Citation: 2006TCC657
Date: 200612___
Docket: 2005-875(CPP)
2005-410(EI)
BETWEEN:
BRENDA McCARTY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
FAMILY GUIDANCE GROUP INC.,
Intervenor.
REASONS FOR JUDGMENT
Beaubier, J.
[1] These appeals were
heard together on common evidence at Saskatoon, Saskatchewan, on November 20, 2006. The
Appellant testified. Counsel for the Intervenor called Randall Varga who was
Family Guidance Group Inc.’s (“FGI”) Supervisor of the Appellant during the
Period.
[2] The “Period” respecting
the appeals is from June 1, 2002 to August 21, 2003 in which the Appellant
alleges that she was an employee of FGI and insurable under the Employment
Insurance Act and pensionable under the Canada Pension Plan. It is
not calendar 2003 as described in the Replies.
[3] The particulars in
dispute are set out in paragraphs 2 to 6 of the Reply to the Notice of Appeal
(File No. 2005-410(EI)). They read:
2. By Notice of
Assessment dated April 20, 2004 the Payor was assessed for, among other things,
employment insurance premiums in the amount of $994.01 in respect of Appellant,
for the 2003 year.
3. By letter
received May 21, 2004, the Payor appealed to the Minister for a reconsideration
of the 2003 year assessment.
4. In response to
the Payor’s appeal, the Minister decided to cancel the assessment with respect
to the Appellant as the Appellant was not employed under a contract of service
with the Payor.
5. In so deciding
as the Minister did with respect to the Appellant, the Minister relied on the
following assumptions of fact:
(a) the Payor
operated a business which provided counselling services to corporate customers
who offer employee assistance programs (“EAP”);
(b) the Payor
operated out of Thornhill Ontario;
(c) the Appellant
was engaged as a counsellor and her duties included providing EAP counselling,
case management, record keeping and reporting;
(d) the Appellant
was engaged to service the Payor’s Saskatchewan region clients;
(e) the Appellant
and the Payor entered into a written contract which included the following:
(i) the
Appellant is an independent contractor,
(ii) the Appellant
will provide short-term counselling and case management,
(iii) the Payor
acknowledges the Appellant’s professional skills and clinical expertise,
(iv) the Appellant
is contracted to close 210 credits per year,
(v) the Appellant’s
fee is $2625 per month, on a retainer basis,
(vi) the Appellant
shall accept full liability for the payment of income tax, EI, CPP, automobile
and business expenses, office expenses, professional training, health coverage
and professional insurance,
(vii) the Appellant
agrees to maintain liability insurance,
(viii) the Appellant
agrees to maintain professional certification, and
(ix) the Appellant
must submit invoices on a monthly basis;
(f) the Appellant
performed her services at her private office and in her home office, which were
both in Saskatoon;
(g) the Payor paid
the Appellant $2,808.75 per month based on a monthly fee of $2,625.00 plus GST
of $183.75;
(h) the Appellant
was required to submit invoices in order to get paid;
(i) the Payor did
not withhold CPP contributions or EI premiums from the Appellant’s fee;
(j) the
Appellant’s retainer would have been adjusted if targets were not met;
(k) the Appellant
did not receive health benefits, insurance benefits, vacation pay or sick leave
from the Payor;
(l) the Appellant
determined her own hours and days of work;
(m) the Appellant
contacted the clients directly and set up appointment times;
(n) the Payor did
not control the Appellant;
(o) the Payor hired
the Appellant for her professional skills, expertise and experience;
(p) the Appellant
was not supervised on a day-to-day basis;
(q) the Appellant
used her own discretion and judgement in determining how to perform her
services;
(r) the Payor was
only interested in the Appellant’s final results;
(s) the Appellant
had the power to accept or refuse clients;
(t) the Appellant
had the freedom to, and did, work for others while performing services for the
Payor;
(u) the Appellant
was required to provide her services personally as her expertise was required
for the job;
(v) the Payor did
not provide a work location for the Appellant;
(w) the Appellant
provided her own offices;
(x) the Payor
provided the Appellant with forms, surveys and a counsellor handbook;
(y) the Appellant
provided her own training, books and vehicle;
(z) the Appellant
incurred expenses in the performance of her duties which included business
licenses, membership fees and dues, telephone, utilities, insurance, postage,
parking, travel costs, office supplies and office rent;
(aa) the Appellant
provided her own liability insurance;
(bb) the Appellant
had a chance of profit and a risk of loss;
(cc) the Payor did not
provide the Appellant with job security or a guarantee of ongoing work;
(dd) the Appellant
had her own business name, business license and GST account;
(ee) the Appellant
advertised for other clients;
(ff) the Appellant
charged the Payor GST;
(gg) the Appellant
has declared professional income and expenses on her 2000, 2001 and 2002 year
tax returns;
(hh) the Appellant
was in business for herself, and
(ii) the total
amount paid by the Payor to the Appellant, in the 2003 year, was $20,924.99.
