EMPLOYEE AND SELF-EMPLOYED WORKER

Author: François Auger

TABLE OF CONTENTS

PART I
Analyse the concepts of "employee" and "self-employed worker". How much of a distinction is
there between these concepts in tax law, and in which statutes are they mentioned?
INTRODUCTION
1. DEFINITIONS
1.1 TESTS ESTABLISHED BY CASE LAW
1.1.1 COMMON LAW TESTS
1.1.2 CHANGES IN THE CONCEPT IN TAX LAW
1.1.3 WIEBE DOOR SERVICES LTD
1.1.4 DECISIONS AFTER WIEBE DOOR SERVICES LTD
1.2 FEDERAL ADMINISTRATIVE POSITION
1.3 TESTS IN QUEBEC CIVIL LAW
1.3.1 TESTS UNDER THE CIVIL CODE OF LOWER CANADA
1.3.2 TESTS UNDER THE CIVIL CODE OF QUÉBEC
1.3.3 QUEBEC’S ADMINISTRATIVE POSITION
1.4 IMPORTANCE OF DISTINGUISHING BETWEEN THE CONCEPTS
1.4.1 IMPORTANCE OF DISTINGUISHING BETWEEN THE CONCEPTS IN TAX LAW
1.4.1.1 COMPUTATION OF INCOME AND ALLOWABLE EXPENSES
1.4.1.2 ROLE OF THE EMPLOYER: SOURCE DEDUCTIONS, REIMBURSEMENT, ETC
1.4.1.3 PERSONAL SERVICES BUSINESS
1.4.1.4 GST OBLIGATIONS
1.4.1.5 OTHER
1.4.2 IMPORTANCE OF DISTINGUISHING BETWEEN THE CONCEPTS IN CIVIL LAW
1.4.2.1 EMPLOYER’S LIABILITY FOR THE ACTIONS OF EMPLOYEES
1.4.2.2 COLLECTIVE RELATIONSHIPS
1.4.2.3 INDIVIDUAL CONTRACT OF EMPLOYMENT
1.5 TERMINOLOGICAL DIFFERENCES
PART II
Have the courts recognized the specific nature of Quebec civil law in respect of these concepts, particular since the new Civil Code of Québec was introduced in 1994?
2. RECOGNITION BY THE COURTS OF THE SPECIFIC NATURE OF QUEBEC CIVIL LAW IN RESPECT OF THE CONCEPTS OF EMPLOYEE AND SELF-EMPLOYED WORKER
2.1 COURTS APPLYING FEDERAL TAX LAWS
2.2 COURTS APPLYING QUEBEC TAX LAWS
PART III
Where there are differences between the principles applicable in tax law and the principles of the Civil Code of Québec, analyse the impact and tax implications of the situation. Evaluate the practical side of the issue by referring to the legislation, such as the Income Tax Act, the Employment Insurance Act, the Excise Tax Act and the Canada Pension Plan.
3. DIFFERENCES BETWEEN THE PRINCIPLES APPLICABLE IN TAX LAW AND THOSE APPLICABLE IN CIVIL LAW
3.1 ANALYSIS OF THE IMPACT AND TAX IMPLICATIONS OF THIS SITUATION
3.2 EVALUATION OF PRACTICAL INTEREST IN THE ISSUE WITH REFERENCE TO THE LEGISLATION
3.2.1 INCOME TAX ACT
3.2.2 EMPLOYMENT INSURANCE ACT
3.2.3 EXCISE TAX ACT
3.2.4 CANADA PENSION PLAN
3.3 OUR PROPOSALS
BIBLIOGRAPHY

PART I
Analyse the concepts of "employee" and "self-employed worker". How much of a
distinction is there between these concepts in tax law, and in which statutes are they
mentioned ?
INTRODUCTION
Canada is a country in which there are two systems of law: civil law in Quebec, and common
law in the other provinces. There is interplay between the two systems of law; the phenomenon
is known as bijuralism. It is important to remember that common law is primarily based on case
law, that is, decisions made by judges, although there has been a proliferation of legislation in
recent years. Still, judges continue to have a vital influence. Civil law is based more on the
deductive method, which emphasizes the philosophical principles underlying the applicable
rules.[1] Canada is therefore governed by these two systems, which interact with and influence
each other for the sole purpose of changing and adapting to new situations.
The main types of interaction between civil law and common law are essentially related to
complementarity and dissociation between federal and Quebec statutes. Where a federal tax
law does not define a concept in private law, we have to turn to the private law of the province,
which means there is then complementarity. This is probably the best example of bijuralism
where the two systems interact. Dissociation exists where Parliament has set its own rules on
private law.
The coming into force of the Civil Code of Québec transformed private law in Quebec. The
changes brought about by Quebec’s reforms altered the situation regarding the coexistence of
the two systems of law. The application of federal statutes, tax laws in particular, which are
related to provincial private law, changed, as rules of civil law were abolished, amended,
reformulated or added.
What about the distinction between "employee" and self-employed worker", a distinction that in
tax law is fundamental in establishing a worker’s source of income? The author endeavours to
analyse the current state of both tax law and civil law on this point and then targets problems
encountered in applying the established principles. The aim of this analysis is to shed light on the
impact of the new Civil Code of Québec on application of the Income Tax Act[2] in
determining a worker’s status and to identify any changes that need to be made in the rules of
procedure applicable in tax matters.
1. DEFINITIONS
The terms "business", "employed", "employee", "employer" and "employment" are used
throughout the ITA. These terms are defined as follows in section 248(1) of the Act:
"business" includes a profession, calling, trade, manufacture or undertaking of any kind
whatever and, except for the purposes of paragraph 18(2)(c), section 54.2, subsection 95(1)
and paragraph 110.6(14)(f), an adventure or concern in the nature of trade but does not include
an office or employment;
"employed" means performing the duties of an office or employment;
"employee" includes officer;
"employer", in relation to an officer, means the person from whom the officer receives the
officer's remuneration;
"employment" means the position of an individual in the service of some other person (including
Her Majesty or a foreign state or sovereign) and "servant" or "employee" means a person
holding such a position.
It is clear from these definitions that the terms are very broad. We therefore need to turn to the
case law in an attempt to establish their real meaning and scope.
1.1 TESTS ESTABLISHED BY CASE LAW
1.1.1 COMMON LAW TESTS


A distinction has been made in common law between employees and self-employed workers,
particularly in the context of civil liability law and labour law. The principles established by tax
jurisprudence have subsequently drawn heavily on those two areas. It is clear from the case law
that referring to a person as an employee or as self-employed is a point of fact based on the
substance and nature of the relationship between the parties.
In the last century, the determining factor was the degree of control exercised by one person
over another.[3] It should be noted that the control test was originally developed on the basis
of the traditional master-servant relationship. The doctrine of the time stated:
The relation of master and servant exists between two persons where by agreement between
them, express or implied, the one (called "the servant") is under the control of the other (called
"the master").
A person is under the control of another if he is bound to obey the orders of that other not only
as to the work which he shall execute, but also as to the details of the work and the manner of
its execution.[4]
Because of changes in the world of business and the fact that in many areas control had given
way to almost complete autonomy, the distinction based on the control test eventually became
insufficient and inadequate. Since the 1950s, courts have tried to come up with other tests to
facilitate the distinction between employees and self-employed workers. The frequently quoted
decision in Montreal v. Montreal Locomotive Works Ltd.[5] developed a test of economic
reality based primarily on four elements: control, ownership oftools, chance of profit and risk of
loss.
Among the factors most often used in case law are: right of control, right to lay off, nature and
duration of task, autonomy, magnitude of amounts involved, method of payment, ownership of
tools, chance of profit, risk of loss, and integration into the business of the payer.[6]
1.1.2 CHANGES IN THE CONCEPT IN TAX LAW

