Section 5

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 between all the Richter partnerships and their direct partners and indirect individual partners required those individuals to devote their services exclusively to Richter affairs.

Mr. Gross also was the controlling shareholder of a corporation (9149), which agreed (in the “9149 Agreement”) with 635 and 307 that it would fulfill their obligations under the partnership contract to provide services by providing the full-time services of Mr. Gross in fulfilment of such obligations.

Mr. Gross, who did not have a written agreement with 9149 for the provision of his services, had taken the position that he provided his services as a self-employed worker. Revenue Quebec treated him as an employee of 9149, and assessed 9149 for its failure to make source deductions and Mr. Gross to deny expenses deducted from his income.

In confirming the finding of the Court of Quebec that Mr. Gross was an employee of 9149, Lavallée JCA found that, notwithstanding Mr. Gross’ control of 9149, 9149’s relationship with him was one of subordination and control, given the above contractual arrangements, whose effect included that he was bound to 9149 to provide his services to the two clients of 9149 (635 and 307).

A small contracting company, whose shareholders were Mr. and Mrs. Lynch, made regular bi-weekly payments by cheque to Mr. and Mrs. Lynch in amounts that were equal to an even gross salary number minus amounts equal to income tax and CPP withholdings that would be applicable to such salary amounts. Mrs. Lynch, as an interim bookkeeper, notated the cheques as being “payroll” and for the first two months of 2018, but not thereafter, remitted source deduction amounts to CRA.

Cook J accepted (at para. 10) the statement in Park Avenue (2019 TCC 94, at para. 20) that “it is the intention of the parties (payer and payee) at the time of the payment that characterizes the nature of the payment” as salary or shareholder advance. He found that “Mr. and Mrs. Lynch, were not sophisticated in tax matters and it resulted in the unfortunate notation on the Cheques, misguided use of the website calculator and mistaken remittances for January and February 2018” (para. 26) and accepted the testimony of the company’s accountant and Mrs. Lynch that (consistent with the financial statements) “all draws were to be on the shareholder loan account and that no amounts were to be paid to Mr. and Mrs. Lynch by way of salary” (para. 17). He concluded (at para. 27):

This is the type of situation referred to by Chief Justice Rip in Adam [85 DTC 667] wherein a shareholder receives draws on the shareholder loan account throughout the year and then a dividend determination is made at some point for the year.

The taxpayers (two baseball players), who performed 40% of their duties in Canada rather than the US, agreed with the Toronto Blue Jays (the “Club”) that a portion of their total package would take the form of annual contributions to a retirement compensation arrangement (RCA). The Crown position was that the RCA contributions did not enter into computing the taxpayers’ income for the purposes of the allocation of 40% thereof to Canada because they were not received by the taxpayers and because of the specific exclusion under s. 6(1)(a)(ii) of RCA benefits from employment income.

Gagnon J instead agreed with the taxpayer submissions that the exclusion of RCA contributions in s. 6(1)(a)(ii) only applies against the amount of Canadian-source income subject to taxation in Canada, so that those contributions were to be deducted solely from the 40% of their remuneration that was earned in Canada.

Before so concluding, Gagnon J indicated inter alia:

• The ITA’s computational rules, including the exclusion in s. 6(1)(a)(ii) for RCA contribution benefits, “cannot apply to a non‑resident’s foreign-source income as the Act only grants jurisdiction over a non‑resident’s Canadian-source income” (para. 95, see also para. 105).
• Before their exclusion under that computational rule, the RCA contributions “made up a portion of the Appellants’ compensation and remuneration for the year” given the broad scope of the concept of an employment benefit, so that those contributions were “part of the Appellants’ compensation during the taxation years in which the contributions were made” (para. 98) - and it was this total income that was to be allocated between Canada and the US under s. 2(3) and s. 115((1)(a)(i) and in accordance with s. 4(1)(b) (before applying the domestic computational rules, as per the first point).

In connection with the second point, Gagnon J reviewed the jurisprudence under ss. 5(1) and 6(1)(b) and stated (at para. 72):

The Court also believes the foregoing analysis supports that, without the exclusion of benefits under a RCA, the RCA contributions could be included in employment income of the Appellants and therefore the applicable tax treatment could not be decided as foreseen by another provision within the Act. The interpretation and scope given to section 5 and paragraph 6(1)(a) ITA by the Federal Court of Appeal uphold the conclusion.

The appellant, a real estate brokerage firm, determined (based on agreement between its two employees) that the remuneration paid to them would be allocated as to $165,000 and $192,000 to Mrs. and Mr. Sutton, respectively. CRA noted that all but $12,675 of such remuneration had been deposited into the bank account of Mr. Sutton, considered that all of such deposits to his account were remuneration received by him, and imposed a late source-deductions remittance penalty under s. 227(9) on the appellant regarding its computed under-remittance.

