellant as having been the understanding and the conditions under which he was to render social work services at the Grand View School throughout the period from 1970 to 1975 including, of course, the pertinent taxation years.

All the documents contain some mention that the appellant was appointed as an employee to the Unclassified Service in accordance with section 7 of the Public Service Act; that the appellant fell either in Group 1 or Group 2 of employees; that the “unclassified staff are Subject to conditions of employment on the same terms as classified staff in similar positions” in most documents the appellant signed as accepting the terms of employment; the evidence is that the salaries were fixed by the Department of Correctional Services and the appellant was issued a T-4 slip and the ordinary salary deductions, excepting OHIP payments, were recorded.

The letter dated June 6, 1977, written by the appellant to the Director of Personnel of the Correctional Services and his reply thereto, in my view, are conclusive, (Exhibits R-4 and R-12, copies of which are attached herewith).

Although, as pointed out by the appellant, the Income Tax Act does not contain a definition of “employee”, the difference between an employee and an independent contractor is determined principally by the nature of the contract entered into which is either a contract of service or a contract for services. Only when the nature of the contract is unclear is it necessary in order to determine whether or not a taxpayer is an employee, to apply the control, integration and other tests which have been evolved by the courts for that purpose.

In the instant appeal the nature of the contracts and the preponderance of the evidence adduced, both written and oral, lead me to the inevitable conclusion that the appellant was, in 1973 and 1974, an employee of the Ministry of Correctional Services and as such was, in the circumstances of the appeal, precluded by subsection 8(2) of the Income Tax Act, SC 1970-71-72, c 63, as amended, from deducting the travelling allowances claimed.

For these reasons the appeal must be dismissed.

Appeal dismissed.