Tax jurisprudence has embraced the tests established by common law courts and divided them
into four categories: control, economic reality, specified result and integration.[7]
The control test can be used to determine whether the payer indeed had the power to control
the work and the manner in which it ought to be performed. In realty, control does not have to
be actually exercised; the mere fact that the payer has the power to exercise it is sufficient. We
are thus a long way from the traditional master-servant relationship. This test is less valuable in
cases where professionals work for a payer, as professionals normally work very
autonomously. Cardin J. wrote the following in Hauser:[8]
This test, which in certain circumstances is still applicable, has been found by the courts to be
inflexible in determining the issue, particularly in respect of professionals, highly trained and
skilled tradesmen.[9]
The economic reality test analyses the business structure required by anyone claming to be a
self-employed businessperson. As we stated earlier, the decision in Montreal v. Montreal
Locomotive Works Ltd.[10] was the first to incorporate this test into the process of
distinguishing between employed and self-employed:
In the more complex conditions in modern industry, more complicated tests have often to be
applied. It has been suggested that a fourfold test would in some cases be more appropriate, a
complex involving (1) control; (2) ownership of the tools; (3) chance of profit; (4) risk of loss.
Control in itself is not always conclusive. […] In this way it is in some cases possible to decide
the issue by raising as the crucial question whose business is it, or in other words by asking
whether the party is carrying it on for himself or on his own behalf and not merely for a
superior.[11]
Where the control test has been insufficient, the courts have used a variety of economic factors
that characterize a business. Those factors have been considered in many decisions.[12]
The specified result test focuses on one person’s undertaking to work for another for a specified
period or indefinitely, either part time or full time. The employee makes his or her personal
services available to the employer for a set period. However, if a person undertakes to do a
specific job that he or she does not have to carry out personally, a business owner-client
relationship is deemed to exist. It should be noted that the specified result test was first set out
in Simon,[13] where the Court asked, "Was the employed to exercise his skill and achieve an
indicated result in such manner as was most likely to insure success?" The Exchequer Court
subsequently applied the test established in Simon:[14]
On the one hand, a contract of service is a contract under which one party, the servant or
employee, agrees, for either a period of time or indefinitely, and either full time or part time, to
work for the other party, the master or the employer. On the other hand, a contract for services
is a contract for which the one party agrees that certain specified work will be done for the
other. A contract of service does not normally envisage the accomplishment of a specified
amount of work but does normally contemplate the servant putting his personal services at the
disposal of the master during some period of time. A contract for services does normally
envisage the accomplishment of a specified job or task and normally does not require that the
contractor do anything personally.[15]
The integration test was established by Lord Denning of the House of Lords in Stevenson,
Jordan and Harrison Ltd.:[16]
One feature which seems to run through the instances is that, under a contract of service, a man
is employed as part of the business, and his work is done as an integral part of the business;
whereas, under a contract for services, his work, although done for the business, is not
integrated into it, but is only accessory to it.[17]
According to this test, the services rendered by an employee are an integral part, in whole or in
part, of a business, whereas those rendered by a self-employed person are not integrated into,
but are only accessory to, the payer’s business.[18] This test was subsequently confirmed by
the Supreme Court of Canada in Co-Operators Insurance Association v. Kearney[19] and
has been used widely in tax cases.[20]
The integration test is a valid indicator that can be used in some circumstances to determine
whether an employer-employee relationship exists. It also seems that where the integration test
is used and produces a positive result, that is, one party is integrated into the business of the
other, the other pertinent tests must still be applied before a final determination of status is
made. This test is not conclusive on its own.[21]
Generally, all of these tests must be taken into account when determining a worker’s status, and
each test carries different weight depending on the specific facts of each situation. However,
some decisions were based on one test alone. Moreover, despite the development of these
tests, many decisions based on similar facts are contradictory, because the weight assigned to
each test is left to the discretion of judges.
1.1.3 WIEBE DOOR SERVICES LTD.[22]

The benchmark tax case on determination of a worker’s status is still the Federal Court of
Appeal’s 1987 decision in Wiebe Door Services Ltd.[23] In that case, the Court studied
Canadian, British and American authorities. Emphasis was placed on the tests established in
Montreal v. Montreal Locomotive Works Ltd.,[24] that is, the economic reality test[25] and
the integration test developed by Lord Denning.[26]
Wiebe Door Services Ltd. had a door installation and repair business. It operated its business
through installers and repairers whom it dealt with as independent contractors. The contractors
each carried out their work autonomously and paid their own taxes and Employment Insurance
and Canada Pension Plan contributions. The department determined that the workers were
employees and that the business had to pay Employment Insurance premiums and make
Canada Pension Plan contributions. The Tax Court of Canada upheld that determination based
on the many tests that had been developed over the years, that is, control, ownership of tools,
chance of profit, risk of loss, and integration. The Court ruled that the evidence was
inconclusive according to the control test and that the workers were independent contractors
according to the other tests. The Court wrote the following with regard to the integration test:
"All the work performed by the installers formed an integral part of the Appellant's business.
Without the installers, the Appellant would be out of business."[27] It therefore found that the
workers were employees based on the integration test.
The Federal Court of Appeal began by tracing the background of the control test, which was
established and developed by case law in matters involving tort liability. The Court pointed out
that in common law, the conventional test for confirming the existence of an employment
relationship is the control test. The Court then made reference to the decision in Hôpital
Notre-Dame de l'Espérance et Théoret v. Laurent,[28] a case in which the source of the
dispute was in Quebec, where the Supreme Court of Canada had to determine whether the
hospital should be held liable for a misdiagnosis by an emergency room physician. In its ruling,
the Supreme Court, echoing the Federal Court of Appeal’s decision in the case, reiterated the
following statement by author André Nadeau: "[translation] The essential criterion of employer-
employee relations is the right to give orders and instructions to the employee regarding the
manner in which to carry out his work."[29] The Court went on to find that there had been a
contract between the physician and the patient, not between the hospital and the patient. With
regard to the notion of control, the Court concluded by stating that "it was recognized in Curley
v. Latreille[30] that the Quebec rule is identical on this point to the common law."[31]
In Wiebe Door Services Ltd,[32] the Federal Court of Appeal reiterated that statement
regarding the notion of control, adding that "[a]lthough this is a civil-law case [Hôpital Notre-
Dame de l'Espérance et Théoret v. Laurent[33]], the Court's expressed view is that that law
is in this respect the same as the common law."[34] In other words, according to the Court, the
civil law and the common law jurisprudence consider the control test to be equally important.
However, the Court also recognized that the control test alone subsequently proved inadequate
in special situations, such as situations involving professionals and highly skilled workers. The
test is therefore not conclusive on its own. The Federal Court of Appeal endorsed the Supreme
Court’s analysis in Montreal v. Montreal Locomotive Works Ltd.[35] that the control test is a
product of tort liability case law and that a more comprehensive test would be more
appropriate.
The Court later ruled that the test established by Lord Wright in Montreal v. Montreal
Locomotive Works Ltd.[36] should not be considered a fourfold test as it had widely been
interpreted to be elsewhere, but rather a single test with four integral parts, and that "[t]he
combined force of the whole scheme of operations"[37] would always have to be considered in
applying those parts.
With regard to the integration test, the Court acknowledged that it had been used ill-advisedly
as a magic formula. The Federal Court of Appeal wrote:
[T]he effect has been to dictate the answer through the very form of the question, by showing
that without the work of the "employees" the "employer" would be out of business ("Without the
installers, the Appellant would be out of business"). As thus applied, this can never be a fair
test, because in a factual relationship of mutual dependency it must always result in an affirmative
answer. [. . .] What must always remain of the essence is the search for the total relationship of
the parties.[38]
The Court said that the integration test should always be applied from the worker’s point of
view. The question "Whose business is it?"[39] was aimed at the person providing the
services. It should be noted that the Federal Court of Appeal redefined the integration test in
that case but did not use it. Rather, it issued a warning against using the test, emphasizing that
even if it were applied correctly, it would be conclusive in only some cases. The best test for
determining whether there is a business relationship is therefore a general test covering all
aspects of the relationship.[40]
1.1.4 DECISIONS AFTER WIEBE DOOR SERVICES LTD.[41]