In finding that Mrs. Sutton had received remuneration in excess of the $12,675 deposited into her account, Gagnon J stated (at paras. 21, 25):

Case law has noted that the word “receive” means to get or to derive benefit from something, therefore to “enjoy its advantages without necessarily having it in one’s hands”. Moreover, an amount of money is deemed received by an employee when it is available to the employee. …

… [C]onstructive receipt applies with respect to Mrs. Sutton’s remuneration received from the Appellant.

Gagnon J went on to find that because the Crown had not proven its allocation of the remuneration between the Suttons, the penalty should be reversed.

Bocock J indicated (at para. 24) that whether annual awards (paid bi-weekly) made to a post-doctoral fellow (PDF) of the University, Dr. Lanery, were employee remuneration for CPP and EI purposes turned on a determination of their “dominant purpose,” namely, “whether on balance the payments were made on account of monetary assistance to enhance the PDF’s education and research skills or paid as income in consideration of various services provided by the PDF to the University.” Bocock J concluded (at para. 35) that the “annual award was paid with the dominant characteristic of furtherance of the education and learning of … the PDF,” so that the PDF was not an employee.

In this regard, he had found that:

• “PDFs received minimal oversight and supervision” (para. 10) so that they had “free range” in their pursuit of research;
• any teaching tasks taken on were separately remunerated by the University;
• there was no documented “obligation of the PDF to provide laboratory, tutorial, teaching or research assistance to the University” (para. 30);
• there “simply were no identifiable, direct or measurable services or activities delivered by Dr. Lanery to the University” (para. 31); and
• the evidence was consistent with “the University [having] exhorted its PDFs, and Dr. Lanery in any event, to pursue research, discussion and research in order to enhance Dr. Lanery’s long term academic skills for the benefit of her learning generally” (para. 33).

Three CRA collections employees were awarded a lump sum by the Public Service Labour Relations and Employment Board pursuant to their grievance for having been unfairly denied the right to work overtime hours. They described the conduct of the assistant director in connection with their complaints as harassing, and claimed that the award constituted damages for personal injury and violation of their rights under their collective agreement, and should be treated as a personal injury award that was non-taxable under s. 81(1)(g.1).

After referring to the Tsiaprailis surrogatum principle, Wong J dismissed the appeal, stating (at para. 19):

[T]he compensation award - based on an agreed number of hours - replaced the remuneration the appellants would have received had they been offered and in turn accepted overtime work. Those amounts would have been taxable as employment income at first instance.

The appellant, which provided specialized logistics services for the export of agri-food products, engaged workers to transload bags of grain and legumes from trucks or railway cars into sea containers.

After noting (at para. 7) that “the definition of a contract of employment under article 2085 of the Civil Code of Québec places emphasis on the essential characteristic of direction or control,” Boivin JA went on to apply the statement in Grimard, 2009 FCA 47, at para. 43:

[T]here is no antinomy between the principles of Quebec civil law and the so‑called common law criteria used to characterize the legal nature of a work relationship between two parties. In determining legal subordination, that is to say, the control over work that is required under Quebec civil law for a contract of employment to exist, a court does not err in taking into consideration as indicators of supervision the other criteria used under the common law, that is to say, the ownership of the tools, the chance of profit, the risk of loss, and integration into the business.

The Tax Court had found:

“[T]he parties believed that they had established a ‘contract of enterprise or for services’ [and not a contract of employment] …” (quoted at para. 10)

However, the Tax Court had gone on to apply the four Wiebe tests referred to above, and concluded that "the objective reality of the employment relationship, including [such] factors … indicates that there was an employee/employer relationship" (quoted at para. 12).

Boivin JA concluded that he did “not see any palpable and overriding error” in this analysis” (para. 22), so that the appellant was subject to CPP obligations as an employer.

The appellant (the “Institute”), which was a non-profit organization providing inter alia professional and continuing education to the Ontario insurance industry, and an individual (Peter Barlow) who worked as an instructor, agreed in their contracts that Mr. Barlow would be an independent contractor.

Graham J found that Mr. Barlow was not an employee for EI and CPP purposes in accordance with the two-step approach mandated in Connor Homes. Clearly, under the first step, “the subjective intent of each party to the relationship” (para. 7) was that of independent contractors, and the focus was on how to apply the second test of “ascertain[ing] whether an objective reality sustains the subjective intent of the parties” (para. 8).

After stating (at para. 18) that “For the first step to mean something, the outcome of the first step has to affect the application of the test in the second step,” he stated (at para. 26):

[I]if the Wiebe Door and Sagaz factors are completely inconsistent with [their shared] common intention, then their relationship will be the relationship indicated by those factors; and …

if the Wiebe Door and Sagaz factors are inconsistent with that common intention but the parties nonetheless act and carry on their relationship in a manner that is similar to what one would expect from their intentions, then their relationship will be the relationship that they intended.

