Tax Court of Canada

Employment Insurance

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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