A quick look at the way federal courts subsequently applied the decision in Wiebe Door
Services Ltd. is in order.[42] We will begin with an overview of Federal Court decisions and
then move on to decisions by the Tax Court of Canada.[43]
The Federal Court of Appeal applied a single fourfold test and also considered the integration
test. In Moose Jaw Kinsmen Fins,[44] the Court confirmed the definitive authority of the
Wiebe Door Services Ltd. decision[45] in determining a worker’s status.
We view the tests as being useful subordinates in weighting all of the facts relating to the
operations of the applicant. This is now the preferable and proper approach for the very good
reason that in a given case, and this may be one of them, one or more of the tests can have little
or no applicability. To formulate a decision then, the overall evidence must be considered,
taking into account those of the test which may be applicable in giving to all the evidence the
weight which the circumstances may dictate.[46]
In a later decision, Sutherland,[47] the Federal Court had to consider a situation in which the
director of a corporation that operated a hotel business provided consulting and management
services for which he received fees. The taxpayer was not involved in day-to-day management
of the hotel, had no source deductions and was not treated as an employee. Generally, he
oversaw the various financial aspects of the corporation, and his fees made up only a portion of
his income. The Court applied the four-in-one test. The fact that he was a director of the
corporation was not taken into account. The director was deemed to be self-employed.
In Standing,[48] the Federal Court of Appeal also confirmed the approach used in Wiebe
Door Services Ltd.[49] and stated that there was no legal basis for suggesting that an
employer-employee relationship may exist simply because the parties chose to so describe their
relationship.
In Hennick,[50] the issue before the Federal Court of Appeal was the status of a musician.
The taxpayer was teaching piano at the Royal Conservatory of Music in Toronto. The
conservatory was responsible for registering students, providing rooms and studios, and
collecting students’ fees; it withheld a 25% commission that it paid to the taxpayer, plus 4%
vacation pay. The standard deductions were made, and the taxpayer had an exclusive
agreement with the conservatory for the Metropolitan Toronto area. Outside Metropolitan
Toronto, the taxpayer was free to teach on his own. The contract between the parties was also
subject to a collective agreement between the conservatory and the Music Faculty Association
that would take precedence in the event of a dispute. The Tax Court of Canada ruled that
under the Employment Insurance Act, the taxpayer had to be considered an independent
contractor. The Federal Court of Appeal disagreed with the trial judge’s ruling and found that
the Wiebe Door Services Ltd.[51] test had been incorrectly applied. The Court wrote:
While this test is well known, it might be useful at the outset to emphasize that in his analysis of
both Lord Wright’s fourfold test (control, ownership of tools, chance of profit, risk of loss) and
of Lord Denning’s organization or integration test, MacGuigan J.A. in Wiebe Door Services
Ltd. stressed all along that what remains of the essence is the search for the total relationship of
the parties.
[…]
While it is true that the element of control is somewhat more difficult to assess in cases of
professionals… the trial judge completely ignored that, on January 15, 1993, the intervenor
notified the respondent that she had not fulfilled the minimum teaching requirements as stipulated
in the collective agreement and that she was requested to increase her teaching load… While
her contract with the intervenor did not specify how she was to teach, there were parameters
she had to meet with regard to time which clearly constituted control… What is relevant is not
so much the actual exercise of control as the right to exercise control.
The Court went on to analyse chance of profit and risk of loss and applied the integration test
and ultimately concluded:
It is obvious that the status of a person cannot depend on her character as an individual. The
test to be followed is an objective one, which is determined on the facts of each case by
weighting the relevant factors. On the whole, we are inclined to think that the work done by the
respondent formed an integral part of the curriculum of the Conservatory. The business of
teaching music was ultimately that of the intervenor and not of the respondent; she was but one
of the instructors who contributed to the reputation of the institution.[52]
It should be noted, however, that when the Court applied the integration test, it analysed it from
the payer’s point of view, which is at odds with the process set out in Wiebe Door Services
Ltd.[53] In the end, the music teacher was deemed to be an employee.
In Haddad,[54] the Federal Court of Appeal had to determine whether the taxpayer was or
was not an employee of Electrolux under the Employment Insurance Act. In a contract, the
parties had described their relationship as a relationship between an independent contractor and
a client. The taxpayer worked entirely on commission. Electrolux had no control over its sales
representatives’ activities but did reserve the right to terminate the contract if sales were too
low. The sales representatives were responsible for all costs related to sales licences. In order
to get a regular income, the taxpayer had signed a special agreement under which he would
receive a set amount each week for a period of three months. The taxpayer argued that his
status was that of an employee during the three-month period. The Federal Court of Appeal
upheld the ruling by the Tax Court of Canada, after applying Wiebe Door Services Ltd.[55]
test, which had found that such changes in compensation did not alter the taxpayer’s autonomy
with respect to his work.
It therefore strikes us that the test in the Wiebe Door Services Ltd. decision[56] is well rooted
in the case law as there has been no appeal to the Supreme Court of Canada. Since 1986, the
Federal Court has refined the fourfold test as well as the integration test. The following five
statements by author Alain J. Gaucher bear reiterating:
Firstly, the Court confirmed that control does not have to be exercised as long as it is capable of
being exercised, and that fixing remuneration or purpose of work, paying remuneration, or
checking whether specifications have been met is not control for the purposes of this test.
Secondly, while the Court has questioned the usefulness of the integration test and has
confirmed it is not critical to the analysis, the Federal Court of Appeal cases since Wiebe Door
case often refer to the integration test after reviewing the 4-in-1 test as part of the process of
weighting all the facts and the total relationship of the worker and hirer. Thirdly, although there
appears to be some confusion, the integration test is to be looked at from the perspective of the
employee to determine "whose business is it?". Fourthly, "risk of loss" for the purposes of the
4-in-1 test does not contemplate risk associated with the ownership of shares in the hirer or a
debt relationship with the hirer. Fifthly, the Court has confirmed that in any given case, one or
more of the 4-in-1 test or integration test may have little or no applicability as these tests are
subordinate to an analysis of all the facts surrounding the relationship. This approach of
mandating the Court to look at the total relationship and ignoring some tests in any given
circumstances precludes the ability to categorize types of workers that are more likely, or less
likely, to be employees.[57]
The Tax Court of Canada has also recognized the decision in Wiebe Door Services Ltd.[58] as
an authority in determining a worker’s status, despite the fact that the fourfold test has on
occasion been difficult to apply.[59]
Since Wiebe Door Services Ltd.,[60] the employment relationship has been determined not on
the basis of a single test, such as the control test, but on a general overview of the employer-
employee relationship. The suggestion that there is a magic formula has also been dismissed.
The concept of 4-in-1 test requiring an overview of the whole scheme means that any one of the
4 indicators taken together may point towards employment but, considering the whole
relationship… the 4 indicators taken together may point more towards an independent
contractor and less towards employment.[61]
In Placements Marcel Lapointe Inc.,[62] the Tax Court of Canada stated that the elements
do not all apply to every situation. The Court did not consider ownership of tools in that case
because no tools were required for the work the taxpayer was doing. We will come back to
this decision a little later in our analysis.
Bradford[63] referred to the control, integration, economic reality and specified result tests. In
that case, the taxpayer was a dental hygienist who had decided to work on a self-employed
basis for the dentist who had previously been her employer. The Tax Court of Canada began
by reviewing the contract between the parties. Nothing in the contract seemed to contradict the
taxpayer’s contention that she was self-employed. The Court went on to express its view that
in an ambiguous situation where there seem to be some elements that favour a determination of
"self-employed" and others a determination of "employee", it is important to look at the
intentions and objectives of the parties. The Tax Court of Canada ultimately concluded that
Ms. Bradford was self-employed, based on the economic reality test, and added that it was not
necessary to use the integration test as set out in Wiebe Door Services Ltd.[64]
Let us come back to the fact that the specified result test, even though it is closely related to the
others,[65] was not used in Wiebe Door Services Ltd.[66] It was, however, applied by the
Tax Court of Canada in Tedco Apparel Management Services Inc.[67] In that case, the
taxpaying corporation was deemed to be a personal services business. And in Qureshi,[68]
the encyclopedia sales manager, working under contract, was deemed to be an independent
contractor. The Court described the specified result test as a criterion to be considered in
determining a worker’s status. However, the test was apparently not applied, as the Court
relied on the control and economic reality tests.
It appears that some types of work have a greater chance than others of being deemed an
integral part of the contractor-client relationship. For example, sales representatives who work
on commission were considered to be independent contractors in Qureshi[69] as well as
Haddad.[70] Consulting services also tend to be considered part of a contractor-client
relationship, as evidenced in Bass[71] and Martinez.[72] However, where teaching is
involved, there seems to be a preference for an employer-employee relationship; examples
include the decisions in Talbot,[73] Bart[74] and Hennick.[75] Still, care must be taken in
determining a worker’s status, as author Alain J. Gaucher points out:
One, however, must be careful not to generalize in finding trends based on categorizing workers
as it is the whole relationship and not the type of work that should be relevant. Factors that
have been considered by the courts in the past may not be relevant in a particular situation and
neither will all factors, if considered, be of equal weight.[76]
1.2 FEDERAL ADMINISTRATIVE POSITION
The Canada Customs and Revenue Agency[77] has no specific interpretation bulletin on the
determination of a worker’s status. Basically, selected paragraphs from two different bulletins
have to be considered. Paragraph 19 of Interpretation Bulletin IT-73R5[78] deals with the
employer-employee relationship and provides a partial list of indications of such a relationship:
a) the entity to which the services are provided has the right to control the amount, the nature
and the direction of the work to be done and the manner of doing it;
b) the payment for work is by the hour, week or month;
c) payment by the entity of the worker's travelling and other expenses incidental to the
payer's business;
d) a requirement that a worker must work specified hours;
e) the worker provides services for only one payer; and
f) the entity to which the services are provided furnishes the tools, materials and facilities to
the worker.
Interpretation Bulletin IT-525R[79] includes a number of factors that must be examined in order
to determine whether a performing artist is to be considered an employee or self-employed.
The bulletin states:
Many factors must be taken into consideration in establishing whether an individual is an
employee or is self-employed. The question to be decided is whether the contract between the
parties is a contract of service that exists between an employer and an employee, or is a
contract for services, that is, the engagement of a self-employed individual. A contract of service
generally exists if the person for whom the services are performed has the right to control the
amount, the nature, and the management of the work to be done and the manner of doing it. A
contract for services exists when a person is engaged to achieve a defined objective and is given
all the freedom required to attain the desired result.[80]
When dealing with persons of particular skills and expertise, such as artists, supervision and
control of the manner in which the work is done may not be a critical and decisive factor.
However, the determination of whether or not an artist is under a contract of service or a
contract for services is a question of fact, and will depend on the nature and the terms of the
contract or arrangement (written or oral), its duration, and all the elements that constitute the
relationship between the parties.[81]
Paragraph 6 contains a number of indications that can be used to determine that the artist is an
employee if the entity ( payer) has the following rights and obligations under the contract:
a) the right to decide on or change the size of the group with which the artist performs;
b) the right to choose the nature of the artist's performance (opera, ballet, theatre, films,
musicals, concerts, classical, popular, jazz) without obtaining the artist's agreement;
c) the continuing authority to dictate the time and place of the artist's performance including
rehearsals, again, without obtaining the artist's agreement;
d) the unilateral right to change the dates, times, and places from those ordinarily scheduled, or
increase the number of rehearsals or performances;
e) the obligation to pay overtime; or
f) the responsibility to provide or authorize transportation for the artist.
Paragraph 7 sets out the conditions that favour a contractor-client relationship:
[The artist]
a) has a chance of profit or risk of loss;
b) provides instruments and other equipment;
c) has a number of engagements with different persons during the course of a year;
d) regularly auditions or makes application for engagements;
e) retains the services of an agent on a continuing basis;
f) can select or hire employees or helpers, fix their salary, direct them or dismiss them;
g) can arrange the time, place, and nature of performances; or
h) is entitled to remuneration that is directly related to particular rehearsals and performances.
Finally, even though these two bulletins suggest several factors that can be considered, it is clear
that control is still a very important factor for CCRA.
CCRA has also published a brochure entitled "Employee or Self-Employed?"[82] to help
taxpayers determine whether they are employees or self-employed. The brochure recasts the
Wiebe Door Services Ltd.[83]test in the form of questions divided into four parts. The
taxpayer must decide whether each item is carried out by the payer or the worker or is not
applicable. If, after the control, ownership of tools, chance of profit and risk of loss tests have
been applied, the nature of the relationship is still uncertain, the last test – integration – must be
used. It should be noted, however, that "control [. . .] is the most important factor."[84]
Integration must be analysed from the worker’s point of view, not the payer’s. Integration
appears to be the last test that can be used to settle the matter if the others do not.
Another CCRA document provides information about the factors to be considered in
determining a worker’s status.[85] Again, control is the most important test. An employer
exercises control if it:
- decides where, when, and how the work is to be done;
- establishes your working hours;
- determines your salary amount;
- supervises your activities; and
- assesses the quality of your work.
CCRA acknowledges that all the factors which determine the nature of the relationship
between the parties must be examined, but the department seems to recognize control as being
the most important test in most cases.[86]
Generally, in an employer-employee relationship, the employer controls, directly or not, the
way the work is done and the work methods used. The employer assigns specific tasks that
define the real framework within which the work is to be done.
If the employer does not directly control the worker's activities, but has the right to do so, the
notion of control still exists.
The degree of control exercised by the employer may vary depending on the type of work to be
done and the employee's experience and skill.[87]
However, the type of questionnaire provided by CCRA does not seem to reflect the analysis
the Court had in mind when it rendered its decision in Wiebe Door Services Ltd.[88]
However, in defence of Revenue Canada, the Wiebe Door test is not a user-friendly test. It
requires that all the facts regarding the relationship be analyzed as opposed to simply going
through each test in an organized manner. All factors are not to be given equal weight and some
factors are to be ignored in certain circumstances. The pamphlet does not address this nor, in
all likelihood, could it. The extent to which the questions in the pamphlet analyze all the facts
regarding the relationship of a particular fact situation, will determine the usefulness of the
pamphlet. However, the answer to many of the questions is more than a simple "payer or
worker" answer, and the answer to some of the questions do not point to an employment or
independent contractor relationship as suggested in the pamphlet.[89]
Finally, it should be noted that CCRA has two forms[90] that workers and payers can use to
request a decision on employment status under or for the purposes of the Canada Pension Plan
and/or the Employment Insurance Act.[91] Basically, there are five questions to be answered:
a) Describe the nature of your work.
b) Describe the terms and conditions under which you work.
c) How, when and how frequently are you paid?
d) Are you responsible for losses, expenses or damages you might cause for your
employer/payer? If so, describe your responsibility.
e) State why you think that you are an employee or self-employed.[92]
1.3 TESTS IN QUEBEC CIVIL LAW
1.3.1 TESTS UNDER THE CIVIL CODE OF LOWER CANADA