B. ISSUES TO BE
DECIDED
6. The issue to be
decided is whether the Appellant was employed under a contract of service with
the Payor during the period January 1, 2003 to December 31, 2003.
[4] All of the
assumptions in paragraph 5 are correct. The Appellant stated respecting
assumptions:
(a) Admitted.
(b) Admitted.
(c) Admitted.
(d) Admitted
as to the area in and around Saskatoon.
(e) Admitted
in testimony, but respecting (iv) and (v) the Appellant was paid on the basis
of a scale of “credits” per case closed which were calculated at year end
against the total retainer paid to the Appellant, the total of which was then
adjusted to credit or debit the Appellant.
(f) The
Appellant only met clients at her private business office in downtown Saskatoon or at another premises that they agreed on.
(g) The
Appellant recalled these numbers – but does not recall billing GST. The Court
finds her failure to recall GST to be incredible in view of the GST charging –
remittance – and credit requirements for small businesses. This finding of a
lack of credibility on such an obvious and important fact is confirmed by the
Appellant’s failure in her evidence in chief to refer to either of two written
contracts (Exhibit I-1, Tab 2 and Tab 3) she had with FGI detailing assumption
(e).
(h) Admitted.
(i) Admitted.
(j) This
happened and affected her gross income and, after her deduction of office and
other expenses for her business (trade name “Health Plus Counselling” (“HPC”)),
affected her business profit and loss position.
(k) Admitted.
(l) Admitted.
(m) Admitted.
FGI contracted with national corporations such as CNR or 7-Eleven to provide
employees and their families with counselling of a non-medical nature
respecting matters such as trauma from a hold-up or a family death or
alcoholism. In a small centre such as Saskatoon it retained
professional counsellors such as Ms. McCarty, M.A. Psychology (Counselling) and
B.A. Social Work with approximately three years experience and a licensed
Chartered Psychologist in Alberta since 2001. The work contracted for is
called an Employee Assistance Program (“EAP”). FGI gets the employee’s
(“client’s”) name, telephone number, client number, and the nature of the
problem and refers that, in the Saskatoon area, to the retained counsellor (the
Appellant) who is to contact the client and arrange personal counselling. FGI
provided the Appellant with a schedule of over 30 common situations with
suggested solutions and a scheduled suggested number of counselling meetings
with the client.
(n) FGI
did not control the Appellant. Rather, the Appellant contracted with FGI like a
franchisee. She operated her office under her trade name HPC in downtown
Saskatoon as she had done for 2 previous years; she had her own clients
(billing about $800 per year) and advertised for more; she had to fill out
reporting forms of FGI to report particularly on client cases closed, but she
was contracted as an experienced professional person to deal with the clients
FGI referred to her on a professional basis. She was paid by FGI on a credit
basis which limited the number of credits per client and, in that way,
suggested the time to be spent with each client. If the Appellant spent more
time than that then she was losing for unpaid time. At first, the possible case
load was estimated by FGI to warrant about 3 days per week; later it was
reduced to 2.5 days per week. The Appellant testified that it took all of her
time, but this would happen if she failed to manage her time efficiently and beyond
FGI’s scheduled parameters. She quit her 30 day notice contract with FGI due to
a pregnancy.