Applying such factors, the control factor was neutral as was the ownership of tools, Mr. Barlow “had an ability to increase his effective earnings through up-front investment and efficiencies in a manner similar to that of an independent contractor”, so that in that limited sense, he had an opportunity for profit, but he did not face any realistic risk of financial loss.

He concluded (at paras. 68-69):

… If I simply applied the Wiebe Door and Sagaz factors …, I would conclude that Mr. Barlow was not carrying on business on his own account. Those factors … indicate that he was an employee. The control and ownership of tools factors are neutral but Mr. Barlow had no real risk of loss and no true ability to profit.

However, for there to be meaning to the two-step test in Connor Homes, a different test must be applied when the worker and the payor share a common intention. I conclude that because Mr. Barlow and the Institute shared a common intention, I am to apply a lesser standard and consider whether the Institute and Mr. Barlow acted and carried on their relationship in a manner that was similar to an independent contractor relationship. I find that they did. Mr. Barlow’s level of control, ownership of tools, risk of loss and chance of profit are similar to what one would expect from an independent contractor. He conducted his affairs in an entrepreneurial and business-like manner.

The taxpayer (“Mr. Ghumman”), who conducted a life insurance broker business through his personal corporation (“GFP”), purchased a life insurance policy (the “Policy”) on his life, resulting in the receipt by GFP of $57,262 in commissions from the insurer and an affiliate of the insurer, with those amounts then being included in what was paid to Mr. Ghumman, who was the sole GFP employee. Mr. Ghumman excluded such commissions from his income in reliance on IT-470R, which stated:

[W]here a life insurance salesperson acquires a life insurance policy, a commission received by that salesperson on that policy is not taxable provided the salesperson owns that policy and is obligated to make the required premium payments thereon.

In dismissing Mr. Ghumman’s appeal of the CRA inclusion of the commissions in his income, Sommerfeldt J stated (at paras 12, 15):

There is nothing in section 8 that permits Mr. Ghumman, in computing his income from employment …, to deduct the commissions received by GFP in respect of the Policy. …

According to the principle enunciated in Bilodeau, if the CRA decides, for whatever reason, not to extend [its] administrative policy … to a particular taxpayer, the taxpayer cannot expect this Court to require the CRA to comply with its administrative policy in a situation where that policy is not consistent with the ITA.

Sommerfeldt J went on to find that CRA’s expressed policy was in any event inapplicable here, stating (at para. 18):

[T] hat policy… applies where the individual who acquires a life insurance policy and who pays the premiums … is the person who receives the commissions. … [I]t was Mr. Ghumman who acquired the Policy, but it was GFP that received the Commissions.

The taxpayer, who received wages from working as a slot attendant at a casino in 2011 and 2012 of $27,011 and $29,327, respectively, which he reported in his returns, was also found to be taxable on unreported tip income of $23,937 and $39,219, respectively. The taxpayer unsuccessfully argued that these amounts remained part of the source, that is, the jackpot winnings, that were non-taxable gambling proceeds and were, therefore, not received by virtue of his employment. Campbell J stated (at para. 14):

… The fact that the tip amount is paid to a committee and pooled with other amounts paid to the attendants before distribution does not change the nature of the payment. It remains a gratuity for services provided by the slot attendant by virtue of his employment. …

The first corporate appellant (the “Corporation”) owned and operated the RadioX team, which was a minor professional hockey team based in Quebec that played in the Ligue Nord-Americaine de Hockey from 2004 to 2008. It had been treating its players (and other staff) as employees rather than independent contractors for Quebec health tax purposes in accordance with the views of the ARQ which had been expressed to the League. However, in 2006, it commenced to treat them as independent contractors in order to reduce operational costs. The players did not register for GST/QST purposes or invoice for their services, and refused to sign a written contract (which did not reflect the realities of how the team continued to be operated), and the only substantive change made was that the team manager was incorporated.

In finding that this revised approach was incorrect, Cotnam JCQ stated respecting the test of superintendence and control ("factual and legal subordination") (at para. 61, TaxInterpretations translation) that “the fact of the delegation of management of the Team to a management firm does not permit the conclusion that there was an absence of subordination,” and further stated (at paras. 64-65, 70):

The players were required to follow the timetable determined by the Team for practices and games. The duration and frequency of training was fixed by the trainer. …

To the extent they were not available for a game, the players were required to so inform the Team. It was not the player who could secure his replacement … . It was the Team who chose the replacement. ...

It is the trainer who decides on the ice time, the line-up and the choice of who participates in special events, etc.

Respecting other tests noted in the jurisprudence:

• The players received no bonuses or other profit participations and did not share in losses.
• Contrary to the contract which they declined to sign, they did not lease their equipment from the Team (it was mostly provided by the Team).
• They were integrated with the Team activities and identified with it.
• They were not responsible for producing a specified result.
• Notwithstanding the unsigned contract, the evidence did not establish that they regarded themselves as independent contractors.

