Asare-Quansah v MNR, 2012 TCC 226

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Is a Sessional Lecturere an Employee?

Asare-Quansah v MNR, 2012 TCC 226

The issue was whether pursuant to subsection 103(1) of the Employment Insurance Act the worker was engaged in insurable employment.

The Taxpayer worked at the School of Continuing Studies at the University of Toronto.   He claims he was self-employed as a sessional lecturer, and that he did not intend to be an employee and always considered himself an independent contractor.

The Court concluded that cases requiring the determination of the relationship as either employment or independent contractor are highly fact specific, such that even a small tweaking of the facts can alter the nature of the relationship.  With regards to sessional instructors, little may be required to tip the balance either way.  In this case, the court held that the taxpayer was a professional who gave back to his professions the benefits of knowledge and experience over and above his working life.

The court stated that the application of the four pronged test in Wiebe Door Services Ltd. v. Canada, massaged slightly by comments of the Supreme Court of Canada in the 671122 Ontario Ltd. v. Sagaz Industries Canada Inc, 2001 SCC 59. case and by recent decisions of the Federal Court of Appeal (see The Royal Winnipeg Ballet v. M.N.R, 2004 TCC 390,  aff’d 2006 FCA 86 for example) is easily stated, it is not easily applied.  In this case, the court held that the taxpayer was in independent contractor.

The court identified the indicia or a working arrangement as control, ownership of tools, change of profit and risk of loss, and stated that the intention of the parties is only a factor to be considered where the intention was mutual among the parties.

The court stated that since UoT could not identify the rationale for their policy of treating sessional lecturers as employees, it was of no assistance in the case.

CONTROL

The court began by looking at control and noted that this is mostly the decisive factor.  Justice Miller stated as an aside that the difference of on-line vs in class lectures formats are not determinative.

The CRA relied on what is called control features in the Handbook the university provided in combination with the agreement signed by the taxpayer acknowledging that he would be bound by those controls.  The Court disagreed and held that the handbook was not a controlling factor, and stated that it could not be relied on as proof of an employment arrangement because:

  • the university representative stated that the Handbook itself is guide to assist instructors
  • the Handbook itself says that it applies to employees and independent contractors
  • the consequence for the failure to comply was the potential not to get another contract

The court also noted that:

  • although the university sets the date for courses, it does so with instructor input
  • the instructor had changed the schedule to accommodate his work
  • the majority of the work was preparation and making, which was done wherever and whenever the instructor chose
  • no one from UoT reviewed the instructor’s syllabus, attended lectures, and other than student evaluations provided comments on his performance
  • minimum and maximum number of students were set by the school, but with deference given to the instructor’s preference
  • Remuneration was a base amount plus an amount per student, and the school saw instructors as sharing in the revenue as partners

In the end, there were little control factors to point towards employment and several factors of independence to point towards independent contractor.

TOOLS

The court dealt with the “tools” factor. The instructor covered his own expenses of his home office. The School provided the classroom and online software as well as a resource centre (with very few resources).

The court noted that knowledge was claimed by the taxpayer as the main tool, but did not feel it needed to deal with this argument as the indicator of this factor was neutral.

Chance of profit – Risk of Loss

There were two remuneration systems among which an instructor could choose (flat fee or per student), and the instructor could also negotiate.  The taxpayer here had chosen a per-student remuneration basis.  The court noted that the reputation of the instructor and his teaching style, as well as the number of hours he devoted to preparation and making, all could lead to different rates of remuneration, which favoured independent contractor finding.

There was little risk of loss, absent the materials and preparation time, and this was seen as a neutral factor by the court.

CONCLUSION

The court referred to cases:

Heritage Baptist College v. Minister of National Revenue: instructors required to answer questions, dean determined who would be invited back, and payment was flat fee irrespective of the number of students. The court distinguished this case and Lopez v. Minister of National Revenue as they were different on the facts.

The court noted that with sessional lecturers little may be required to tip the balance as between employee and independent contractor.  These cases are very fact specific and even a small tweaking of the facts can change the nature of a relationship.

– Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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Michelle D’Elia v The Queen, 2012 TCC 180

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Canada Child Tax Benefit as Between Parents

D’Elia v The Queen, 2012 TCC 180

This case had two main issues: (1) whether the appellant was the “eligible individual” in respect of her son for purposes of claiming the CCTB, and (2) whether her son was a dependent for purposes of the GST credit.

The CRA denied the above benefits to the taxpayer for the four months that the child was not in her care.  The CRA assumed that due to the breakdown of the marriage the parents  began to live separate and apart, and that the child’s primary residence was the spouse’s house while the appellant had reasonable access.  The child resided with the appellant 48 hours every two weeks for some of the periods in question, and 129 hours every two weeks for some other periods.

The Court concluded that for purposes of claiming the CCTB and the GSTC, a female parent with whom a child resides for any period of time in the relevant months is presumed to be the eligible individual, absent assumptions or evidence that bring in the circumstances found in regulation 6301(1) into play.

The CCTB is calculated as an overpayment on a   monthly basis, that is then paid to an eligible individual as a refund of the   overpayment.  The determination is made   at the beginning of the month, thus one must determine whether or not a   person is an “eligible individual in respect of a qualified dependent at   the beginning of a particular month”.The GSTC is determined for eligible individuals in   relation to specified months (122.5(3)), and the specified months are July   and October of the immediately following taxation year, and January and April   of the second immediately following taxation year (122.5(4)).To be an eligible individual in respect of a   qualified dependant, for purposes of CCTB, two conditions must be   satisfied every month at the beginning of the month: (1) the person must   reside with the qualified dependant; and (2) the person must be the parent of   the qualified dependant who primarily fulfills the responsibility of care and   upbringing of the qualified dependant (paras 9-10).For the GSTC, one need only qualify at the   beginning of the specified months, and this again requires that the dependent   person reside with the person who is to be the qualified individual.

The court referred to the decision of the SCC in   Thomson v. M.N.R., 1945 CarswellNat 23, [1946] C.T.C. 51, the decision of the   TCC in S.R. v. The Queen, 2003 TCC 649 (CanLII), 2003 TCC 649, [2004] 1   C.T.C. 2386, and the decision of the TCC in Lapierre v. The Queen, 2005 TCC   720 (CanLII), 2005 TCC 720, 2008 DTC 4248, and determined that the question   of residence must be determined by looking at the child’s “settled and   usual abode” (para 16).

The court commented that one problem with the   Minister’s assumptions is the use of the word “resided”, which is a   question of fact to be determined only after applying the law to the facts,   and that it’s not proper to assume where a person is residing as this is a   conclusion that must be drawn after looking at the facts (para 18) – see   Nadalin v. The Queen, 2012 TCC 48 (CanLII), 2012 TCC 48.  Thus, these assumptions by the Minster are   not proper assumptions.The court also rejected the assumption that the child   was primarily residing with the spouse, as the ITA’s eligibility criteria   only require the dependent to be residing with the qualified individual, not   primarily residing.  The court looked not at the separation agreement,   but evidence of the child’s actual residence, and determined that the child   had a settled and usual abode with both the spouse and the appellant for all   of the months in question.  The issue   then was whether she was the person primarily responsible for the child’s   care. The court noted that the ITA s 122.6 assumed that the female parent   fulfilled this role, absent prescribed circumstances found in the regulations   at 6301(1).The court stated that none of the prescribed   circumstances were in the assumptions of the Minister, nor were any proven by   the Minister during the proceedings. Thus, if the child resided with the   female parent during any of the months required, then the statutory   presumption makes her the eligible individual.

– Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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Income Tax – HST/GST – International Tax