The Civil Code of Lower Canada Lower Canada[93] did not define "contract of employment",
but rather "lease and hire of work":
Art. 1665a. The lease and hire of work is a contract by which the lessor undertakes to do
something for the lessee for a price.
Art. 1666. The principal kinds of work which may be leased or hired are:
1. The personal services of workmen, servants and others;
2. The work of carriers, by land or by water, who undertake the conveyance of persons or
things;
3. That of builders and others, who undertake works by estimate or contract.
As noted by Professor Marie-France Bich,[94] regulation of individual employment
relationships under the CCLC was rooted in French law. The private law of labour is
traditionally defined as a set of rules which serve as the foundation for the employer-employee
relationship and underlie relations between employees and their employers.[95]
In this light, a brief overview of French doctrine of that period might be useful. In his
Dictionnaire pratique,[96] Dalloz defined "lease and hire of work" as follows:
[TRANSLATION] There are two separate types of lease and hire of work:
1. lease of services, whereby one person works for another for a specified period . . .
2. lease of work per se, whereby one of the parties undertakes to the other to carry out a
specific work or a specific enterprise.
[…]
23. This subordination of the lessor of services to the master is one of the essential features of a
contract of lease of services and sets it apart from a contract of lease of industry or enterprise
governed by articles 1787 et seq. C.C.; in the latter contract, the contractor performs the work
without direction or supervision by the master and presents the work to the master once it is
complete; in the former, in contrast, the master has discretion and supervision of the work.
24. Lease of services therefore exists where a worker works under the direction of a master
regardless of the magnitude of the work; inversely, lease of industry exists and the worker
becomes a contractor when he works on his own, independently, no matter how minor the
work or how low the value of the work.
29. However, a worker is bound by a contract of lease of industry and not lease of services
where the worker undertakes work which he carries out independently, not under the direction
and control of the primary contractor, who is required only to ensure that upon completion that
the work has been done properly.
In French doctrine, the primary test for determining a worker’s status is whether or not there is
an element of subordination in the employer-employee relationship.
Under the CCLC, subordination was the decisive test. The term used at the beginning of the
century was "master-servant relationship", not "employer-employee relationship". Since the
body of Quebec case law was small, judges tended to rely on decisions from France and, in
some cases, English decisions.
Howard J. wrote in Lambert v. Blanchette:[97]
To begin with, the relation of master and servant, or of employer and employee, rises only out
of a contract by which the latter leases his services to the former, upon such terms and
conditions as the parties may see fit to make.
In that decision, the judge set out a number of tests, in particular method of payment, ownership
of tools used to perform the work, whether the employee was required to do the work
personally or was free to hire someone else to do it and, lastly, the term of the agreement. He
also put a great deal of emphasis on the fact that the payer not only had the authority to
supervise the work generally, but could also control the method and approach, as well as the
timetable for doing the work. The other factors therefore could not be conclusive in their own
right, but were at least an indication of a true employer-employee relationship. Finally, the
subordination test was conclusive on its own; the other tests simply provided more information.
Another landmark is the Supreme Court of Canada’s decision in Québec Asbestos
Corporation v. Gédéon Couture,[98] where Rinfret J. wrote:
[TRANSLATION] It includes the main distinguishing features of a business contract: terms of
payment; the right to choose the men he wished to employ, to determine their wages, to direct
them and to dismiss them; liability for damages arising from his failure to supply the plant; and
especially the absence of subordination between Couture and the company and his
independence in choosing a work method.
A contract of employment contract is different from a contract of enterprise primarily in that it
puts the employee in a position of subordination. Even piece workers can be employees if they
are subordinate to an employer; in contrast, however, workers are contractors if they are not
subject to such subordination. [Emphasis added.]
It is clear from this decision that subordination is still the key factor in determining whether a
person is an employee or is self-employed.
Lord Wright later added in Montreal v. Montreal Locomotive Works Ltd.[99] a number of
tests which we have already discussed. Lord Wright put forward four tests: control, ownership
of tools, chance of profit and risk of loss. He also concluded that the control test alone was not
conclusive. Finally, he made it clear that he was heavily influenced by the integration test
developed in common law jurisdictions.
However, as indicated by the Quebec court rulings which followed that decision, the distinction
between "employee" and "self-employed" was always based on subordination. There was
apparently some confusion at one time resulting from the introduction of the fourfold test in
Montreal v. Montreal Locomotive Works Ltd.[100] However, the courts continued to
develop the subordination test. Control no longer had to be direct. A person was considered
another person’s employee if the latter person was entitled to give orders and instructions as to
how the work was to be performed. Authority and subordination thus remained the two
elements without which there would be no employer-employee relationship.[101]
The Labour Court then introduced an economic element to the subordination test in Syndicat
des employés de Publications Québécor (CSN) v. Publications Québécor Inc.[102]
Subordination was no longer a purely legal notion, but an economic one as well. A worker
could be considered an employee if he or she was subject to the authority of another person,
namely the payer, on whom he or she depended to earn an income. Administrative tribunals
then applied the fourfold test and the economic factor in order to distinguish between employees
and contractors.
Brière J. noted this confusion in Ville de Brossard v. Syndicat des employés de la Ville de
Brossard[103] and wrote at page 366:
[TRANSLATION] The case law indicates some confusion between legal subordination and
economic subordination and between those types and subordination pure and simple, whether it
is the product of legal or economic dependence. The outcome is that I consider all
subordination to be legal, and that because subordination is essential, legal subordination is
necessary, which rules out subordination arising from economic dependence. If one legitimately
rejects economic dependence that does not give rise to subordination, one is led to think,
wrongly, that economic subordination could not be a useful test unless it was coupled with legal
subordination.
[...]
It is not economic dependence that distinguishes a contractor from an employee: a business can
depend economically on a single client. In order for an economically dependent contractor to in
fact be an employee, the contractor must be subordinate to someone who has control over his
or her freedom to act; the contractor’s autonomy must be so reduced as to be on a par with
that of an employee in terms of the ability to perform the work and the manner in which the
work is performed, taking into account all of the factors that characterize that work.
[...]
Subordination obviously entails economic dependence. However, economic dependence does
not lead to economic subordination unless it generates control similar to the control that would
result from an employment contract.[104]
Other tests were also developed, such as control, ownership of tools, chance of profit and risk
of loss, compensation, work schedule, integration of work into the payer’s business, and
incorporation of the provider of services. They were used for purposes of information, or at
least they ought to have been used that way. However, they were primarily developed in the
context of labour law; the definition in the CCLC was more restrictive and, in particular,
archaic.
To recap the state of the law at that time, we should turn to the words of Professor Beaudoin,
now a judge with the Quebec Court of Appeal:
[TRANSLATION] A lease of industry or contract of enterprise is significantly different from a
lease of services. The contractor carries out the work at his own risk, as he sees fit and
generally with his own tools, and his contract requires him to provide a specific result in a
specific time frame that meets certain standards of quality agreed to by the parties. The
contractor remains master of the execution of the work, although because of the interest he has
in the success of the enterprise, the contractor retains a right of general supervision.
The contractor’s independence is incompatible with the specific nature of the power of
supervision, control and direction required by the case law in order to recognize an employer-
employee relationship.[105]
[…]
As the case law currently stands, the specific nature of the control is essential to the very
existence of a master-servant relationship. There is a difference between overseeing to ensure
that an assigned task is carried out and supervising performance by directing it. A simple right
of inspection is not enough to establish a master-servant relationship unless it is accompanied by
the right to give specific orders, instructions and directives as to how the employee is to carry
out the work. The case law has relied on that test primarily to determine that there is no master-
servant relationship in a contract of enterprise.[106]
1.3.2 TESTS UNDER THE CIVIL CODE OF QUÉBEC[107]

