http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/70951/index.do 
Wagg v. M.N.R. (April 8, 2014 – 2014 TCC 109) involved an application by the taxpayer for EI benefits for the 2011 calendar year. The taxpayer ran an unincorporated landscaping and snow removal business from 2001 to 2007. In 2007 he incorporated the business. In 2010 he married and transferred all of his shares to his wife. The test he had to meet was as follows:
[7] The sole question to be determined is whether, based on the evidence at the hearing, it is reasonable to conclude that Mr. Wagg’s employment was not substantially similar to arm’s length employment “having regard to all the circumstances of the employment, including the remuneration paid, the terms and conditions, the duration and the nature and importance of the work performed.”
The court was not satisfied with the evidence of the terms of employment nor the record-keeping involved:
[9] I will first consider the remuneration. Mr. Wagg was employed at a flat bi-weekly salary of $1,560, plus 4 percent for vacation pay, and an additional $4,440 paid in December as a Christmas bonus.
[10] At the hearing, Mr. and Mrs. Wagg testified that the salary was kept the same as in prior years. They submitted that the salary was within the range of arm’s length hourly rates for a person working a 40 hour work week. Mr. Wagg testified that these were the hours worked, on average.
[11] One of the problems that I have with this position is that the work hours in a snow removal business must vary substantially with the weather. I think it is unlikely, therefore, that an arm’s length employer would provide remuneration to an arm’s length worker engaged in snow removal based on a fixed salary.
[12] A second difficulty that I have is that no records were kept of the hours worked. I can understand how hours for a landscaping business could be regular, but I do not understand how hours could be accurately estimated by the appellants for the snow removal business without some type of records being kept. I am not satisfied based on the evidence presented that Mr. Wagg worked an average of 40 hours per week.
[13] Accordingly, the appellants have not established that the remuneration reflects arm’s length terms.
The court was particularly unimpressed by the evidence of the taxpayer and his wife:
[17] Before concluding, I would also comment that I found much of the testimony of Mr. and Mrs. Wagg to be far-fetched. They described an employment relationship in which Mr. Wagg’s day to day activities were directed in detail by Mrs. Wagg and that Mr. Wagg reported to her throughout the work day. As an example, they testified that Mrs. Wagg would recommend what type of lawnmower to use for a particular job.
[18] The circumstances in this case are that this business had been operated by Mr. Wagg for about 10 years prior to his marriage to Mrs. Wagg. Mrs. Wagg had a full-time job as an educator. It is simply not plausible that the business operated on the basis suggested in their testimony.
[19] The appeals will be dismissed.