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Case Law is a sample selection from the weekly summaries of notable unreported civil and criminal court decisions published in Law Times newspaper.

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Social Welfare

INCOME TAX

By buying tickets each week, amounts claimed did not qualify for public transit tax credit

Appeal by taxpayer from reassessment by Minister under Income Tax Act (Can.), for 2009 taxation year. Taxpayer lived in Whitby Ontario and commuted to work in downtown Toronto each day by taking train. Taxpayer purchased tickets which were valid for ten rides for $64.25 to $66.75. Taxpayer claimed those amounts under public transit tax credit as provided in s. 118.02(2) of Act. Appeal dismissed. Tickets that were purchased by taxpayer were paper tickets, not an “eligible electronic payment card” or an “eligible public transit pass” as required by Act. By buying tickets each week, amounts claimed did not qualify for public transit tax credit.
Taino v. Canada (July 25, 2012, T.C.C., Webb J., File No. 2011-3106(IT)I) 218 A.C.W.S. (3d) 228 (6 pp.).

Social Welfare

CANADA PENSION PLAN

It was employees who primarily benefited from distribution of beer tickets

Appeal by employer from reassessment by Minister regarding Canada Pension Plan remittances. Employer was beer manufacturer who regularly provided employees with tickets entitling them to free cases of beer from manufacturing premises. Minister reassessed employer on basis that free beer was taxable benefit to employees such that its retail value had to be included for purposes of employer’s Canada Pension Plan remittances. Appeal dismissed. Value of beer would be subject to employee contribution and employer remittance if it was taxable benefit under s. 6(1)(a) of Income Tax Act (Can.). To fall into common law exception, free beer must have been provided primarily for benefit of employer and any personal enjoyment by employee must have been merely incidental to employer’s business purposes. Employer undoubtedly derived some benefit from both quality control and marketing perspective from its staff beer policy encouraging employees to report any problems with quality and to share free beer with non-employees. Employees had no legal obligation to cash in ticket, sample product, share it with others or report any quality control problems, and employer received few quality reports and did not even monitor employees’ use of tickets. Employer did not rebut Minister’s assumption that it was employees who primarily benefited from distribution of beer tickets, and employer who received incidental benefit. It was established law that employee benefits should be valued at fair market value, which in this case was retail value of beer rather than cost to employer of manufacturing it.
Steam Whistle Brewing Inc. v. M.N.R. (June 26, 2012, T.C.C., Pizzitelli J., File No. 2011-4037(CPP); 2011-4039(EI)) 218 A.C.W.S. (3d) 216 (15 pp.).

Taxation

INCOME TAX

Unanswered questions not irrelevant, abusive or designed to embarrass or harass party

Motion by Crown for order compelling taxpayer to provide written responses to examinations for discovery queries conducted by written questions. Appeal related to determination under s. 55(2) of Income Tax Act (Can.), as to whether transaction or series of transactions was entered into for purposes of reducing amount of capital gain in taxpayer’s hands. Motion granted. On basis of pled assumptions, series of transactions were not patently unrelated nor prima facie lacking in nexus to application and operation of s. 55(2). Based upon principles established in 2004 case, it was clear that unanswered questions on face of pleadings were not patently irrelevant nor were they abusive or designed to embarrass or harass party or to delay case. Order was made that taxpayer be compelled to provide answers to unanswered questions and such responses be delivered within 30 days from date of issuance of decision and order.
D & D Livestock Ltd. v. Canada (June 12, 2012, T.C.C., Bocock J., File No. 2011-137(IT)G) 217 A.C.W.S. (3d) 722 (9 pp.).

Employment Insurance

APPEAL

Intermittent nature of layoffs more characteristic of family employment

Appeal from employment insurance decision ruling bar manager job as not insurable employment. Appellant worked several years as manager and waitress for bar jointly owned with husband. EI assessment determined bar manager’s employment was not insurable employment due to family run nature of business and link of dependency as family member rather than proof of employee subordination as role. Original assessment ruled lengthy unpaid tasks such as bookkeeping and upkeep of bar more characteristic of employment not insurable due to dependency of family relation. Original assessment and reviewing court held that intermittent nature of appellant’s lay-offs from bar manager role more characteristic of family employment rather than genuine labour force lay-off due to seasonal work. Reviewing court held original assessment reasonable on facts and law. Appeal dismissed.
Jacques v. M.N.R. (Mar. 29, 2012, T.C.C., Angers J., File No. 2011-1876(EI)) Reasons in French. 217 A.C.W.S. (3d) 605 (13 pp.).