(o) Admitted.
(p) The
Appellant had no EAP experience when she first contracted with FGI. She never
met Mr. Varga, her FGI supervisor, in the time she was contracted to FGI. They
dealt by telephone. Mr. Varga’s testimony is believed respecting these
contacts. At the beginning, they spoke weekly and later, monthly. There were
also scheduled telephone conferences by Mr. Varga with groups of retained
counsellors in which sample cases were reviewed.
(q) If
the Appellant felt that a specific client warranted extra counselling, she
could review that with Mr. Varga, who might authorize it or not for FGI
credits.
(r) Correct,
but not admitted.
(s) Correct
and admitted in testimony.
(t) The
Appellant could work for FGI competitors in the EAP field with FGI’s permission
and received it, but did not get any such work. She was free to do any other
counselling work in her own discretion.
(u) Admitted.
(v) and (w) The Appellant had operated her business, HPC, out
of a downtown office in Saskatoon for two years before her first contract
with FGI. She continued to operate that business and office during the entire
Period.
(x) Admitted.
(y) Is
correct, but FGI also sent her its manual, schedule and forms.
(z) Is
correct and in 2000, 2001 and 2002, the Appellant reported her income tax on a
business basis. She was reassessed for 2002 by Canada Revenue Agency after
claiming she was employed. There is no evidence about her 2003 income tax
position.
(aa) Admitted.
(bb) and (cc) Are correct, based on the foregoing
findings of fact. The Appellant had her business expenses, her own consulting
practice and her references from FGI contracted for at $165 per credit.
Depending on her professional work and income each year, she incurred a profit
or a loss.
(dd) Admitted,
subject to her claim not to remember billing for GST. She admitted to having a
GST account number. She did not renew her business licence in 2003.
(ee) Is
correct, but the Appellant did not renew her Yellow Pages advertisement at a
date that she could not remember.
(ff) Is
correct.
(gg) is
correct.
(hh) Is
correct and was admitted by the Appellant.
(ii) Was
not refuted by the Appellant.
[5] As a result of
these findings of fact, the Court finds that upon the signing of both contracts
with FGI, the Appellant had been in business for two years or more and the
parties both intended that the Appellant should remain in business for herself.
In particular, using the criteria set out in Wiebe Door Services Ltd. v.
Minister of National Revenue [1986] 3 F.C. 553:
1. Control: The
Appellant had complete control over the operation of her business and the
delivering of its services.
2. Tools: The
Appellant owned her business equipment and the lease of her office premises
(which she shared with a third party).
3. Choice of Profit or
Loss: The Appellant could take FGI’s referred clients or not and service
them as much as she liked, but FGI’s credits and payments to the Appellant were
limited and based on closed files. She could also accept business from other
clients and did so. She was in business and could make a profit or a loss from
her professional services like any other self-employed professional person.
4. Integration: The
Appellant’s business was not integrated into FGI’s. FGI could and did refer
business in the Saskatoon area to other consultants whom it paid on an hourly basis.
[6] The contracts
signed between the Appellant and FGI established that at the time they were
signed, and throughout the Period, the Appellant and FGI both intended that the
Appellant was to be in business for herself and they both conducted themselves that
way throughout the Period.
[7] The Court finds
that the Appellant was in business for herself during the Period.
[8] The appeals are
dismissed.
This Amended Judgment and
Amended Reasons for Judgment are issued in substitution for the Judgment and
Reasons for Judgment dated December 5, 2006.
Signed
at Yorkton, Saskatchewan, this 18th day of December, 2006.
"D.W. Beaubier"
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