The appellant (“Russell”) was an undergraduate Chemistry student at Mount Allison University, which required him to undertake research and write a thesis. He obtained an Undergraduate Student Research Award (a “USRA”) from the University, which was funded in part by the Natural Sciences and Engineering Research Council of Canada (“NSERC”) and covered the period from May 6, 2013 to August 23, 2013 (the “Period”). At issue was whether he was an employee for Employment Insurance and Canada Pension Plan purposes.

Visser J noted (at para. 19) that “based on …Rizek, [2013 TCC 273] it is necessary to determine whether the dominant characteristic of the amount received by Mr. Russell for the ‘work’ he undertook…was compensation for work or student assistance.”

In finding that it was the later, he stated (at paras. 22, 23, 25):

[T]he dominant characteristic of the payments to Mr. Russell is that of financial assistance to an Honours student working on his thesis, and ….any benefit to Dr. Meli or the University was secondary.

…The University must administer the NSERC USRA in accordance with the criteria set out by NSERC, and pays recipient students such as Mr. Russell through its accounts payable department, not through its payroll department, as it does not consider award recipients to be employees. …

In contrast [to Rizek], Mr. Russell applied for, and was awarded, an NSERC USRA in his own name based on his own research proposal.

The taxpayer ran several restaurant businesses in which it redistributed its employees' tips under a tip-sharing arrangement. Campbell J found that these were amounts paid by the employer for the purposes of the Income Tax Act and for CPP and EI calculations. Canadian Pacific was dispositive. In concluding that the taxpayer had “paid” the gratuities to its front line staff, Campbell J stated (at para 49):

[T]he Appellant, during the relevant period, not only ended up with possession of all gratuity and tip amounts… but exerted considerable control over those amounts, engaging in the redistribution of those amounts within the broad definition of “paid” as contemplated in the [Insurable Earnings and Collection of Premiums Regulations].

The taxpayer and two others incorporated, and the taxpayer became a director of, a corporation ("Wellspring") that provided operational services in the oil industry. Wellspring retained the taxpayer as a consultant under contract for $8000 monthly. Lyons J affirmed the Minister's position that the taxpayer was an employee rather than an independent contractor. The control factor of the Wiebe Door test for establishing who owned a business was inconclusive (paras. 25- 29), but the fact that Wellspring initially provided a desk and then from 2008 paid rent to the taxpayer to operate its business from Red Deer indicated that he did not provide his own equipment (paras. 30-31), nor did he have an opportunity to profit and bore virtually no financial risk. (paras. 33 – 36). Lyons J further concluded that the taxpayer was working within Wellspring’s business for his benefit as an employee, evidenced by lack of separate books and records and invoices, and that Wellspring operated out of his residence at the same time that he claimed to be an independent contractor. (para. 37)

Three individuals, who were hired by the appellant (“Big Bird”) to drive trucks, were independent contractors rather than employees for EI and CPP purposes. C. Miller J. noted that (under the Wiebe tests) the drivers had little responsibility for investment or management, and that Big Bird provided the insurance and the truck and trailer (a factor which was given weight in TBT, 2011 FCA 256). However, the (poorly-documented) agreements were that a driver might be offered loads by Big Bird, which the driver might refuse or accept, and which were to be paid for only after the driver submitted an invoice. In addition, there was some risk of damage due to the driver’s own negligence and also a risk of not getting paid if the customer refused to pay Big Bird for the cost of layovers - and there was no dispatcher directing the drivers’ services (para. 22). He stated (at para. 13) that “there is a lack of commitment on either side, a lack of security, a lack of continuity and inherent risk that one seeking employment would find unattractive,” and concluded (at para. 22) that “one side clearly was just looking for the drivers’ services.”

Pursuant to a share appreciation right ("SAR") attached to stock options granted by a public corporation which he controlled and of which he was the CEO, the taxpayer surrendered the options for a cash payment equal to their value.

After finding that the surrender payment was not a taxable employee benefit under s. 6(1)(a) (see summary under s. 7(3)(a)), Hogan J found that the payment also was not "salary, wages, and other remuneration" under s. 5(1), quoting the statement in Hale v. The Queen, 90 DTC 6481 (FCTD), aff'd 92 DTC 6473 (FCA) "that the words salaries, wages and other remuneration unavoidably correspond to a sum of money received in return for the provision of services."

The appellant was an equity partner at the respondent law firm, whose partnership agreement required retirement at 65. The respondent applied to have the appellant's age discrimination complaint dismissed on the grounds that, as an equity partner, he was not an employee under BC's Human Rights Code.

