http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/218847/index.do
Inowal Transport Ltd. v. M.N.R. (February 13, 2017 – 2017 TCC 26, V. Miller J.).
Précis: The issue was whether 4 workers were engaged in contracts of service with the appellant corporation in 2014. In the case of 2 of the workers, they were related to the appellant corporation, so there was a secondary issue of whether the agreement were substantially similar to contracts of employment that would have been entered into if they had been dealing at arm’s length with the appellant.
The Tax Court held that the two related workers, Simarjit and Varinderpal, were not engaged in insurable employment. The occasionally accompanied their uncle on this trips but were not paid. The third worker, their uncle, Surinder, was working on his own account and not for the appellant. The fourth worker, Mohinder, was not present in Canada in 2014. Thus the appeal was allowed and the assessment under appeal vacated.
Note: The facts of this case can be a bit confusing. Simarjit and Varinderal were the nephews of Surinder. Mohinder was the brother of Surinder and father of Simarjit and Varinderal. The shareholdings were Simarjit (30%), Varinderal (30%) and Surinder (40%).
Decision: The Court did not find this a difficult case:
[35] It is my view that Simarjit and Varinderpal were not employed as truck drivers with the Appellant in 2014. They occasionally accompanied their uncle on his trips but they did not receive any wages. Varinderpal did not receive his Class 1 driver’s licence until September 2014. Although Simarjit received his Class 1 driver’s licence in 2013, he stated that he was a trainee truck driver.
[36] I have concluded that neither Simarjit nor Varinderpal were employed by the Appellant in insurable employment in 2014.
[37] The question that must be answered with respect to Surinder is whether he was an employee or an independent contractor with the Appellant. That is, was he performing his services as a person in business on his own account: 671122 Ontario Ltd v Sagaz Industries Canada Inc, [2001] 2 SCR 983 at paragraph 47.
[38] I have concluded that Surinder was not engaged pursuant to a contract of service with the Appellant. My decision is based on the following:
a) The Appellant did not control the manner in which Surinder performed his duties as a truck driver. The evidence indicated that none of the other shareholders of the Appellant had the expertise or experience as a truck driver to exercise control over Surinder.
b) Surinder alone decided when he would be remunerated and the amount he would receive from the Appellant. He definitely had a chance of profit.
[39] Mohinder was not an employee with the Appellant in 2014. According to the evidence, he was not in Canada in 2014.
Thus the appeal was allowed and the assessment under appeal vacated.