Articles 2085 to 2097 of the CCQ[108] define the private law regime governing employment.
The provisions in the new CCQ are considered to be far more explicit than the ones they
replaced, despite the fact that they did not upset the established order; still, they are a definite
improvement. As Professor Bich wrote:
[TRANSLATION] [These articles] provide a more detailed picture of employment contracts,
state more clearly the primary obligations of the parties and, best of all, breathe new life into the
pertinent legal vocabulary by tying it to contemporary usage. The [French] term "contrat de
travail" can now be used instead of "contrat de louage de services personnels", the term
"employeur" can be used instead of "locataire" or "maître", "salarié" instead of "locateur",
"partie engagée" or "serviteur".[109]
According to the publication Commentaires du ministre,[110] the definition of "contract of
employment" that was chosen highlights three elements: work for another, compensation and a
subordinate relationship between the employee and the employer. Further, in tandem with the
rules set out in the CCLC, a specific field of law developed in the 20th century – labour law –
that was better suited to needs in that area. The provisions of the CCLC became obsolete in
the face of the statutes and regulations that emerged from that process of development, hence
the importance of revitalizing the private law regime, which applies to many contracts and is the
foundation of any employment relationship. These modern general principles can thus be used
as a foundation for specific provisions applicable to certain classes of employee. Article 2085
CCQ states:
A contract of employment is a contract by which a person, the employee, undertakes for a
limited period to do work for remuneration, according to the instructions and under the direction
or control of another person, the employer.
This new definition focuses on the main feature of an employment contract, which is a master-
servant relationship characterized by control other than economic control by the employer over
the employee with respect both to the desired end and to the means used.[111] In the
minister’s view, it matters little whether that control is actually exercised by the payer, and the
fact that the work is physical or intellectual is of no consequence.
The CCQ also prescribes the basic rules governing "contracts of enterprise". It defines
"contractor" as a person who carries out work and a "provider of services" as a person who
provides a service. The person who receives the service or who makes a request and
undertakes to pay the price is the client. Article 2098 CCQ defines a contract of enterprise as
follows:
A contract of enterprise or for services is a contract by which a person, the contractor or the
provider of services, as the case may be, undertakes to carry out physical or intellectual work
for another person, the client or to provide a service, for a price which the client binds himself to
pay.
The CCQ also affirms the autonomy of the contractor or provider of services in a contract of
enterprise. It was traditionally acknowledged that the nature of the service provided by a
contractor assumed almost complete independence from the client in terms of the manner in
which the work was carried out. Finally, the minister contends that the tests used are the tests
identified in the case law, which clearly recognized that a contractor directs the work and
determines how it will be carried out, even though the client identifies the target result in the
contract and retains the right to ensure that the work complies with the contract.[112] This
autonomy test is primarily laid out in article 2099 CCQ:
The contractor or the provider of services is free to choose the means of performing the
contract and no relationship of subordination exists between the contractor or the provider of
services and the client in respect of such performance.

