Victoria Five Star Cleaning Ltd. v. R. – TCC: Cleaners were independent contractors and not engaged in insurable or pensionable employment

Victoria Five Star Cleaning Ltd. v. R. – TCC:  Cleaners were independent contractors and not engaged in insurable or pensionable employment

https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/367249/index.do

Victoria’s Five Star Cleaning Ltd. v. M.N.R. (April 3, 2019 – 2019 TCC 73, Lafleur J.).

Précis:   The appellant provided workers (the Workers) for janitorial services in commercial and residential premises.  The sole question before the Tax Court was whether the Workers were independent contractors.  The Tax Court held that they were independent contractors, not engaged in insurable or pensionable employment, and allowed the taxpayer’s appeal.  There was no order as to costs.

Decision:   The Court accepted the evidence of the taxpayer’s sole shareholder and director, Mr. Ademi, that the intention was to enter into contracts for services and that the Workers would be independent contractors:

[49]  It is clear from the reading of the Subcontractor Service Agreement that the Appellant intended to hire workers under a contract for services and that the Workers would be independent contractors. Mr. Ademi’s testimony was clear in that his intent was that the Workers would be independent contractors and not employees of the Appellant. Throughout the Subcontractor Service Agreement, the term “subcontractor” was used to refer to the Workers. The agreement provided specifically that no withholding was to be made by the Appellant on payments to the Workers. Further, the evidence showed that T4A slips were issued by the Appellant to the Workers. The agreement also provided that monthly invoices needed to be issued by the Workers; however, the evidence showed that the Workers did not comply with this term. Some paragraphs in the agreement referred to the Workers as employees, but overall, I find that the intent to be inferred from the agreement is consistent with the creation of an independent contractor relationship between the Appellant and the Workers. On the basis of the evidence, I find that any reference to employment in the agreement is simply reflective of Mr. Ademi’s misunderstanding of the specific legal implications of the term. I find Mr. Ademi’s testimony to be credible and reliable in that respect.

The Court reviewed the other traditional factors applicable in EI/CPP cases and concluded that they did not tip the balance in the direction of insurable or pensionable employment.  Accordingly the taxpayer’s appeal was allowed, but without costs.