Ernest S. Tucker v. Minister of National Revenue, [1986] 1 CTC 2357, 86 DTC 1250

Taylor, T.C.J.:—This is an appeal heard in Montreal, Québec, on October 24, 1985, and December 3 and 4, 1985, against income tax assessments for the years 1978, 1979 and 1980, in which the Minister of National Revenue disallowed as business expense deductions amounts of $1,250, $7,366 and $7,120 respectively. It was the position of the Minister in striking the assessments that Mr. Tucker's income in question arose from employment not from business. Both parties relied upon the provisions of section 18 of the Income Tax Act, S.C. 1970-71-72, c. 63, as amended, for support. Part of the hearing was conducted in the French language, and part in English, but the argument was presented by counsel in English and accordingly this judgment is being written in that language.

Certain small amounts (1978, $465, 1979, $375, and 1980, $200) included by Mr. Tucker as income in preparing his tax returns had been accorded a “business” status by the Minister, and equivalent amounts of “business expenses” deducted therefrom in the reassessments at issue, which left only income from “C.E.G.E.P. Vanier”, as a teacher (agreed by both parties as from “employment”, and income from Canadian Broadcasting Corporation (“C.B.C.”) as a reporter which was in dispute — “business” according to the taxpayer, “salary” according to the Minister. The amounts of the disputed deductions were not in issue, so those details will not be reviewed, other than to note that a major portion thereof was for “car expenses”, clearly expended for travelling between Mr. Tucker's residence and the C.B.C. Office in downtown Montreal. It should also be noted that Mr. Tucker did have a “location” at the C.B.C. office at which he did his work — a library, telephone, teletype, paper, etc. He did have his own tape recorder, and did some personal interviewing of persons or groups as background for some of his work. I note this because these minor and infrequent occurrences seemed to loom large in his mind as support for his “business” proposition. In my mind they were nothing more than that which might be expected of any employee where he could provide particular assistance to his employer

— and there was no indication from Mr. Tucker, that when, as, and if such activity was “required” by C.B.C. (see section 8 of the Act) that C.B.C. would be at all reluctant to pay the costs involved.

The appellant himself testified, and in addition evidence was given by a former colleague and a former supervisor to exhibit Mr. Tucker's contention that he was “independent” and “not controlled”. Certain instances when he acted decisively and directly in connection with his work as well as some indication of the investigative reporting and jornalism which he initiated on his own, were cited as examples of such independence. Copies of “Union contracts” with C.B.C. governing Mr. Tucker were also provided, in which he came clearly under the provisions dealing with “part-time” or “supplementary” employees. The Minister presented testimony to show that for all administrative purposes there was no real difference between the part-time employees and full-time employees, other than that the full- time employees did have some more benefits, regulations, and perhaps security. Schedule “A” attached to an earlier “Notice of Objection” sets out the overall thrust of the taxpayer's proposition.

SCHEDULE “A”

Objection

Objection is hereby made to the increase in “Taxable Income” caused by the disallowance of expenses incurred in order to earn Professional Income.

Facts

My basic earnings were and still are from teaching communications and journalism in universities. this teaching income was earned as an employee and reported as employment income.

I was also engaged on a contractual basis as a freelance journalist. these contracts were renewable at the discretion of both parties every three (3) months.

My freelance work was carried out on a week to week basis when I was available at various times during the week while not teaching.

In 1978, I began to extend my efforts into freelance media basis. However, due to the consistency of one contractor making more demands on my time than I expected, I was never able to pursue very many more leads than those which I found during my initial attempt of gaining freelance income. I was never under any obligation to accept assignments nor the hours which I did.

The facilities available for me to perform and deliver my journalistic skills were over 25 miles from my residence. The time that I completed my reports was usually during very late hours. I required personal transportation in order to function and gather material.

In order to carry out these functions I required on a continuous basis, a network of updated contracts and information at my fingertips. I set an area aside in my premises and built a library and an office for the purpose of research and preliminary writing and correspondence. I therefore incurred respective expenses to attain this.

All expenditures were therefore incurred and necessary for the purpose of earning income (section 18(1)(a) of the Income Tax Act).

Reason

From the above facts the information used by the tax department to process the assesment in question was incomplete at the time of assessing.

Conclusions

Due to my capacity as a freelance journalist having specific and required expenses in order to carry out my efforts and gain a gross income sufficient to cover these expenses and leave me with a comparable net, I therefore ask that this assessment be annulled and that the original assessment be reinstated.

It seems to me that the argument of counsel for the appellant comes down to three or four points:

(1) That since as a “part-time” worker Mr. Tucker did not have the same benefits, salary, privileges, etc. as a “full-time” employee, he was therefore an “independent contractor”.

— That proposition is unsupportable and has been soundly rejected by all the relevant Courts — See H. Lionel Rosen v. The Queen, [1976] C.T.C. 462; 76 D.T.C. 6274; Henry L. Molot v. M.N.R. [1977] C.T.C. 2170; 77 D.T.C. 111.

(2) The fact that Mr. Tucker would not work for a competing news agency while working for C.B.C., made him an “independent contractor”.

— That is unsupportable — See Joseph Gleddie v. M.N.R., [1985] 1 C.T.C. 2217; 85 D.T.C. 224.

(3) The lack of direct minute by minute control of the functions of Mr. Tucker, together with the discretion and flexibility permitted to him, made him an “independent contractor”.

Henry L. Molot v. M.N.R., [1977] C.T.C. 2170, 77 D.T.C. 11.

(4) That “times are changing”, in the income tax field, and that a more flexible and interpretive approach should be taken to such matters.

— I am not sure what jurisprudence would provide for such an approach, but in any event, it would seem to me rather risky for taxpayers to make such a proposition, since it should then be open to the Minister to assess on a “flexible” and “interpretive” basis, as opposed to the law — a situation which might become very troublesome to the same taxpayers.

As opposed to the above, counsel for the Minister proposed:

(1) Mr. Tucker comes within the collective agreement, covering employees.

(2) He was issued a T-4 slip by C.B.C.

(3) He was paid on an hourly rate, received overtime, vacation pay, sick leave, etc.

(4) He was “controlled” to the degree required under the circumstances of his employment, functions and assignments.

(5) There was no risk of “loss”, or chance of “profits” in the engagements.

(6) His work was totally integrated into the overall requirements of C.B.C., and was indistinguishable in its overall thrust from other employees.

(7) Mr. Tucker could not equate his work with that of “authors”, or “artists”, whose situation recently has been reviewed by Revenue Canada. they are assumed to be producing a product for sale to the public, in their own time, with their own resources in most instances, and virtually without any direction or control — only the demand for the end result.

I should add that counsel for the appellant did present in argument a considerable body of information and case law in support of the appeal. However, in my view it was either unrelated to the point at issue, or easily distinguishable from the present situation.

Counsel for the Minister, in addition to referencing those cases already noted, did quote from Jean Thibault v. M.N.R., [1983] C.T.C. 2211, and 83 D.T.C. 183 at 2214 and 185, respectively.

Personal service contracts are not transformed into business contracts simply by grouping several of them together, by associating them with “business” as opposed to an “employee” intention on the part of the taxpayer, or by the subjective interpretation of them by the taxpayer.

The appeal is dismissed.

Appeal dismissed.