The absence of subordination is therefore the key element in making a distinction between an
employee and a contractor under current Quebec private law. It should noted that in this
context, the existing case law, which has established tests for determining whether there is a
relationship of subordination, is still topical.[113]
Articles 2085 to 2087 CCQ pertain to employer-employee relationships, that is, cases where a
person puts his or her physical or intellectual abilities to work for another and is integrated into
that person’s business in return for compensation, subject to the parties’ contract terms or
limits.[114] The role of such private law provisions in the legal regime applicable to every
person can vary depending on the person’s status. An example that is often given is a senior
manager whose work relations will be primarily governed by the CCQ because he is the
exception under most social legislation. In other cases, private law coexists with a minimum
normative regime, particularly under the Act respecting labour standards[115] or the Canada
Labour Code, Part III.[116] Finally, the private law regime still complements the regime
established by a collective agreement, for which it serves as something of a backdrop.[117]
It would therefore be beneficial to take a quick look at the tests as they are recognized by the
CCQ and the existing case law. Three main elements emerge from the pertinent articles:
compensation, performance of the work and subordination. Labour laws use different terms –
"employee"[118] and "worker" – depending on the area in which they apply. There may be
differences in the definitions, but they all contain all three of the basic elements as defined by the
CCQ. Some statutes specifically broaden the concept of employee to include foremen and self-
employed workers. The following are examples of definitions set out in Quebec statutes:
"employee"—a person who works for an employer and for remuneration, but the word does
not include . . .[119]
"employee" means a person who works for an employer and who is entitled to a wage; this
word also includes a worker who is a party to a contract, under which he:
i. undertakes to perform specified work for a person within the scope and in
accordance with the methods and means determined by that person;;
ii. undertakes to furnish, for the carrying out of the contract, the material, equipment,
raw materials or merchandise chosen by that person and to use them in the manner indicated by
him; and
iii. keeps, as remuneration, the amount remaining to him from the sum he has
received in conformity with the contract, after deducting the expenses entailed in the
performance of that contract;[120]
"employee" means any apprentice, unskilled labourer or workman, skilled workman,
journeyman, artisan, clerk or employee, working individually or in a crew or in
partnership;[121]
"worker" means a natural person who does work for an employer for remuneration under a
contract of employment or of apprenticeship, except . . .[122]
"worker" means a person, including a student in the cases determined by regulation, who, under
a contract of employment or a contract of apprenticeship, even without remuneration, carries
out work for an employer, except . . .[123]
"employee" means any person employed or holding an office.[124]
Article 2087 CCQ reaffirms the element of remuneration with respect to both proportion and
terms. Remuneration is in principle fixed by the parties, subject to the minimum standards set by
the legislator and to any collective agreement that may apply. The notion of remuneration or
pay is interpreted broadly so as to include all forms of remuneration, including commission,
piece work, freelance work and fees.
[TRANSLATION] The remuneration referred to in our code is payment for work done, that is,
remuneration which was agreed to in advance and which constitutes the employer’s primary
obligation.
Our code makes no distinction between wages based on work time and wages based on work
performance. Whether wages are based on an hourly rate, a daily rate, a weekly rate,
commission, or even profit sharing, the amount paid is always remuneration, that is,
compensation for the work a person does or the services a person renders.[125]
It matters little whether remuneration takes the form of pay or payment of an invoice without
source deductions or deductions for taxes and benefits. Moreover, this element has been
deemed not to be conclusive in and of itself.[126]
Personal performance is another element referred to in the CCQ. What this means is that the
employee must personally fulfil his or her obligations and may not delegate to anyone execution
of anything other than a small portion of the work, unless authorized by the employer to do so.
Personal performance no longer depends on the intuitu personae character of the employment
contract,[127] but rather the very nature of the contract and usage. An employment contract
can hardly be construed as requiring anything other than personal performance. The mere fact
that an employee can have someone else do his or her work or hire someone to assist with the
work may be an indication that we are dealing with a contract of enterprise.[128]
The last element, subordination between the employee and the employer, is the very essence of
the contract of employment in Quebec law.[129] It is that test which, in most cases, is used to
distinguish between a contract of employment and a contract of service or enterprise. An
employee may sometimes have considerable leeway in performing his or her duties, but the fact
remains that the employee is subject to the employer’s control; because the employee’s activity
is integrated into the employer’s business and is carried out for the employer, it is only
reasonable that the employer should have control and that the employee should be
subordinate.[130] Article 2085 CCQ states the corollary whereby the essential feature of a
contract of employment is subordination as it is recognized by French doctrine.
Power of direction and control can take a variety of forms. In the most traditional form, the
employer regularly gives the employee specific orders and instructions as to how the work is to
be carried out. This constitutes direct, narrow, frequent, daily control.
The degree of control tends to change depending on the employee’s level of specialization, just
as it changes at different levels in the organization. There are also many jobs that require
consider professional leeway which increases with experience. In that case, control is
characterized more as the power to verify and evaluate completed work. Power of control
therefore does not focus on the way the work is done, but rather the quality of the work and the
regularity with which it is performed.[131] The employer retains theoretical power to give
instructions but will not usually exercise that power. Finally, some authors[132] hold the view
that the wording of article 2085 CCQ is very general and can cover a range of levels of control,
from very tight to very loose.
Ordinarily, civil and administrative courts in Quebec tend to consider subordination as the most
important test and consider the others as simply providing information. It should be noted,
however, that the private law regime governing employment in Quebec considers legal
subordination to be the most important test. It is not enough, however, to determine the status
of a worker in a tripartite relationship. "[T]he test of actual control over work performance is
much too rigid and does not take account of other fundamental aspects that are obviously
important."[133] In that case, other factors will have to be examined, such as the selection
process, hiring, training, discipline, evaluation, supervision, assignment of duties and integration
into the business.
1.3.3 QUEBEC’S ADMINISTRATIVE POSITION


We should mention Revenue Québec’s position on the tests used to distinguish between
"employee" and "self-employed".
Interpretation Bulletin RRQ.1-1/R2[134] refers to article 2085 CCQ and states:
[TRANSLATION] In our system of civil law, subordination is the primary test for determining a
worker’s status. Article 2085 of the Civil Code of Québec, read in conjunction with article
2099, leads us to conclude that the existence of subordination in respect of the performance of
work is indicative of a contract of employment.
The subordination in question is legal subordination, and the department believes that the
presence of such subordination, even to a small degree, implies a contract of employment.[135]
The department points out that the legal relationship between the parties is determined by
analysing the overall situation. Many tests are taken into consideration in that analysis. The
department suggests a two-step analysis: first, actual subordination, and second, the other tests.
If the first test is conclusive, the others need not be used. It there is any doubt, the other tests
will be useful.
The department holds the view that the presence of actual subordination in respect of the work
is a determining indicator of an employer-employee relationship and therefore considers it to be
of utmost importance. Generally, subordination is defined as the power of a principal to define
the work to be performed and to set guidelines for and monitor performance of that work. An
employer is deemed to have authority over an employee if the employer is able to impose
directives and set standards. It also appears that the concept of employment must be
interpreted loosely, particularly where the employee’s degree of specialization and the rank in
the organization are high. The following are therefore indications that the employee is given
direction and that there is indeed subordination: control over the performance of work,[136]
execution of the contract by the employee personally,[137] work schedules set by the payer,
and terms of hiring and dismissal set by the payer.[138]
If the results of this first test do not appear to be conclusive, the following tests should be used:
economic test (chance of profit and risk of loss, remuneration), ownership of tools, integration,
specified result and the parties’ perception of their relationship.
Finally, the department’s position is that the actual subordination test is crucial. The other
interpretation bulletins[139] issued by Revenue Québec refer to RRQ. 1-1/R2 but do not
introduce any new elements. Bulletin RRQ. 1.1/R2 is also referred to in the department’s
technical interpretations on determination of a worker’s status.[140]
1.4 IMPORTANCE OF DISTINGUISHING BETWEEN THE
CONCEPTS
1.4.1 IMPORTANCE OF DISTINGUISHING BETWEEN THE
CONCEPTS IN TAX LAW


