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Citation: 2003TCC226
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Date: 20030408
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Docket: 2001-3809(IT)I
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BETWEEN:
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TIMOTHY ALAN JONES,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Rip, J.
[1] Timothy Alan Jones appeals an
income tax assessment for 1999 in which the Minister of National
Revenue ("Minister") considered income he claimed as
business income to be employment income. As a result, the
Minister effectively disallowed business expenses claimed by Mr.
Jones in computing his income for the year.
[2] At all relevant times Mr. Jones
was employed by Cambrian College ("College") in
Sudbury, Ontario as a geology instructor. Mr. Jones does not
dispute that, with respect to teaching, he earned employment
income from the College. In earlier years Mr. Jones had
contracted for work with businesses and the governments of Canada
and Ontario. In all these contracts, Mr. Jones was engaged as a
professional geologist. These contracts were unrelated to
activities carried on by the College.
[3] The College has encouraged
international students[1] to attend the College for post-secondary and special
programs. This work is undertaken by the International Programs
Division of the College, known as Cambrian International.
[4] The International Program
Division, according to Mr. Ibrahim Alladin, its director, has a
good reputation in mining. In early 1999 the College had a
contract with a mining company in Saudi Arabia to provide
specialized training in mining and geology to four Saudi
individuals attending the College for approximately six months.
Each of the four students was to be assigned a mentor in the area
of training required by the Saudi corporation for the particular
student. In January 1999 the International Program Division was
looking for someone to arrange a program for, and mentor, an
employee of a Saudi Arabian mining company. The College had made
arrangements to place one student, Khalid al-Sharrif, who had a
geology background, to work in a gold mine in Timmins and the
Inco mine in Sudbury. Apparently the Saudi corporation wished to
train Mr. al-Sharrif so that he would return to Saudi Arabia and
teach mining skills to citizens of that country. The College
wanted the mentor to have a geological background so that he
could arrange fieldwork experience for the student, supervise him
during the training period and generally act as his contact at
the College.
[5] Mr. Alladin approached Mr. Jones,
asking if he would agree to act as Mr. al-Sharrif's
mentor. Mr. Jones' supervisor agreed to permit him to work
"outside" his normal teaching duties.
[6] According to Mr. Jones, he and the
College entered into a verbal contract for the College to pay him
$1,600 to supervise Mr. al-Sharrif for the period
January 15, 1999 to February 28, 1999. He was to be paid the
$1,600 for his services upon completion of the contract. Mr.
Alladin, represented the College in negotiating the terms of the
contract. Usually, Mr. Alladin said, the Department of Human
Resources is responsible for hiring full-time and part-time
teaching staff. The Department of Human Resources did not
participate in the hiring of Mr. Jones to mentor Mr. al-Sharrif
because "there was not enough time". It was an
"oversight", according to Mr. Alladin, that no written
contract was prepared for Mr. Jones.
[7] Mr. Jones testified that he had
discussions with Mr. Alladin to establish the particulars of his
responsibilities. These discussions included scheduling.
Mr. Jones said he made the final decision as to the contents
of the student's program. He insisted that he organized the
work and completed the contract on his own time, using his own
resources. He had weekly meetings with Mr. Alladin during
the term of the contract to discuss Mr. al-Sharrif's
assignments. There was a problem with Mr. Al Shariff who,
according to Mr. Jones, did not want any training and often
failed to attend meetings with him. Mr. Alladin stated that
Mr. al-Sharrif did attend classes and had arrangements with
other professors. Mr. Alladin received regular reports concerning
the student's attendance at class and progress.
[8] The principal resources used by
Mr. Jones, he declared, were his skills as an experienced
geologist and manager. Teaching was not a factor.
[9] Mr. Alladin testified that had Mr.
Jones become ill for an extended time during the contract, a
replacement would have been found.
[10] Mr. Jones billed the College for $1,600
on completion of the contract. However, according to Mr. Jones,
the College's Accounting Department arbitrarily adjusted the
pay to a fixed rate per hour worked and instead of paying him
$1,600, paid him $1,000. The College also issued him a second
statement of remuneration paid (T4) for $1,000, less statutory
source deductions. Mr. Jones did not agree with this approach but
he did not pursue the matter. Mr. Alladin had provided Mr. Jones
with some computer equipment he had difficulty getting from his
supervisor.