The Abella J stated (at para. 28) that in making this determination:

Ultimately, the key is the degree of control, that is, the extent to which the worker is subject and subordinate to someone else's decision-making over working conditions and remuneration... .

She then found (at para. 39) that "as an equity partner, he was part of the group that controlled the partnership, not a person vulnerable to its control." Therefore, he was not an employee under the Code and could not contest the mandatory retirement. Abella J went on to state (at para. 46) an employee finding "would only be justified ... where the powers, rights and protections normally associated with a partnership were greatly diminished."

The taxpayer was a licensed operator of foster homes and group homes through which it provided care for children with serious behavioural and developmental disorders. The Court found no basis for overturning the trial judge's finding that the taxpayer's youth workers and area supervisors were employees rather than independent contractors, and hence had pensionable employment under the Canada Pension Plan and insurable employment under the Employment Insurance Act.

Although each contract clearly indicated contractual work on its face (e.g. "nothing in this agreement shall be construed so as to restrict in any way the freedom of the Independent Contractor(s) to conduct any other business or activity for his/her individual profit"), the trial judge's findings supported the conclusion that the work was practically indistinguishable from employment - for example, workers had no ability to increase their income by cutting costs or producing more, nor did they control the hours they worked.

Mainville JA also stated (at paras. 39-40):

In this case, the Tax Court Judge appears to have proceeded in an inverse order, dealing with the parties' intent as set out in their mutual contracts at the end of his analysis. The first step of the analysis should always be to determine at the outset the intent of the parties and then, using the prism of that intent, determining in a second step whether the parties' relationship, as reflected in objective reality, is one of employer-employee or of independent contractor.

However, the incorrect ordering of the trial judge's analysis was not enough to shake his conclusions.

Lamarre J. found that a clergyman, who worked as the full-time manager of a small charitable organization ("MAP"), which provided support to former prison inmates) was an employee having regard inter alia to the integration test. While MAP and the worker had attempted to structure their affairs so that the worker would be treated as an independent contractor (for example, he was generally responsible for his own equipment and office), the evidence showed that he acted and generally represented himself as MAP's director, and "the services of the worker were integral to MAP's core function rather than being merely ancillary..." (para. 51).

Accordingly, the appeal of MAP from CPP and EI assessments, and income tax source deduction assessments, was dismissed. (The reasons do not disclose whether the income tax assessment of MAP was restricted to the 10% penalty under s. 227(8), and there was no discussion as to whether MAP was liable for the source deduction amounts themselves having regard to s. 227(8.1).)

Archambault J. found that "bursary" amounts that the taxpayer received from the University of Laval in connection with his postdoctoral fellowship at that university were employment income rather than amounts described under s. 56(1)(n) (scholarship, bursary, fellowship or prize for achievement), because his work was in the nature of "employment" under Quebec civil law. Under art. 2085 of the Civil Code, "a contract of employment is a contract by which a person, the employee, undertakes for a limited period to do work for remuneration, according to the instructions and under the direction or control of another person, the employer." The relative independence of research fellows as employees was irrelevant given that they were ultimately accountable to their supervisors. Archambault J. stated (at para. 72):

Having more independence does not necessarily mean that there is no relationship of subordination. The existence of a relationship of subordination does not depend on the right of direction and control being exercised, but on the existence of the right to exercise such control.

Hershfield J. found that the taxpayer was not engaged in a business in respect of his work as the assistant rugby coach at Queen's University. As the honorarium was only enough to cover the taxpayer's expenses, there was no reasonable expectation of profit. Hershfield J., considering the control factor in Sagaz, also found that the university had control over the taxpayer, notwithstanding that the control was not exercised and the taxpayer was essentially given a free hand. Employers are able to "dictate the desired result" (such as improving Rugby team performance) to an employee without concerning themselves with implementation details (para. 42).

Real property with a value of $68,000 was devised to the taxpayer (conditional upon settlement of the estate) "as a token of gratitude for the services" the taxpayer was called upon to perform under the will as liquidator of the estate. The taxpayer accepted his appointment as liquidator. Tardif J. found that the value of the property was remuneration from an office. The fact that the compensation was generous relative to the level of work performed did not alter this finding.

Rip C.J. found that Mr. Reesink, the taxpayer's sole shareholder, worked for the taxpayer as an employee rather than an independent contractor. Rip C.J. stated (para. 25):

Mr. Reesink was also a director of Pluri Vox, albeit a de facto director. The directors, the de jure directors, are not acting as directors; to the extent they do anything, they follow Mr. Reesink's wishes. Who is running the company? Mr. Reesink says he is and on the facts before me he is. It is Mr. Reesink who actually manages and supervises the management, business and affairs of Pluri Vox. It is clear that he exercised all the powers of the director [and] he was and is, in fact, a director of Pluri Vox. And since he was (and is) a de facto director of Pluri Vox, he may be an officer of the appellant.

