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Employment Insurance

Contributions

“Placement or employment agency” in Employment Insurance Act (Can.) given same meaning as in s. 34(1) of Canada Pension Plan Regulations

Appellant corporation was in business of providing various social services workers to temporarily work with group homes, schools and families to temporarily so clients could meet their staffing needs. Workers were paid by corporation based on set hourly amount without regard to what corporation was paid by its clients, and did not pay fee to corporation. Ruling was made under Employment Insurance Act (Can.) that one of corporation’s workers was engaged in insurable employment on basis that corporation was “placement or employment agency.” Corporation appealed. Appeal dismissed. Although there was no definition of “placement or employment agency” in Act or its regulations, it was given same meaning as in s. 34(1) of Canada Pension Plan Regulations. Accordingly, corporation’s argument, that it was not placement or employment agency because it was not paid fee by its workers, failed. With exception of lack of fixed hours, and of right of corporation to assign work hours to worker, corporation’s control over its workers, which included control of worker by corporation’s clients, was consistent with terms of employment under contract of service. Corporation placed its worker with its clients to provide services to them, corporation paid worker for her services, and worker performed those services under clients’ direction and control, so appeal was dismissed.
Wholistic Child and Family Services Inc. v. Minister of National Revenue (Feb. 9, 2016, T.C.C. [Employment Insurance], Patrick Boyle J., 2014-2870(EI), 2014-2871(CPP)) 263 A.C.W.S. (3d) 232.


Taxation

Goods and Services Tax

Services provided by facilities were “personal services” falling within definition of “homemaker services”

CH Ltd. and CT Ltd. were for-profit operators of residences for seniors (facilities). CH Ltd. and CT Ltd. entered into agreements with health authority for provision of services to facility residents. On assessment, claims by CH Ltd. and CT Ltd. for refunds of GST paid in error were denied. CH Ltd. and CT Ltd. claimed for refunds of GST paid in error on supplies of homemaker services provided by third-party contractors in course of operating facilities. Appeals allowed in part. Plain and ordinary meaning of “personal service” would clearly encompass services assistance with activities of daily living such as were provided to residents of both facilities due to their age, infirmity or disability. There was little ambiguity in words “personal service” and ordinary meaning of those words must play dominant role in their interpretation. “Personal service” in definition of “homemaker service” was not restricted to services similar in nature to examples that followed term “household or personal service” in definition provided in Excise Tax Act. Use of specific examples after general term in legislation does not restrict meaning of general term to cases similar to specific examples. Presumption is that in using specific examples, Parliament intended extension of meaning of general term to things that would ordinarily have been seen as not falling within general term. Use of word “or” between “household” and “personal” in term “household or personal service” supports view that Parliament intended to distinguish between household and personal services and intended to include services beyond those ordinarily considered household services. Fact that exemption for homemaker services falls within Part II of Schedule V of Act, which deals with health care services, is further contextual support for conclusion that assistance provided to elderly or infirm persons with activities of daily living would be included in concept of “personal service”, and would support conclusion that examples used in definition of “homemaker service” were included because they might not otherwise be considered as health care services. Contracts between third-party contractors and facilities clearly provided for supply of services including care services, hospitality services and housekeeping services. Services in issue were provided to residents in their place of residence, regardless of whether they were provided inside their units or rooms in other areas of premises. Since services provided by facilities were “personal services” falling within definition of “homemaker services”, it would follow that program under which health authority paid for those personal care services would be program in respect to homemaker services. Subparagraph 13(1)(b)(ii) of Act does not require that sole purpose of program under which funding is provided to fund homemaker services. It was only necessary to show connection between provincial continuing care program and provision of homemaker services by third-party contractors. Personal care services at facilities were funded as part of continuing care program partly administered by health authority. Health authority was administering government program in respect of homemaker services.
Courtyard Terrace Assisted Living Residence Ltd. v. R. (Nov. 5, 2015, T.C.C. [General Procedure], B. Paris J., File No. 2011-3419(GST)G, 2011-3420(GST)G) 259 A.C.W.S. (3d) 788.

Taxation

INCOME TAX

Motion to exclude lawyers’ testimony was dismissed

Company terminated taxpayer’s employment by sending notice of termination in accordance with employment contract. Parties reached settlement agreement and signed confidentiality clause. Taxpayer included confidential settlement amount on his tax return as retiring allowance. Taxpayer commenced appeal objecting to minister’s assessment confirming imposition of confidential settlement amount as retiring allowance. Taxpayer sought to include testimony of lawyers, who acted for parties during signing of settlement agreement, alleging it was necessary for court to determine true nature of payment made by company to taxpayer. Company brought motion pursuant to s. 65 of Tax Court of Canada Rules for order forbidding lawyers from testifying on existence and terms of settlement agreement, and that if testimony was allowed, hearing be conducted in camera. Motion granted in part. Motion for request for in-camera hearing was granted, but motion to exclude testimony was otherwise dismissed. Discussions between lawyers prior to settlement were not protected by professional secrecy, and lawyers were not precluded from testifying. Taxpayer established two overarching public interests which prevailed over interest in favour settlement negotiations. Overarching public interests were preservation of Canadian tax base and taxpayer’s right to fair trial. Based on contract and circumstances under which settlement agreement was reached, clauses of agreement did not show that parties intended to exclude exceptions to privilege laws. It was implicit at time parties signed agreement that they were aware that terms of agreement could be brought to attention of public authority. Court could not conclude that parties clearly intended to preserve confidentiality in situation when considering exceptions to settlement privileges. Section 151.21 of Code of Civil Procedure could not prevent intended testimony.
Abenaim c. R. (Jul. 24, 2015, T.C.C. [General Procedure], Johanne D’Auray J., File No. 2012-2005(IT)G) 258 A.C.W.S. (3d) 444.