[11] The Minister determined that Mr. Jones
was an employee of the College with respect to the work he
performed for the College's International Program for the
following reasons, as outlined in the Reply to the Notice of
Appeal:
I) the Appellant was
required to perform the services personally;
II) he could not hire
others to complete the work;
III) he had to take direction about
the work to accomplish it and the method used to complete it;
IV) the Employer established the
clientele, deadline and priorities and rate of pay;
V) the Employer provided any
tools or equipment necessary to complete the work; and
VI) the terms of the employment did
not allow the Appellant to profit or expose him to the risk of
loss.
[12] In computing his income tax for 1999,
Mr. Jones reported employment income of $67,545 from the College
and professional income of $1,600, the amount in issue, although
he received only $1,000 from the College. He claimed expenses of
$2,123, including the amount of $600 written off as a bad debt,
that were incurred in producing professional income. The Minister
originally allowed the expenses so that Mr. Jones was permitted
to deduct the difference of $523. On reassessing, the Minister
"included previously unreported employment income of
$1,000". The respondent plead that the Minister allowed the
loss of $523 in error.
[13] During cross examination of Mr. Jones,
respondent's counsel posed questions concerning Mr.
Jones' claimed expenses. The respondent did not dispute the
legitimacy or the reasonableness of the expenses in her Reply to
the Notice of Appeal. It is too late to raise this issue at
trial.
[14] Respondent's counsel referred me to
the reasons for judgment of the Supreme Court of Canada in
671122 Ontario Ltd. v. Sagaz Industries Canada Inc.[2] Major J.
agreed with MacGuigan J.A. in Wiebe Door Services Ltd.
v. M.N.R.,[3]
that in considering the various tests to determine if an
employer-employee relationship exists, one must always
search for the total relationship of the parties. What control
the employer has over the employee is an important factor. But
there are other factors, a non-exhaustive list of factors, as
well: who provides the equipment, does the worker have others to
help, the financial interest of the worker, the worker's
opportunity for profit? Finally, is the worker performing the
services as a person in business on his own account?
[15] The evidence suggests that the
arrangement Mr. Jones had with the College to mentor was
occasioned by his employment with the College but was independent
of his employment. It is obvious that Mr. Jones' contract of
employment with the College to teach did not contemplate anything
related to Mr. Jones' services undertaken for Mr.
al-Sharrif.
[16] Mr. Jones testified that due to a
"nasty divorce" between him and his former wife he
deliberately curtailed his business activities in 1996. He said
he feared that if he earned extra income, a good portion of that
income would go to his wife for child support. Thus, he said, he
was not prepared to earn more than $3,000 to $4,000 per year from
his outside business activities. The divorce became final in
1999. The contract with the College for $1,600 was a continuation
of his business that had been carried on before 1996, he argued.
I do not accept Mr. Jones' evidence that the contract to
mentor Mr. al-Sharrif was a continuation of his previous
business. I find that it was separate from his employment with
the College and not part of any other previous business.
[17] The argument by the respondent that Mr.
Alladin engaged Mr. Jones to perform the services personally and
Mr. Jones could not hire others to complete the work is not
fatal to Mr. Jones' position. An individual may engage the
services of a medical doctor, for example, and insist that only
that physician perform the medical services. Nobody would
consider the doctor an employee of the individual; for the same
reason it does not necessarily follow that Mr. Jones is always an
employee of the College. Other factors need be taken into
account.
[18] Messrs. Jones and Alladin discussed the
work Mr. Jones would provide and was providing during January and
February 1999. However, according to Mr. Jones, it was he
who decided the contents of the program for Mr. al-Sharrif and
how it would be provided. He met frequently with Mr. Alladin to
discuss the student's assignments but there is no evidence
Mr. Jones received instructions from Mr. Alladin as to how he
should do his work.
[19] The College provided the student but
the "priorities and rate of pay" were negotiated: this
is the evidence of both Mr. Jones and Mr. Alladin. Mr. Jones
said the "tools" to provide the services were his
knowledge and experience.
[20] I am not satisfied that Mr. Jones
incurred losses to the extent claimed but, as mentioned earlier,
this is not a matter before me.
[21] In short, with respect to the services
Mr. Jones provided to Mr. al-Sharrif, the total relationship of
the College and Mr. Jones was not that of an employer and its
employee. Mr. Jones' position was not unlike any other
teacher or instructor who, on his or her own accord, offers
tutoring to students for a fee. The services he provided to the
College for Mr. al-Sharrif was on his account, not the
College's.
[22] The appeal is allowed without costs and
the assessment is referred back to the Minister for
reconsideration and reassessment on the basis that the Minister
ought not have included the amount of $1,000 in computing
employment income for 1999.
Signed at Ottawa, Canada, this 8th day of April 2003.
J.T.C.C.
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