The taxpayer was a director, shareholder and employee of a corporation ("Northern"). He resigned from his directorship and employment in 2001. In that year, Northern declared a $3.7 million bonus, withheld and remitted source deductions from this amount and recorded a loan to it from the taxpayer for the remaining amount of the bonus. In 2002, the taxpayer directed that $350,000 be paid by Northern to each of two corporations controlled by the taxpayer or his wife (purportedly for management services provided by them to Northern notwithstanding that these corporations were not organized until 2002), and the balance to him.

The taxpayer's position was that the two $350,000 amounts paid to the two corporations (who included these amounts in their 2002 returns) were not income to him. Jorré J. found at para. 79 that the taxpayer had received these two amounts in 2001 in light of the withholding and remittance of source deductions on the full $3.7 million amount of the bonus, the booking by Northern of a loan back to it of the net bonus proceeds and the absence of any evidence that this was done without his knowledge or consent.

The taxpayer was employed as a ships pilot by the Atlantic Pilotage Authority ("APA") and was paid a flat salary pursuant to a collective agreement when he worked as scheduled every second week in the Halifax harbor. In addition, he had the option of accepting assignments for pilotage services during the other weeks, and when he did so he received a percentage of the fees his employer charged to the ship owners. In light inter alia that the collective agreement provided that such work performed outside scheduled weeks was done by him in his capacity of employee, the authority the APA had to ensure compliance by the taxpayer with the provisions of the collective agreement and the fact that there was very little risk of the taxpayer not receiving the fees for work performed by him in the non-scheduled weeks, the income from such supplementary work was employment income to him.

Before going on to apply the four-fold test in the Sagaz Industries case to find that the taxpayer, who was responsible for overseeing the marketing and packaging processes of a corporation in the sugar industry in consideration for a fixed monthly fee, was an independent contractor, Sheridan, J. stated (at para. 9) that "it is not unusual for a consultant to be paid a fixed monthly fee for his services".

In finding that loans made to the taxpayer by his employer were employment income to him when received, Webb, J. stated (at para. 22):

"in a situation where a cheque is issued (or cash is dispersed) to an employee in relation to services that have been rendered and the transaction is labelled an advance or a loan but in reality the employee is only obligated to repay the amount, without interest, from subsequent salary or 'bonuses' paid by the employer, in my opinion, the real character of the amount received is that it is received as a payment of compensation and not a loan. There is no true intention that the employee will have to repay the amount from any source other than the future 'payments' to be made by the employer."

Amounts that the appellant paid to its employees after they were injured were characterized as advances in respect of the employees' entitlement to receive disability payments from the Québec Board of Occupational Health and Safety, rather than as remuneration, so that such amounts were not subject to source deductions.

Bédard J. noted that the question whether an individual would have been regarded as an employee of Hydro Quebec under the "personal services business" definition should be determined on the basis of the test of employment contained in the Civil Code of Quebec, which rules are incompatible with the rules set out in the leading tax cases on what constituted employment including the Wiebe and Sagaz Industries cases and noted (para. 12) that, following the codification in the Code of what constituted employment "the courts no longer have the latitude that the common-law courts have to define what constitutes a contract of employment or a contract of enterprise or service".

The taxpayer, who was the president of a start-up technology company ("AVL") was issued shares of AVL in recognition of past services. Although it was anticipated that these shares would be exchanged by him for escrowed shares of another corporation ("USX") on an acquisition of the AVL shares by USX, this did not represent a contractual restriction on his right to deal with AVL shares. The value of the shares (net of the subscription price) was included in his employment income.

Individuals that the taxpayers retained on an engagement-by-engagement basis to perform duct cleaning at houses which the taxpayers had lined up through their efforts, in consideration for a portion of the fee collected from the homeowners, and with the requirement on the individuals to rectify any deficiencies in the cleaning at their own expense, were found to be independent contractors for Canada Pension Plan and employment insurance purposes. Before reaching this conclusion, Bowman C.J. stated (at para. 34) that "the four-in-one test in Wiebe Door has ... been reduced to representing 'useful guidelines relevant and helpful in ascertaining the intent of the parties'" and that "intent is a test that cannot be ignored but its weight is as yet undetermined".

An individual whom the taxpayer retained to provide specified bookkeeping services for a fixed amount per week and who provided bookkeeping services to other of her clients as well was found to be an independent contractor rather than an employee, with the result that the taxpayer was not obligated to pay employer premiums under the Canada Pension Plan Act in relation to her services.

A mechanical engineer who worked 35 hours a week plus overtime at the offices of a corporation under the supervision of a project manager and who was assigned work on a regular basis with strict project guidelines, was found to be an employee.

Amounts received by the taxpayer from her son while he was suffering partial, permanent incapacity from a traffic accident did not represent income from employment or income from services rendered but, instead, represented amounts given by him to her in appreciation for what she had done for him.