Employment Insurance

CONTRIBUTIONS

Taxpayer was independent contractor

Minister determined that A was engaged by appellant business owner in insurable and pensionable employment from Jan. 1 until Nov. 14, 2012. Owner brought appeal. Appeal allowed. Subjective intention of parties not determinative on its own, but owner’s intention clear from actions, notably not taking source deductions, issuing cheques that were sometimes marked “contract” and issue of tax slips on subcontractor basis. A’s testimony self-serving as he wished to claim employment insurance benefits. A worked under conditions for many years without questioning status. A deducted business expenses on his tax returns. A was experienced painter who did not require supervision. A had considerable freedom to take time off in middle of a job and refused to work overtime. Control factor favoured interpretation that A was independent contractor. A chose to use own tools, although owner’s tools available. Lack of assumption of risk and opportunity for profit favoured employment. Key factor was loose relationship between parties.
Abhar v. Minister of National Revenue (Jun. 26, 2015, T.C.C. [Employment Insurance], Judith M. Woods J., File No. 2014-1926(CPP), 2014-1927(EI)) 254 A.C.W.S. (3d) 854.

Taxation

INCOME TAX

Taxpayer had predominant intention to make profit

Taxpayer had been sports journalist who had written sports blogs as part of his employment. After taxpayer’s employment ended in 2011, he started his own sports blog on professional website with view to obtaining advertisement revenue from sponsors. Taxpayer continued to travel to sports team’s games and deducted travel expenses. Taxpayer claimed no gross income and business loss of $26,540 in 2011, and gross income of $7,500 but net business loss of $33,366 in 2012. Minister of National Revenue denied taxpayer’s business losses on ground that taxpayer did not conduct any business activities. Taxpayer appealed. Appeals allowed. While there was commercial aspect of taxpayer’s venture, there was also personal element for sports fan to travel to watch sports team play and blog about it. Taxpayer had over 20 years’ experience as sportswriter but no experience in selling advertising or running media business. Taxpayer did nothing to solicit sponsors but was able to obtain one sponsor. While taxpayer’s intended course of action was poor business judgment, it was not so devoid of commercial reasoning to conclude venture was personal. Taxpayer did not provide evidence to assess venture’s capability to make profit. Given early stage of venture, it was found to go beyond hobby. Taxpayer had predominant intention to make profit and behaved in reasonable businesslike manner to pursue that end, while in start-up phase.
Berger v. R. (Jun. 19, 2015, T.C.C. [Informal Procedure], Campbell J. Miller J., File No. 2014-4251(IT)I) 254 A.C.W.S. (3d) 232.   

Taxation

INCOME TAX

Favourable income tax consequences did not change nature of gift

Taxpayer purported to make gift to city of ecologically sensitive property he had purchased from father. Minister assessed taxpayer under Income Tax Act (Can.), for 2009 taxation year, treating transaction as disposition of inventory and including value of land less its original cost as income from business. Taxpayer appealed. Appeal allowed. Transaction was charitable gift. Taxpayer was credible. Taxpayer did not acquire and dispose of land as part of business. No indicia of business existed. Putting land in possession of corporation and taking steps to rezone it did not make venture business. Adventure or concern that involves acquisition of land that is ultimately subject of bona fide charitable donation for no consideration is not adventure or concern in nature of trade. Land had been purchased by taxpayer’s father for no reason beyond owning land, and purchased by taxpayer as pretext to give money to father. Application for subdivision and construction of gravel road were not indication of business, but merely steps taken to protect asset. Taxpayer did not have primary intention to purchase land, and whether development of land was secondary purpose was unclear and not carried out. Favourable income tax consequences did not change nature of gift. Transaction was gift subject to capital gain deemed to be zero.
Staltari v. R. (May. 13, 2015, T.C.C. [General Procedure], John R. Owen J., File No. 2013-1038(IT)G) 252 A.C.W.S. (3d) 863.

Employment Insurance

CONTRIBUTIONS

Court not bound by terms of contract where contract did not reflect realities of situation

Minister determined that housekeeping services were insurable employment although workers were held not to be employees. Head of agency appealed from determination made by Minister that insurable employment within meaning of Employment Insurance Act (Can.), existed. Appeal allowed. Application of control test determinative. Clients were often not present when workers were doing housekeeping. Although work not specialized workers had measure of independence in how they carried it out. Court not bound by terms of contract where contract did not reflect realities of situation. Agency contribution to expenses did not occur. Burden of proof rested on Minister. Minister failed to establish that workers were under direction and control of agency.
Barbeau c. Ministre du Revenu national (May. 22, 2015, T.C.C. [Employment Insurance], Robert J. Hogan J., File No. 2012-4560(EI), 2013-2811(EI)) 252 A.C.W.S. (3d) 736.
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