No evidence family members worked for taxpayer in alternative capacity of independent contractor

Tax - Income Tax - Employment Income

Taxpayer was corporation engaged in manufacturing and selling mattresses and seven employees were members of shareholder’s family. Recently, taxpayer struggled financially and received advice from tax planner that it could avoid having to remit payroll taxes if its sales revenues were used to pay off or down large shareholder loan rather than pay salaries to seven employed family members. Evidence established that at all material times in 2013 taxation year, taxpayer had retained payroll services provider to maintain its payroll accounts and records, which included series of bi-weekly entries for each of seven members as individuals each receiving “gross” and “net” pay bi-weekly. Minister assessed taxpayer for unremitted CPP and tax source deductions. Taxpayer appealed. Appeals dismissed. It was concluded, based on payroll registry records, that it was clear seven individuals had worked as employees of taxpayer in 2013 taxation year and there was no evidence that family members had worked for or with taxpayer in alternative capacity of independent contractor. There was no documentary evidence of any corporate decision-making by taxpayer that taxpayer would cease paying salaries to seven family members.

Park Avenue Furniture (MFG.) Corporation v. M.N.R. (2019), 2019 CarswellNat 1533, 2019 CarswellNat 1700, 2019 TCC 94, B. Russell J. (T.C.C.).

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