Individuals working as tour guides and greeters in the cruise ship industry were found to be independent contractors rather than employees of the appellant for Employment Insurance and Canada Pension Plan purposes given the degree of control they had over their work (they were responsible for developing their own "spiel", they worked from the dockyard rather than from rented space, they did not have to work on a particular day if they did not wish to do so, they invoiced for the work they performed, some of them worked for other cruise ship operators as well, and they provided their own clothing other than a red vest for identification purposes), and the practice in the industry was to treat such individuals as independent contractors and not as employees. School bus drivers retained by the appellant were specifically deemed by s. 6(e) of the Employment Insurance Act regulations to be employed.

The taxpayer, a taxicab driver, was found to be self-employed given that the rental fee he paid for the use of the taxicab could range between 62% and 70% depending upon factors which were mostly under his control and the revenues he generated could be significantly increased by demonstrating initiative, he ran the risk of loss through credit card fare charge-backs or NSF cheques and his taxicab operation was not highly integrated with that of the taxicab lessor given that he was free to work whenever he wished and for as long or as short a shift as he wished, and could take time during those shifts to do personal errands.

In addition to being employed as a school principal, the taxpayer worked as a freelance instructor at a college. She was successful in establishing that this supplementary endeavour was a business rather than employment, thereby entitling her to deduct some of the expenses claimed by her.

At the same time that an individual ("Johnson") had companies controlled by Johnson offer employment to the taxpayer, Johnson indicated to the taxpayer that Johnson would provide in his will that the taxpayer would receive 1/9 of Johnson's estate on death. Johnson later amended his will to provide that the taxpayer would receive 10% of the his estate provided the taxpayer was still then an employee. When the taxpayer's employment later was terminated, the taxpayer sued and received lump sums from the companies, which he included in his income as employment income, and also received a lump sum of $3,080,000 from Johnson, which represented approximately 10% of the net value of Johnson's estate at that time.

McArthur J. found that if the interest in the estate had been paid to the taxpayer in the normal course of events, it would not have been employment income, and the damages received in settlement of a claim for this amount accordingly were non-taxable.

The taxpayer ran his own hog operation on his farm but also worked as a barn manager at a nearby 6,400 hog-feeder farm. He was found to be an independent contractor given that the owner of the hog-feeder farm did not supervise the taxpayer's work, let him hire his own assistants (over its objections, in one instance), the taxpayer used his own tools and equipment and he shouldered a degree of financial risk in that he was paid a bonus equal to $1 for every hog shipped.

A retired engineer was engaged by a student tutoring company which provided the premises and some books, supplies, liability insurance, with the taxpayer providing his own calculator, some books, his home office to prepare his lectures and also his car to travel. The taxpayer was found to be an independent contractor given, among other things, that he refused to follow the teaching approach prescribed by the company and taught only on the condition that he use his own methods, which reflected his high degree of qualification and his over 30 years of teaching experience. McArthur J. noted that it was not appropriate to apply the integration test, which had not been applied in the Sagaz case ([2001] 2 S.C.R. 983).

Individuals who hooked up customers of the appellant for the provision to the customers of cable or internet services, or who sold such services on behalf of Shaw ("Shaw") were found to be employees of Shaw rather than independent contractors for purposes of the Employment Insurance Act and the Canada Pension Plan Act.

The agreement with each individual pointed to employment status: Shaw was required to pay the individual's workers compensation monthly premiums, and insurance premiums for disability and life insurance all of which Shaw deducted out of amounts paid to the individuals; Shaw provided medical and dental insurance without charge to the individual; upon termination the individual received a payment in lieu of notice; and the terms were not negotiated.

In addition, Shaw had "overarching control" over the individuals (particularly the installers) including detailed scheduling control over when and where they worked; the selling individuals (although not the installers) did not own significant tools; for all practical purposes the individuals could not hire helpers; and notwithstanding their responsibility for some expenses there was no real prospect of the individuals suffering a loss; the compensation of the installers on a piece-work basis and the sellers on a commission basis was not inconsistent with employment status; and the individuals had no separate business premises, no separate customers (the customers being Shaw customers) and virtually no capital to invest.

Taxicab drivers who contracted with the appellant to drive vehicles owned by them, or leased by them from separate owners, were not engaged in insurable employment given that the appellant did not own the "tools of the trade" (the taxicabs) and the drivers were in a position to gain a profit or suffer a loss from the operation of the business and, in fact, their degree of financial risk was higher than that of the appellant.

The supply of car seat covers to Canadian Tire represented the chief revenue source of a Canadian company("Design"). Design lost this business to a replacement supplier ("Sagaz") as a result of bribes paid to a Canadian Tire executive by the controlling shareholder ("Landow") of a New York corporation ("AIM") which had been retained by Sagaz to promote business with Canadian Tire. Sagaz was found not to have vicarious liability to Design for the tortious conduct of AIM, as vicarious liability would only arise for acts of an employee (or agent) rather than an independent contractor.

