Docket: 2010-2733(EI)
BETWEEN:
FERIN N. YUSUF,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on February 18, 2011 at Vancouver, British Columbia
By: The Honourable Justice Judith Woods
Appearances:
|
For the Appellant:
|
The Appellant herself
|
|
Counsel for the Respondent:
|
Patrick Grayer (student-at-law)
Aman Sandhu
|
____________________________________________________________________
JUDGMENT
The appeal of the decision of the Minister of National Revenue made under the Employment
Insurance Act that the appellant was not engaged in insurable employment with Seven
Eight Six Trucking Ltd. during the period from October 1, 2009 to March 12,
2010 is dismissed, and the decision is confirmed. Each party shall bear
their own costs.
Signed at Toronto, Ontario this 2nd day of March 2011.
“J. M. Woods”
Citation: 2011 TCC 133
Date: 20110302
Docket: 2010-2733(EI)
BETWEEN:
FERIN N. YUSUF,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1]
In this appeal under the Employment
Insurance Act, Ferin Yusuf appeals a decision of the Minister of National
Revenue that she was not engaged in insurable employment with Seven Eight Six
Trucking Ltd. (the “Payor”) during the period from October 1, 2009 to March 12,
2010.
[2]
The Payor operates a delivery
trucking service near Vancouver, British Columbia. The corporation is wholly-owned by
Mohammed Yusuf Venkataya, who is the appellant’s husband.
[3]
During the relevant period, the
appellant was in charge of office matters for the Payor, which operated out of
the family home.
[4]
Since the appellant and the Payor
are related, the employment is not insurable unless the Minister is satisfied
that the appellant would have entered into a substantially similar contract of
employment if she and the Payor were dealing at arm’s length.
[5]
The Minister was not satisfied
that the contract of employment reflected arm’s length terms and concluded that
the employment was not insurable.
[6]
The applicable legislative
provisions are subsections 5(2) and (3) of the Employment Insurance Act
and section 251 of the Income Tax Act. The relevant parts of these
provisions are reproduced below:
Employment
Insurance Act
5(2)
Insurable employment does not include
[…]
(i) employment if the employer and employee are not dealing
with each other at arm's length.
5(3) For the purposes
of paragraph (2)(i),
(a) the question of whether persons are not dealing with
each other at arm's length shall be determined
in accordance with the Income Tax Act; and
(b) if the employer is, within the meaning of that Act,
related to the employee, they are deemed to deal with each other at arm's length if the Minister of National Revenue is satisfied
that, having regard to all the circumstances of the
employment, including the remuneration paid, the terms and conditions, the
duration and the nature and importance of the work performed, it is
reasonable to conclude that they would have entered into a substantially
similar contract of employment if they had been dealing with each other at arm's length.
[Emphasis added.]
Income Tax Act
251(1) Arm's length --
For the purposes of this Act,
(a)
related persons shall be deemed not to deal with each other at arm's length;
[…]
(c)
where paragraph (b) does not apply, it is a question of fact whether
persons not related to each other are at a particular time dealing with each
other at arm's length.
[7]
Based on the evidence presented at
the hearing, I have concluded that the Minister’s conclusion is reasonable and
that it should be confirmed.
Discussion
[8]
The appellant provided testimony
on her own behalf. The respondent called Mr. Venkataya and the appeals officer,
Peter Luo.
[9]
The appellant testified that she
worked on a full-time basis for both the Payor and Scotia Advantage. At Scotia
Advantage, she worked weekdays from 11 am to 7 pm. For the Payor, she testified
that she worked each weekday from 5:30 to 10 in the morning and from 10 to 1:30
in the evening. Her rate of pay fluctuated from $13 to $15 per hour.
[10]
According to the reply, the Minister
did not assume that the appellant’s work hours were as she had stated. He
assumed only the work hours were “alleged” by the appellant.
[11]
Even if the appellant had worked
full-time hours for the Payor, counsel for the respondent submits that this is
not consistent with arm’s length terms of employment. It is submitted that an
arm’s length employee would not agree to such unusual hours of work at the low
hourly wage that was given.
[12]
I agree with the respondent’s
submission. It seems unlikely that an arm’s length employee would agree to work
at the stated hourly wage for five days a week at the two daily shifts that
were alleged, starting early in the morning and finishing early the next
morning.
[13]
In any event, I am satisfied that the
decision of the Minister is reasonable because the appellant and her husband
did not provide clear and cogent evidence regarding the details of the
employment relationship during the period at issue. Such details include the
number of hours worked, the amount paid for the services, and how the pay was
determined.
[14]
The appellant submits that she should
not be denied employment insurance benefits based on minor discrepancies in her
pay and in her hours of work. I reject this submission because the evidence was
not sufficiently detailed or cogent for me to determine whether the
discrepancies were minor or not.
[15]
The Minister’s decision that the
terms of employment were not substantially similar to arm’s length terms was
entirely appropriate in these circumstances.
[16]
Before concluding, I would comment
that the appellant expressed concern about the communication of the decision
provided to her by the Canada Revenue Agency. I have set out below the
explanation provided by the appeals division in a letter dated August 17,
2010.
After
conducting a complete and impartial review of all of the information relating
to the appeal, it has been determined that this employment was excluded from
insurable employment. After considering all of the circumstance [sic] of the
employment, the Minister is not satisfied that a substantially similar contract
of employment would have been entered into if you had been dealing with each
other at arm’s length. You were not dealing at arm’s length with Seven Eight
Six Trucking Ltd. Therefore, your employment was excluded from insurable
employment.
[17]
The above explanation could have
been more clearly worded, and it is unfortunate that it was not. However, this
does not affect the outcome of the appeal. In this regard, I am satisfied that
the reply filed by the Minister is sufficiently clear as to the grounds for the
Minister’s decision.
[18]
The appeal will be dismissed and
the decision of the Minister will be confirmed.
Signed at Toronto, Ontario this 2nd
day of March 2011.
“J. M. Woods”
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