Gross – Quebec Court of Appeal finds that a corporation’s controlling shareholder provided services, to fulfil its contractual obligations, qua employee, not independent contractor

A CPA (Mr. Gross) was the sole shareholder of two corporations (635 and 307), each of which was a partner in a Richter professional partnership or a Richter management services partnership. A partnership contract required all the direct or indirect individual partners to devote their services exclusively to Richter affairs.

Mr. Gross also was the controlling shareholder of a corporation (9149), which agreed with 635 and 307 to provide the full-time services of Mr. Gross in fulfilment of their obligations as partners to provide his services. Mr. Gross, who did not have a written agreement with 9149 for the provision of his services, was treated by the ARQ as providing those services qua employee of 9149 rather than independent contractor, so that the ARQ assessed regarding failure to make source deductions and to deny expenses deducted from his income.

Lavallée JCA confirmed that 9149 should be regarded as having superintendence and control over Mr. Gross for purposes of viewing him as a 9149 employee (notwithstanding his de jure control of 9149) given inter alia that the combined effect of the two agreements was to bind him to provide his full-time services to a single group user.

This case may implicitly contradict the narrow CRA view (see, most recently, Folios S3-F1-C1 and S3-F1-C2) as to when individual shareholders are performing a role of employee.

Neal Armstrong. Summary of Gross v. Agence du revenu du Québec, 2025 QCCA 492 under s. 5(1).