It is important to determine a worker’s status because employees and self-employed workers
are treated differently under the ITA and other tax legislation. The differences are considerable,
particularly with regard to the deduction of expenses and the computation of income, the role of
the employer (source deductions, reimbursement, etc.), personal services businesses, GST
obligations and other elements.
1.4.1.1 COMPUTATION OF INCOME AND
ALLOWABLE EXPENSES
The ITA allows employees to deduct specific expenses from their income, provided they meet
certain criteria.[141] With regard to employment expenses, the ITA states, "Except as
permitted by this section, no deductions shall be made in computing a taxpayer's income for a
taxation year from an office or employment."[142] Tax is therefore payable on the gross
amount of employment income, and certain expenses specifically provided for in the Act can be
deducted from that income.
Self-employed workers are taxed on the net amount of income they draw from their business,
meaning that all expenses incurred for the purposes of earning income are deductible,[143]
other than expenses specifically identified in the ITA as being not deductible.[144]
There are basically fives types of expenses which may apply to workers and which may,
depending on the circumstances and the worker’s status, be deductible. They are: child care
expenses,[145] clothing,[146] meals and entertainment,[147] travel and motor vehicle
expenses[148] and other expenses.[149]
1.4.1.2 ROLE OF THE EMPLOYER: SOURCE
DEDUCTIONS, REIMBURSEMENT, ETC.
It is important to distinguish between "employee" and "self-employed" in order to determine
who is responsible for making source deductions. In an employer-employee relationship, it is
up to the employer to withhold a prescribed amount from any salary, wages or other
remuneration and subsequently remit it to the governments.[150]
Self-employed workers are required to pay quarterly tax instalments based on their previous
year’s taxes or estimated taxes for the current year.[151] However, if the self-employed
worker is a non-resident of Canada, the payer must withhold 15% of any payment for services
rendered.[152]
If the non-resident is an employee, a source deduction is made under the general rule set out in
subsection 153(1) ITA. However, non-residents are subject to the tax agreements between
Canada and other countries irrespective of whether they are employees or self-employed.
Under the Employment Insurance Act, every person who has "insurable employment" is
required to pay premiums. "Insurable employment" is defined as:
employment in Canada by one or more employers, under any express or implied contract of
service or apprenticeship, written or oral, whether the earnings of the employed person are
received from the employer or some other person and whether the earnings are calculated by
time or by the piece, or partly by time and partly by the piece, or otherwise.[153]
An employer who pays an employee remuneration is required to deduct an amount from that
remuneration, namely the employee’s premium, and deposit it into an account.[154] In
addition, the employer is required to pay an employer’s premium equal to 1.4 times the
employee’s premium, subject to a certain limit.[155] The total of these amounts must then be
remitted to the Receiver General for Canada.
In determining a worker’s status, it is obviously very important to know whether or not the
worker has insurable employment, because the payer will have to pay considerable amounts if it
gives work to many people over a year.
Worker status must also be determined for purposes of the Canada Pension Plan.[156] Under
the CPP, every person employed in pensionable employment is required to make an
employee’s contribution.[157] "Employment" is defined as "the performance of services under
an express or implied contract of service or apprenticeship, and includes the tenure of an
office."[158] The employer must withhold from the remuneration paid to the employee an
amount as the employee’s contribution. In addition, the employer is required to make an
employer’s contribution.[159]
Under the CPP, the amount paid by an employer can be considerable, particularly if the
employer has many employees. A worker who is deemed to be self-employed must make his
or her own contributions to the plan.[160] An employer is therefore better off hiring a self-
employed worker than having an employee.
1.4.1.3 PERSONAL SERVICES BUSINESS
The status of a person who provides services may also be relevant in respect of corporate tax
since the result can affect a corporation’s liability regarding the small business deduction. A
personal services business is excluded from the definition of "active business carried on by a
corporation".[161] Consequently, income drawn from such a business does not qualify for the
small business deduction.
A personal services business is a business in which services are provided by an "incorporated
employee"[162] who would reasonably be regarded as an officer or employee. It must
therefore be determined whether a corporation offers the services of an employee or a self-
employed worker. It must also be determined whether the contract is a contract of enterprise
or a contract of service.[163] In order for a business to be a personal services business, the
incorporated employee or a person related to the incorporated employee must be a specified
shareholder[164] of the corporation providing the services. However, a business that had more
than five full-time employees all year or a corporation that provided services for which the
amount paid or payable has been or will be received by an affiliated corporation will not be
considered a personal services business.
Another section of the ITA[165] also limits the amounts that can be deducted in computing
income from a personal services business. No deduction is allowed for expenses other than:
(i) the salary, wages or other remuneration paid in the year to an incorporated
employee of the corporation,
(ii) the cost to the corporation of any benefit or allowance provided to an
incorporated employee in the year,
(iii) any amount expended by the corporation in connection with the selling of property
or the negotiating of contracts by the corporation if the amount would have been deductible in
computing the income of an incorporated employee for a taxation year from an office or
employment if the amount had been expended by the incorporated employee under a contract
of employment that required the employee to pay the amount, and
(iv) any amount paid by the corporation in the year as or on account of legal expenses
incurred by it in collecting amounts owing to it on account of services rendered.
The ITA allows an active business carried on by a corporation, provided it is a private,
Canadian-controlled corporation throughout the tax year, to deduct from its tax payable 16% of
its income earned from a business during the year, to a maximum of $200,000. This deduction,
known as the small business deduction, reduces to 12% the effective rate of federal tax on the
first $200,000 of income. However, as stated earlier, personal services businesses do not
qualify for this deduction and are subject to regular tax rates.
Finally, even if the business is a personal services business, the amounts payable under the
Canada Pension Plan and the Employment Insurance Act are not to be collected by the
person or company that procures the services of the business. Finally, it may be to a payer’s
advantage to use an incorporated employee.[166]
1.4.1.4 GST OBLIGATIONS
Under Part IX of the Excise Tax Act[167], "every recipient of a taxable supply made in
Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the
rate of 7%"[168], except in certain circumstances where the supplier (that is, the worker) is a
small supplier[169] and is not registered.[170]
Generally, the supplier of a taxable supply is required to collect GST from the recipient of the
supply. Subsection 123(1) of the Act defines "supply" as including the provision of property or
a service.[171] The term "service" is defined as "anything other than property, money, and
anything that is supplied to an employer by a person who is or agrees to become an employee
of the employer in the course of or in relation to the office or employment of that person."[172]
According to the definition of "service" in the Excise Tax Act, there is no GST payable on
services provided by an employee for an employer, because such service is not considered to
be a supply.
A self-employed worker who is not a small supplier must collect GST from the recipient of any
service provided and remit the amount to CCRA. The worker’s status must be established in
order to determine whether the worker is responsible for payment of GST by the recipient.
From the worker’s point of view, the relationship must be determined so that the worker knows
whether or not he or she has to register under the Act for the purpose of collecting and remitting
GST.
1.4.1.5 OTHER
The preceding elements are only some illustrations of the importance of making the distinction
between "employee" and "self-employed". The ITA refers to rules that apply to employees but
not self-employed workers and vice versa. The following paragraphs describe the provisions
applicable to self-employed workers only.
Section 249.1 ITA allows taxpayers, other than professionals,[173] who operate a business to
end their fiscal period on any date they deem appropriate, whereas an employee’s tax year runs
from January 1 to December 31 of the same year. A self-employed worker can therefore plan
his or her year end so as to defer payment of taxes for several months, something an employee
cannot do. Further, when a taxpayer disposes of a business on a date during the tax year, the
business’s fiscal period ends on that date.[174] The taxpayer can also elect under section 25
ITA to defer taxation of his or her income to the tax year in which the business’s normal fiscal
period would have ended had the business not ceased. This means that the taxpayer can simply
include the income in whatever tax year he or she wishes; a form is not required.
The ITA is also used to promote scientific research. Paragraph 12(1)v) and section 37 of the
Act allow scientific research and experimental development[175] expenses to be deducted in
computing the income of a business carried on in Canada. In order to be deductible, the routine
expenses must be related to the taxpayer’s business. The investment tax credit is another form
of assistance, but is an exception to the treatment of SR&ED expenses. An investment tax
credit obtained in one year can reduce SR&ED expenses the following year.[176]
Professionals are generally required to use the accrual method of accounting to compute their
income and must also determine the value of work in progress so that it can be included in the
computation of their income. For some professionals,[177] namely those to whom the billing
method applies, special rules must be met, particularly with regard to valuation of work in
progress at year’s end. That value can be excluded from the computation of income if the
taxpayer makes the election under paragraph 34(1)a) ITA. When the taxpayer subsequently
elects to include that value, he or she must still use the same method, unless he or she revokes
the election pursuant to paragraph 34(1)b) ITA.
Section 32 ITA allows an insurance agent or broker to deduct an amount equal to the amount
of commissions unearned at the end of the tax year or a reasonable amount for services to be
rendered after the end of the year, whichever is less.
Finally, subsection 20(10) ITA allows a taxpayer who carries on a business or practises a
profession to deduct expenses incurred in attending not more than two conventions during the
year. There are two conditions that must be met: first, the conventions must be held by a
business or professional organization, and second, the conventions attended by the taxpayer
must be related to his or her business or profession.[178]
1.4.2 IMPORTANCE OF DISTINGUISHING BETWEEN THE
CONCEPTS IN CIVIL LAW


