Tax Court of Canada


Employment Insurance

APPEAL
Neither worker nor employer able to describe relationship clearly and accurately

Appeal by worker and payer from finding worker was not engaged in insurable employment during three periods on basis worker and payer were related and were not dealing at arms’ length. Payer was roofing company and worker was son of sole shareholder. Payer operated seasonally, usually hiring seven or eight workers each season. Worker had worked for payer since 2001 and incorporated own roofing company of which he was sole proprietor, but worked only for payer. Facts relied on by Minister were that workers sometimes used his own tools, and sometimes used payer’s, had to do jobs arranged by payer and was paid $900 weekly salary, which worked out to $2 per hour more than other workers, to compensate for his supervisory work. Beginning in 2008, worker began to receive additional income for piece work that was performed at same time as his supervisory duties and assisted by other workers. Additional amounts earned by worker were in excess of $70,000 per year and other workers did not receive same piece work payment. It was not disputed that worker’s hourly rate was reasonable. Extra income and compensation for use of truck and equipment to operate second crew were in question. Confusion arose because of worker’s answers on Human Resources self-employment questionnaire. Worker was now clear in his testimony that he had always been employee of payer, he was not operating a roofing company, and confusion arose because he did not know how to qualify his relationship with payer. Appeal dismissed. Facts relied on by Minister were provided by worker and payer through questionnaire and conversations and neither was able to describe their relationship and piece work arrangements clearly and accurately. Relationship was first described as subcontract by worker and appeared as such in payer’s books, during investigative stage worker told officer he was self-employed and paid for piece work, and then at hearing worker claimed piece work actually referred to equipment rentals, a claim not supported by invoices or name of worker’s company. Worker also testified he was employee paid with hourly wage plus commission. Onus was on appellants to establish Minister’s decision was unreasonable and they failed to do so with their differing and inconsistent scenarios. Furthermore, if arrangement of salary plus commission was accurate, it was not an arrangement a non-arm’s length person would enter, given worker’s share was apparently entirely at payer’s discretion.

Michaud v. Minister of National Revenue (Aug. 1, 2013, T.C.C. [Employment Insurance], François Angers J., File No. 2012-457(EI), 2012-440(EI)) 231 A.C.W.S. (3d) 683.

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