Don Whiteside v. Minister of National Revenue, [1977] CTC 2328, [1977] DTC 239

The Chairman:—This is the appeal of Don Whiteside from an income tax assessment in respect of the 1974 taxation year.

In his 1974 returns, the appellant claimed expenses for carrying on a consultant business in the amount of $10,077.38, $6,444.34 of which was disallowed by the respondent in reassessing the appellant’s 1974 taxation year, and from which assessment the appellant appealed.

At the opening of the hearing, counsel for the respondent stated that an agreement had been reached between the parties whereby all the expenses originally claimed by the appellant had been settled except expenses in the amount of $2,422, which were incurred in respect of the appellant’s activities at Manitou Community College in Quebec.

Issue

There is no dispute as to the quantum of the expenses, or as to the fact that they were incurred by the appellant. The only remaining issue is whether the $2,422 were business expenses incurred by the appellant in carrying out his business of a consultant at Manitou Community College, or whether they were non-deductible expenses incurred by the appellant as an employee of that institution.

Facts

The appellant, in 1974, was self-employed as a consultant under the name “Don Whiteside, Ph D, Consultant, and Associates’’ and had, in that year, done some consultant work for Central Mortgage and Housing Corporation and for the Department of Indian Affairs and Northern Development. During 1974 the appellant was also employed by the Indian Association of Quebec to teach, on a part-time basis, at Manitou Community College in Quebec, some 150 miles from the appellant’s residence (Exhibits A-1 and A-2).

Manitou Community College was instituted in the autumn of 1973, and its student educational program was aimed at the upgrading of Indian adults whose scholarity was limited to the 9th grade and who wished to enter the CEGEP’s. The remedial program at Manitou Community College consisted of, among other things, courses in English, mathematics and history to a sufficiently high degree to permit the Student entrance into the CEGEP.

The appellant, one of the few Indians with a Ph D degree, was

66 . to instruct students in research techniques, basic methods of viewing social problems as well as introduce them to basic sociological principles’’ (Exhibit A-1). As a result of carrying out this two-day-a- week assignment, the appellant earned $8,013.20, and the expenses incurred principally in travelling to and from Manitou Community College were, as I understand it, $2,422, which is the amount in issue.

Although the circumstances of this appeal are somewhat usual, and notwithstanding the opening paragraph of the Manitou Community College’s letter dated January 5, 1974, which reads:

The Native North American Studies Institute wishes to retain your services as a consultant to our student program.* [1]

the facts are that, although the appellant may have provided consultant services to Central Mortgage and Housing Corporation and to the Department of Indian Affairs and Northern Development in 1974, his services to Manitou Community College were not that of a consultant, but that of a teacher.

The appellant admitted that he taught research techniques, basic sociological principles and basic methods of viewing social problems to the students, as required by the directors of the College, and for which the students earned credits.

The appellant also admitted that he prepared and supervised the writing of exams, corrected the papers and graded the students. The appellant was given specific teaching responsibilities, assigned Thursdays and Fridays of each week to give his courses to his students by the College authorities, and his remuneration was also fixed by them.

Submissions

The appellant, who represented himself, maintained that his activities at Manitou Community College were part and parcel of earning income from his consultant business in the various aspects of Indian problems with which he was very familiar, and about which he had acted as a consultant for the Department of Indian Affairs and Northern Development and Central Mortgage and Housing Corporation in 1974. He concludes, therefore, that the expenses of $2,422, claimed as deductible, were incurred in relation to his consultant work at Manitou Community College as an independent contractor.

Counsel for the respondent, on the other hand, submitted that the appellant, although he might have acted as an independent consultant for Central Mortgage and Housing Corporation and for the Department of Indian Affairs and Northern Development, did not exercise his profession of consultant at Manitou Community College, but was an employee of that institution engaged to teach students specific courses, and that the expenses incurred in relation to his employment do not come within the provisions of section 8 of the Income Tax Act, SC 1970-71-72, c 63, as amended, and they were not incurred for the purpose of earning or producing income within the meaning of paragraph 18(1 )(a) of the new Act.

Findings

There is no evidence that the appellant acted as a consultant to the school’s administrators or staff or that he was consulted in the organization of the school’s educational program. Although the subjects the appellant taught at Manitou Community College were part of the appellant’s specialized field of knowledge, there is no doubt from the evidence that the appellant was engaged at Manitou Community College not as a consultant, but as a part-time teacher, and that his work, although it may have earned the appellant an income, was not derived from his consultant business, but from his work as a teacher.

The question as to whether or not the appellant, in the circumstances of this appeal, was an employee of Manitou Community College, has been clearly dealt with by the courts in several decisions, some of which were cited: Donald B MacDonald v MNR, [1974] CTC 2204; 74 DTC 1161; H Lionel Rosen v Her Majesty the Queen, [1976] CTC 462; 76 DTC 6274 (FCTD); and Henry L Molot v MNR, [1977] CTC 2170; 77 DTC 111, a recent decision of the Tax Review Board.

Although the courts in recent decisions tend to consider the test of control, the strict application of the master-servant relationship rule, to be unsatisfactory and incomplete in determining whether professional persons in a particular set of circumstances are employees or not, there is in the instant appeal clear evidence of some form of control by Manitou Community College over the appellant’s specific teaching responsibilities at the school, over the exact courses he was to give, the days and the times at which he was to give them, and over the remuneration he was to receive for teaching them. Whether or not the appellant agreed with it, the College authority issued to the appellant a T4 Form which (although not by itself an irreversible proof that the appellant was an employee) recorded the statutory periodic deductions made from the appellant’s remuneration during the pertinent tax year and which form is made out by an employer in respect of his employees.

On the preponderance of the evidence, the Board has no hesitation in concluding that the appellant’s teaching activities at Manitou Community College were that of an employee and not that of an independent consultant. In my opinion, there is no significant difference between the College’s control over the appellant as a part-time teacher and the control the school exercised over the full-time teachers; the freedom which the appellant alleged to have had in the preparation of his courses and the marking of exams, etc is in my view not more nor less than the same freedom enjoyed by full-time teachers in all educational institutions. It appears to me, however, that the appellant does fall within the second and more recently evolved criterion in determining whether or not he was an employee and that is that the appellant was, even as were his full-time colleagues, integrated in the school’s primary objective of giving to its students a specific educational program to which the appellant, even as a part-time employee, contributed.

I conclude, therefore, that the appellant was an employee of Manitou Community College on a part-time basis, and the expenses claimed by the appellant in respect of his employment at that school are not deductible pursuant to any of the provisions of section 8 of the Income Tax Act.

The appeal is therefore dismissed.

Appeal dismissed.