The Assistant Chairman:
1 The appeal of David W McKinney, Jr, from income tax assessments in respect of the 1970 and 1971 taxation years was heard in London, Ontario on September 29, 1975.
2 The issue in this appeal is whether the appellant was an employee of State University College of Arts and Science, Plattsburgh, New York, or whether he was a free-lance researcher or research consultant in the years pertinent to this appeal.
3 Since 1966, the appellant has held tenure as a permanent session member of the faculty of the University of Guelph as an Associate Professor of Sociology and Anthropology. For his services as an employee at Guelph University, the appellant received a salary of $17,487.29 in the 1970 taxation year. In 1971 the appellant received a salary of $19,233.86 for the same services at the same university.
4 The appellant, in giving evidence, stated that, while employed as Associate Professor of Sociology and Anthropology at the University of Guelph on a permanent basis, he also acted, within limits set by the said University, as a free-lance researcher and research consultant. On page 2 of Exhibit A-1 there are listed ten different research and consultation projects in which the appellant was engaged, both in Canada and in the United States from 1965 to 1973. These projects were carried out by the appellant independently of his permanent employment as an associate professor at Guelph University.
5 These extracurricular researches and studies were carried out in two rooms of the appellant's eleven-room house and 2/11 of the cost of maintenance of the said house was included in the computation of the overall cost to the appellant of earning income from these freelance activities.
6 In the late 1960's, difficulties arose on the campus of the New York State University at Plattsburgh, as a result of pressure put upon the University administration by militant black students for the introduction of a Black Studies Program in the University's curriculum. Dr D Y Yuan, Chairman of Sociology and Anthropology at New York State University, contacted the appellant with the view of obtaining his services in the development of a Black Studies Program at the said University (Exhibit A-4).
7 The appellant was able to arrange his teaching schedule at the University of Guelph so as to be available at the State University at Plattsburgh from September 9, 1970 to January 14, 1971, after which he returned to Guelph University and resumed his duties as an associate professor there.
8 While at the New York State University in Plattsburgh, the appellant was assigned to serve as editor of a contemplated Black Studies issue of the University's “Papers on the Social Sciences” and, although he taught several relevant courses, his major responsibility was that of consultant in developing a Black Studies Program for the New York State University. Although the appellant was paid a sum of $7,560 for his services for the period from September 9, 1970 to January 14, 1971, the assignment to which he had committed himself at the New York State University continued beyond that date, and long after the appellant had resumed his post at Guelph University (Exhibit A-6 and Exhibit A-11).
9 From the evidence adduced from the appellant's brief (Exhibit A-1), and from his answers to the respondent's questions in cross-examination, I am satisfied that, although the appellant was a member of the permanent teaching staff of Guelph University as Associate Professor of Sociology and Anthropology, he had since 1959 done considerable research, among other fields of study, into social, economic and educational problems, particularly those of black students in both Canada and the United States. The appellant, being himself a learned member of the black race, has, in my opinion, specialized in attempting to help solve, as best he can, the problems affecting young members of his race. This activity of the appellant is independent of the qualifications and skills required of him as Assistant Professor of Sociology and Anthropology at Guelph University and, in my view, he has acted, on all the projects listed on page 2 of Exhibit A-1, as an independent agent or consultant, and should be considered as operating a business within the meaning of paragraph 139(1)(e) of the old Income Tax Act, while performing these services in the cities of New York, Ottawa, Brooklyn, Plattsburgh, Montreal or Hamilton. The appellant testified that, in his preparation of his Black Studies Program, he had done research in various areas of Canada and the United States, including the black ghettos of Detroit.
10 In my opinion, in each of these projects, including the one at the State University of New York at Plattsburgh, in respect of which the facts seem quite clear, the appellant was acting, not as an employed professor of the University of Plattsburgh, but as an independent consultant in a subject in which he had done considerable research and in an attempt to avert a serious clash between the militant black students and the university administration.
11 Counsel for the respondent, in support of his contention that the appellant was an employee of the State University at Plattsburgh and was under its control, produced as Exhibit R-1 a request for approval to serve with another State agency made out on a form supplied by the Central Personnel Office of the State University of New York. This form was forwarded to the appellant long after his return to Guelph University and, although the appellant admitted signing the form, it could have served no useful purpose other than to complete the State University's records. This, in my view, is not a valid proof that the appellant was under the absolute control of the State University of New York.
12 The type of work the appellant did, the special courses given by him to black students, the appellant's dialogues with the militant black students and the Black Studies issue of the “Papers on the Social Sciences” which the appellant edited (Exhibit A-11) indicate to me that the appellant was on a special assignment in Plattsburgh as an independent consultant on a particular problem and was not “an employed visiting professor” (Exhibit A-6).
13 Counsel for the respondent also produced Exhibit R-2, which consists of Wage and Tax Statement forms for the years 1970 and 1971. The fact that the form is called a Wage and Tax Statement “to be filed with Employee's City Income Tax Return” does not of itself, in my opinion, prove that the appellant was an employee. For purposes of the university records and for tax purposes the amount of money paid to the appellant is the pertinent item on the form and not whether the appellant was an employee of the University rather than an independent contractor when he earned that remuneration.
14 Viewing the appellant's activities at the New York State University at Plattsburgh, during the pertinent taxation years in the context of all his extracurricular activities since 1965, leads me to conclude that the appellant was not an employee of the said university in 1970 and 1971 but was acting as an independent consultant and researcher. As such, he would, in my opinion, be entitled to deduct any expenses directly related to his consulting business.
15 Although the respondent had not, in his Reply to the Notice of Appeal, suggested that the amounts of the expenses claimed by the appellant in 1970 and 1971 were unreasonable, he did in argument contend that the appellant's claimed expenses in those years were unreasonable in relationship to the amount of remuneration received from the New York State University.
16 In computing his income for 1970, the appellant deducted as business expense an amount of $5,595.96. The remuneration received from the State University at Plattsburgh, New York, in 1970 was $5,491.92. In computing his income for 1971, the appellant deducted as business expense an amount of $5,205.35. The remuneration received from the State University of New York in 1971 was $2,587.34.
17 It is on record that the appellant spent from September 1970 to January 14, 1971 at the State University at Plattsburgh, New York, but continued to work as editor of its “Papers on the Social Sciences” for several months after January 14, 1971, and had to do some travelling in connection with that publication.
18 It seems to me that the appellant's consulting and research activities go well beyond his consultant assignment at New York State University. It is a full-time enterprise, and the relationship between his general consultant business expenses and the remuneration he may have received from the New York State University in 1970 and 1971 on one of his special projects is not material to the issue in this appeal.
19 The only issue, as I see it, is whether the appellant was an employee of the New York State University in 1970 and 1971 and, from the facts of this appeal, I have come to the conclusion, and I hold: that the appellant was not an employee of the State University of New York but was acting for that university, as part of his business as a special consultant, on a particular matter; and that the business expenses claimed by him were reasonable in the circumstances. They were not personal or living expenses and should be allowable deductions from his business income.
20 The appeal is therefore allowed.
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