AIM was an independent contractor because it was engaged in business on its own account. Central to the inquiry was the fact that AIM decided how much time to devote to Sagaz and how much time to devote to its services for other supply companies (so that "although Sagaz controlled what was done, AIM controlled how it was done" (para. 55). In addition, AIM had its own offices, paid it own costs of conducting its business, and would have realized a loss if these expense had exceeded its commissions.

Major J stated (at para. 47):

Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. [in Wiebe] that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker's activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the performance of his or her tasks.

Compensation received by a police officer for performing special paid duty, i.e., compensation received directly from third parties for performing services in uniform at their special request, represented income from employment rather than income from a business. The contracts with the third parties were entered into by the police force and the force had, and exercised, the right to control the manner in which the work was done.

A lump sum of Cdn.$50,000 that the taxpayer received from his former U.S. employer was found to be compensation for damages suffered by him in agreeing to move to the United States to start his new job. On this basis, the amount was not taxable under s. 5(1).

Tax equalization payments received by a U.S. resident while employed in Canada were found to constitute part of her remuneration for services within the meaning of s. 5(1).

In finding that bonuses that a company had declared in favour of its controlling shareholder were not employment income to him, Bowman TCJ. stated (at p.196):

"It is true that as controlling shareholder he could have required the company to pay it to him but he did not do so. Employment income must be received, not receivable, to be taxed ... . Nor can I accept that the mere bookkeeping entry of moving the bonus owing to Mr. Phillips from a 'bonus payable' to 'due to shareholder' connotes receipt. Accounting entries are supposed to reflect reality, not create it ..."

In finding that amounts advanced to a commissioned salesman and director of a corporation in excess of the commissions earned by him, constituted loans rather than remuneration, Kempo TCJ. stated (p. 1277-1278):

"that if a commissioned sales person may be expected to earn commission income in the future, and to help out in the meantime the employer pays advances in anticipation that sales events will happen, those amounts may appropriately be treated as short term loans".

The special commissioner did not make any reversible error in finding that a "vision mixer" who undertook short engagements for a large number of television companies (generally 120 to 150 engagements per year typically lasting only one day), who incurred very substantial expenditures in the course of obtaining and organizing those engagements, and who took the risk of his fees becoming bad debts, was self-employed, notwithstanding that he did not risk any of his own capital in the various engagements.

As part of the trade of a professional soccer player to another team, his former team paid him £75,000 to induce him to agree to the trade so that it could receive a transfer fee from the other team. The £75,000 "signing-on fee" was an emolument of his employment.

A "joint venture" manager of one of the defendant's stores was found in obiter dicta to be an employee given that his freedom of action was severely limited by the joint venture agreement and by the defendant's detailed operational policies, and given the retention of ownership by the defendant of the place of business and the merchandise sold there.

The Court did not disturb the Commissioners' finding that a senior clerk, who provided at his own expense full clerking services to the 20-barrister members at St. James' Chambers in consideration for a percentage of the gross fees of each barrister, did not hold an "office".

It was stated that no single test is determinative for the purpose of distinguishing a contract of service from a contract for services, although it was stated that the best synthesis is that in Market Investigations where Cooke, J. stated that factors to be considered in determining whether the person who has engaged himself to perform the services is performing them as a person in business on his own account include absence of control over the way in which he performs the services and whether he provides his own equipment, whether he hires his own helpers, what degree of financial risk has been taken and whether he has an opportunity of profiting from sound management in the performance of his task.

Tips which were paid by customers of a CP hotel to CP which in turn distributed the tips among the hotel employees constituted in respect of each employee "remuneration ... paid by his employer" for purposes of the Unemployment Insurance Act, 1971.

The contracts between a franchisee of Weight Watchers International Inc., and "Lecturers" who instructed in the Weight Watchers' programme, provided that "the Lecturer is not an employee of the Company but is an independent contractor...". It was found, however, "that a lecturer is tied hand and foot by the contract with regard to the manner in which she performs her work under it ... [T]he only possible conclusion is that she is an employee."

The taxpayer, who succeeded to the position of head coach at a football club, resigned from that position, became an employee of a company owned by him and his wife, and had the company enter into an agreement with the club pursuant to which his services would be provided to the club. In finding that the fees received by the company were not income to the taxpayer, Cattanach J. noted that, with the exception of minor departures (e.g., the taxpayer in some cases was reimbursed for expenses directly by the club, and the company violated a prohibition in the services agreement against engaging in other businesses the services agreement was scrupulously adhered to by the parties and (at p. 5006) "the agreements entered into between the appellant and the Company and the Club were bona fide commercial transactions all in furtherence of the Company's legitimate objects".