Section 5
Subsection 5(2)
Paragraph 5(2)(b)
Administrative Policy
7 October 2020 APFF Roundtable Q. 6, 2020-0852181C6 F - Par. 5(2)(b) of the Employment Insurance Act
Équipements Boifor, 2019 CAF 69 concluded that two shareholders did not have insurable employment by virtue of s. 5(2)(b) of the EIA given that they controlled more than 40% of Boifor's shares, taking into account those individuals’ shares held indirectly through a holding corporation, even though the shares were held on a 50-50 basis and no one individually held control of the holding corporation. Does CRA accept this decision and not the contrary position stated at the 2009 APFF Conference? Would CRA’s position change if one shareholder held 51% of Holdco and the other held 49%? CRA responded:
In light of the FCA's decision, the CRA must now consider the proportionate attribution approach in similar situations to determine whether the employment of a person who controls more than 40% of the voting shares of the employing corporation is insurable. …
… The proportionate attribution approach leads to the conclusion that the two shareholders each control more than 40% of Opco's voting shares (50% of 100%) for the purposes of EIA paragraph 5(2)(b). …
The approach remains the same where the shareholders held 51% and 49% of the voting shares of Holdco, respectively. Thus, their employment would not be insurable because they had effective control of 51% and 49% of the voting shares of Opco, respectively, for the purposes of section 5(2)(b) of the EIA.
11 October 2013 Roundtable, 2013-0495911C6 F - Insurable employment
Two corporations, each having a sole shareholder, are partners of a partnership ("S.E.N.C.") which, in turn, pays salaries directly to each such shareholder. How does s. 5(2)(b) apply? CRA responded:
[E]mployment with the S.E.N.C. is employment with its partners. Thus, no EI premium would be required in respect of the employment of the taxpayer controlling more than 40% of the voting shares of the corporation, which is a partner of the partnership.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) | partners treated as employers of partnership employees | 125 |
Section 52
Subsection 52(5)
Cases
Canada (Attorney General) v. Emamifar, 2026 FCA 141
After providing in s. 52(1) of the Employment Insurance Act for the right of the Canada Employment Commission to reconsider an EI claim within 36 months of the payment of the related benefits, s. 52(5) extends this reconsideration period:
If, in the opinion of the Commission, a false or misleading statement or representation has been made in connection with a claim, the Commission has 72 months within which to reconsider the claim.
The applicant elected to take mat leave of 18 rather than 12 months. In her application, in order to be relieved of the obligation to provide bi-weekly reports (essentially certifying that she was still not working), she provided the requested up-front certification that she would inform the Commission if her work resumed during the 18 months - and, indeed, she expected to be on mat leave for the full 18 months. However, at the 12-month point, her circumstances had changed and she recommenced working, without informing the Commission. She considered her receipt over 18 months of benefits, approximating what she effectively could otherwise have elected to receive over 12 months, to be fair.
Heckman JA found no reviewable error in the finding below that the applicant’s failure (referenced as an “omission”) to inform the Commission did not amount to a “representation” to which s. 52(5) could apply. Accordingly, the Commission was out of time in trying to recoup, beyond the 36-month point, the last six months of benefits.
This case is consistent with the jurisprudence on ITA s. 152(4)(a)(i) that the identification of a misrepresentation attributable to neglect etc. must be made in relation to the state of affairs at the time of the return-filing. (See, e.g., Vachon, at para. 7.)
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) | a failure to fulfil a commitment to report a return to work while collecting mat leave EI benefits was not a “misrepresentation” | 399 |
| Tax Topics - Statutory Interpretation - Implied Exclusion | application of implied exclusion rule cannot be determinative | 270 |
Section 38
Subsection 38(1)
Paragraph 38(1)(a)
Cases
Canada (Attorney General) v. Bellil, 2017 FCA 104
After losing his job, the respondent (Mr. Bellil) started claiming employment insurance benefits effective April 14, 2013. Although he was outside Canada from June 24 to August 10, 2013 and from September 3 to October 4, 2013, for a total of 11 weeks, for each such week for which he electronically completed his employment insurance declaration cards, he answered "no" to the question "Did you work outside Canada between Monday and Friday during the period covered by this statement? He was assessed a penalty of $1,082.00 under ss. 7.1(5) and 38 of the Employment Insurance Act. On his appeal of this decision, the Social Security Tribunal, General Division (SST-GD) noted that Mr. Bellil had indeed produced false statements but accepted his explanation that he had not intended to defraud, and canceled the monetary penalty and notice of violation. This decision was affirmed by the Appeal Division (SST-AD).
De Montigny JA stated (at paras 10 and 11, TaxInterpretations translation):
Clause 38(1)(a) of the [Employment Insurance] Act provides that the Commission may impose on a claimant a penalty where a claimant made a representation that the claimant “knew’’ was false or misleading. …
With respect to the interpretation to be given to the word "knew", this Court clarified that a subjective test must be used to determine whether the requisite knowledge exists. The issue, therefore, is not whether the claimant should have known that his or her statement was false or misleading; a false but innocent statement will not give rise to penalties. That said, it is not enough to proclaim ignorance to escape sanctions; common sense and objective factors may be taken into account in deciding whether a claimant has a subjective knowledge of the falsity of his or her statements. …
Before remitting the file to the SST-AD for a fresh decision, De Montigny JA stated (at para 14):
By implicitly endorsing the decision of the SST-GD that the intent to defraud would be required for a person to "knowingly" make a false or misleading statement, the SST-AD erred. As noted above, the only requirement imposed by the legislature is that a claimant made a representation that the claimant “knew’’ was false or misleading, that is to say, with full knowledge of the facts. The absence of fraud or having integrity is irrelevant.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) | claimant makes a representation that it "knows" to be false when it has full knowledge of the facts | 159 |
Section 82
Subsection 82(1)
See Also
Andrew Peller Limited v. M.N.R., 2016 DTC 1009 [at 2553], 2015 TCC 329
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].
| Other locations for this summary | |
|---|---|
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | restaurant tips are remuneration from an employer |
| Tax Topics - Other Legislation/Constitution - Federal - Canada Pension Plan - Section 8 - Subsection 8(1) | restaurant tips are remuneration from an employer |
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Specific v. General Provisions | use of "gratuities" in a specific provision did not imply that another kind of gratuity could not be caught under a general provision | 246 |
Section 145
See Also
Henson v. The Queen, 2014 DTC 1092 [at at 3161], 2014 TCC 43 (Informal Procedure)
The taxpayer received a lump-sum worker's compensation payment that brought his income for the year above the repayment threshold in s. 145. Woods J found that the taxpayer was therefore obligated under s. 145 to repay a portion of his employment insurance payments, regardless of the result being harsher because he had received a lump sum.