Appeal

SENTENCE APPEAL

Trial judge erred in misapplying parity principle

Appeal by Crown from sentence imposed on accused after she was convicted of seven counts of dangerous driving causing bodily harm. Accused and her friend encountered vehicle occupied by six males and they flirted with them. Both drivers then engaged in high-speed race on residential street that had posted speed limit of 50 kilometres per hour. Cars collided and were destroyed. Accused’s friend suffered serious injuries. Accused and driver of other vehicle and his passengers were also injured. Accused received suspended sentence and she was placed on probation for two years. She was also subject to two-year driving prohibition. Issue of parity based on sentence imposed on driver of other vehicle was considered. Driver of other vehicle was charged with same offences as accused. He pleaded guilty to one count. His sentence was suspended and he was placed on probation for 18 months. Probation included three months of house arrest. He was also subject to one-year driving prohibition. At time of collision accused was 40 and she had no criminal record. Other driver was in his 20s and he also did not have criminal record. Appeal allowed. Sentence was set aside. It was replaced by nine-month custodial sentence and by five-year driving prohibition. Probation order was set aside as there was no reason for it. Trial judge erred in misapplying parity principle. There were important differences between accused and other driver. She further erred by imposing sentence that did not adequately reflect principles of general deterrence and denunciation. These errors led judge to arrive at sentence that was demonstrably unfit.
R. v. Rawn (July 9, 2012, Ont. C.A., Epstein, Weiler and Watt JJ.A., File No. C53457) 102 W.C.B. (2d) 33 (15 pp.).

Social Welfare

OLD AGE SECURITY

Minister had statutory duty to include pensioners’ rental income

Appeal by pensioners from decision by minister. Pensioners were in receipt of Guaranteed Income Supplement (GIS) pensions. Pensioners’ income for GIS purposes was calculated by minister in accordance with base calendar year method. In calendar year 2008, pensioners earned rental income. Pensioners disposed of rental property in 2009. Minister included 2009 rental income to date of disposition of property in pensioners’ 2010-2011 income for GIS purposes after making certain adjustments for sale of pensioners’ business. Appeal dismissed. By operation of s. 14(2)(c) of Old Age Security Act (Can.), Minister had statutory duty to include pensioners’ rental income in income for GIS purposes. No exception existed to application of base calendar year method in present case.
Parrotta v. Canada (Minister of Human Resources and Skills Development) (May 18, 2012, T.C.C., Paris J., File No. 2011-2012(OAS)) 217 A.C.W.S. (3d) 221 (8 pp.).

Employment Insurance

CONTRIBUTIONS

Distinction to be drawn between deference and control

Appeal by taxpayer from assessment for unpaid 2008 Employment Insurance premiums and Canada Pension Plan contributions with respect to worker. Taxpayer’s business involved testing and evaluating persons for potential learning disabilities. In 2008, taxpayer’s co-owner engaged post-graduate educational assessment student (“worker”) under written independent consultant contract as educational assessor. After co-owner screened test subjects, worker administered tests at taxpayer’s premises before scoring tests, discussing results with co-owner, and agreeing upon diagnosis. Worker then prepared draft report based on co-owner’s and own input, final version of which was signed by co-owner. Appeal allowed. Worker was independent contractor and not employee. Control factor supported worker’s status as independent contractor. Taxpayer had only limited control over manner in which work was done. Reports given to clients were joint work product of two professionals, co-owner and worker. Assessors knew they were represented as joint authors of reports and had professional responsibility to ensure that they agreed with evaluation, so it would conflict with worker’s professional responsibilities as assessor to consider worker to be under taxpayer’s control. While this worker was in learning phase and deferred to co-owner’s opinions, worker still had professional responsibility as assessor, and distinction was to be drawn between deference and control. Despite worker’s belief due to suggestions for preparing reports that she was under co-owner’s control, these were merely suggestions, and co-owner did not dictate how reports were to be written. Fact that reports had to be prepared at taxpayer’s premises arose from fact that reports were confidential and had to be written on computers with enhanced security features. Loose work arrangement and assessors’ ability to accept or decline work assignments and to work elsewhere strongly supported worker’s status as independent contractor. Taxpayer provided all tools but that was not important factor. Assessors had some control over profit, but neither chance of profit nor risk of loss were significant factors. Worker’s signing of contract and knowledge that there would be no source deductions suggested worker knew she was entering into independent consultant relationship and was not employee. While taxpayer should have given worker better explanation of status, parties’ intentions supported that this was independent contractor relationship.

Worldwide School Search and Relocation Services Inc. v. M.N.R. (Apr. 26, 2012, T.C.C., Woods J., File No. 2011-593(CPP); 2011-597(EI)) 215 A.C.W.S. (3d) 243 (8 pp.).
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