In civil law, a client’s obligations to a contractor or service provider are different from an
employer’s obligations toward employees. Further, a contractor’s obligations to a client are
different from the obligations of an employee to his or her employer.
1.4.2.1 EMPLOYER’S LIABILITY FOR THE ACTIONS
OF EMPLOYEES
Article 1463 CCQ states, "The principal is liable to reparation for injury caused by the fault of
his agents and servants in the performance of their duties; nevertheless, he retains his recourses
against them." In this case, the legislator allows the principal or the employer to avoid that
liability only by proving simple absence of fault on its part. As indicated in the minister’s
comments,[179] the principal has an obligation to secure third parties against actionable fault by
an agent or servant in the performance of his or her duties.
Article 1463 CCQ establishes strict liability; in other words, it is not necessary for the employer
to have assumed liability in the actionable fault. It is enough to simply show that the employee
was at fault. The criteria set out in article 1457 CCQ will of course have to be proven, that is,
fault, damage and the causal link between the two. It should also be noted that an employer
cannot be held accountable for damage caused to a third party by an employee unless the fault
occurred in the course of the employee’s duties.
It is also important to determine the nature of the relationship between the payer and provider of
services. As stated earlier, the control test is still the most conclusive test. What has to be
established is the authority vested in the principal enabling the principal to impose a work
method and to supervise and immediately direct the servant.[180]
Because they are their own boss, self-employed workers may be held directly liable for any
professional fault. Their liability is in that respect full and complete.
1.4.2.2 COLLECTIVE RELATIONSHIPS
The distinction is equally important in labour law, mainly because only workers are allowed to
form unions and thus become part of a collective agreement. In Quebec, the collective labour
regime set out in the Labour Code is based on the freedom of employees to join the association
of their choice.[181] The Code protects the formation of an association and, once the
association is accredited, the employee’s participation in the activities and management of the
association.[182]
The Code defines "employee" as "a person who works for an employer and for
remuneration".[183] That definition includes the three components of a contract of employment
as defined by the CCQ, namely employment, remuneration and subordination. The definition
does not include self-employed workers. Because they are not subordinate to an employer in
carrying out their work, self-employed workers cannot join an accredited association within the
meaning of the Labour Code.
Finally, some people who meet the stated definition are still not considered employees, which
means that they cannot join an accredited association under the Labour Code. These
exclusions stem primarily from possible conflict of interest between the employee’s duties and
his or her membership in a union. "Employee" therefore does not cover a person who acts as
manager, superintendent or foreman, an administrator or officer of a corporation, a public
servant whose work is confidential,[184] the permanent Crown prosecutor, a member of the
Sûreté du Québec[185] or an employee of the Director General of Elections.
1.4.2.3 INDIVIDUAL CONTRACT OF
EMPLOYMENT[186]
In this part of the text, we look at some of the rights and obligations of employees and
employers. Most of those rights and obligations are set out in the CCQ. Where there is a
contract of employment, the employer has an obligation to "allow the performance of the work
agreed upon and to pay the remuneration fixed, but also to take any measures consistent with
the nature of the work to protect the health, safety and dignity of the employee."[187]
Employers have the right to exercise disciplinary authority because of the relationship of
subordination between the parties.[188] In the event of dismissal, the employer must give the
employee reasonable notice of termination of the indeterminate contract.[189] If the employee
suffers injury where insufficient notice of termination is given, the employee is entitled to
compensation.[190] In the case of a term contract, the employer cannot terminate the contract
without a serious reason.[191] Employers are also required to recognize the maintenance and
continuity of an employee’s job subsequent to a merger or a change in the business.[192]
Further, employers who wish to include a non-competition clause in an employee’s contract are
subject to certain limits, particularly with regard to the duration, location and type of activity.
Finally, employers who terminate a contract without a serious reason cannot invoke a non-
competition clause.[193]
Article 2088 CCQ states that employees are bound to perform their work as agreed, to act
faithfully toward the employer and to not use any confidential information they receive in the
course of their work.
Contractors do not have the same obligations to their clients as employees have to their
employer. If they sell goods, for example, they are required under article 1726 CCQ to
warrant against latent defects and provide common, conventional warranties.[194] The payer
does not have the power to discipline the contractor, and when a contract is terminated, the
general rules governing the law of obligations apply.
Employees are also protected by social legislation. Those statutes contain their own definitions
of "employee", but there are similarities between those definitions and the private law definition,
with a few exceptions.[195]
The Act respecting labour standards guarantees minimum working conditions for all Quebec
workers. It thus provides a very broad spectrum of protection ranging from minimum wage to
parental and maternity leave to the exercise of rights and recourse, particularly in cases of
dismissal. The Act respecting occupational health and safety requires everyone who carries
out work or is present in a workplace to conduct themselves safely. The Act sets out
obligations for employees and employers, specifically with regard to products, processes,
equipment, materials, contaminants and hazardous materials. The Act respecting industrial
accidents and occupational diseases covers a wide range of protective measures for workers
who sustain an accident or contract an illness while carrying out their duties. The Act
establishes the board responsible and the legal framework for the benefits a worker is entitled to
while he or she recovers. Finally, the number of employees is what determines whether or not a
business is subject to the Pay Equity Act.[196] It is therefore essential that the true status of
individuals providing services to the business be determined. Section 8 of the Act defines
"employee" as "[a]ny natural person who undertakes to do work for remuneration under the
direction or control of an employer [. . .], except [. . .]". Finally, without giving a
comprehensive list of all the benefits normally granted to employees, it should be noted that the
Pay Equity Act applies to a considerable number of situations and that in many cases a worker
would be wise to consider himself or herself an employee.
1.5 TERMINOLOGICAL DIFFERENCES
We should begin by clarifying the concept of subordination as set out in the CCQ. The
dictionary defines subordination as the fact of being subject to authority.[197] Subordination
includes the notions of control and direction. The power to say what has to be done springs
from direction, and the power to say how it must be done stems from control.[198] The
difference may be small, but it is not insignificant. It is assumed that the terms "subordination"
and "control" are not interchangeable, as control is narrower in scope.
The CCQ now uses the term "salarié" [employee] instead of "locateur"[199] [lessor], [while]
the terms "ouvriers" [workmen] and "domestiques" [servants][200] are used in the CCLC.
Labour laws use the words "salarié", "travailleur" [worker] and "employé". As we saw earlier,
these statutes define the terms, and while the definitions differ somewhat, they all contain three
basic elements: subordination, remuneration and performance of work. In Quebec law, the
terms "salarié", "travailleur" and "employé" [in English, "employee" and "worker"] must
therefore be considered synonymous.
From a tax perspective, the notion of employee connotates subordination, that is, one person
serving another.[201] It also includes the notion of performance of duties.[202] It is therefore
not inconceivable that the definition of "employee" in the ITA could be likened to the definition
in the CCQ, although the case law has established different tests for defining the term in the two
instances.
The Dictionnaire de Droit privé[203] does not define "lease and hire of services", but does
indicate that the term is synonymous with "contract of employment", which is defined as:
[TRANSLATION] A contract under which a person, the employee or worker, undertakes, in
return for pay and for a limited time, to put his or her physical or intellectual abilities to work for
another person, the employer, as instructed by and under the authority of that other person. In
a broad sense, a contract of employment would include all forms of lease and hire of work. In
practice, the term "contract of employment" has a narrower meaning, referring only to a
contract for the lease and hire of personal services. [. . .] A contract of employment is a form of
lease and hire of work where the worker is the lessor and the employer is the lessee.
The commentaires du ministre[204] state that the term "lease and hire of services" has been
replaced by the more accurate and more contemporary term "contract of employment". The
two terms can therefore be considered synonymous, as we said earlier. The term "contract of
lease and hire of services" is now obsolete and no longer reflects Quebec civil law. It is,
however, still used in some Quebec and federal statutes.
Analysis of the terms used in the different legislative instruments shows that lawmakers do not
always use the same terms or phrases when translating into one language or the other. We will
see that there is no consistency among Quebec statutes or federal statutes or between provincial
and federal legislation.
The CCQ uses the following terms in French and English:
Salarié Employee[205]
Employeur Employer[206]
Contrat de travail Contract of employment[207]
Entrepreneur Contractor[208]
Prestataire de services Provider of services[209]
Client Client[210]
Contrat d'entreprise Contract of enterprise[211]
In matters of civil liability, the terms used are "commettant" and "principal"[212] and
"préposé" and "agent" or "servant".[213]
Labour laws mostly use the terms "employeur" and "employer".[214] As we saw earlier, there
are a number of terms used to mean "employee", all of them synonymous.
Salarié Employee[215]
Travailleur Worker[216]
Travailleur autonome Independent operator[217]
In tax matters, the ITA and the Canada Pension Plan generally translate the term "employé" as
"employee", whereas the Employment Insurance Act uses "employed person". The term
"employeur" is always translated as "employer".
We examined the use of the term "contract of lease and hire of service" in tax legislation.[218]
Because the term is not defined in the Act, we have to rely on the private law definition. As
stated earlier, the term "contract of lease and hire of service" is now obsolete in Quebec civil
law. The legislator should modernize the term and instead use "contract of employment".
Both Parliament and the National Assembly should review their statutes in order to bring the
above-mentioned terms in line with the new terminology used in the CCQ.


PART II
Have the courts recognized the specific nature of Quebec civil law in respect of these
concepts, particular since the new Civil Code of Québec was introduced in 1994?

2. RECOGNITION BY THE COURTS OF THE SPECIFIC NATURE OF
QUEBEC CIVIL LAW IN RESPECT OF THE CONCEPTS OF EMPLOYEE AND
SELF-EMPLOYED WORKER
Having studied the concepts established in lax law and those established in Quebec civil law, we
should analyse the way the courts apply those concepts, particularly when the source of the
dispute is in Quebec.
It should be noted that the CCQ has considerable scope in federal law, and tax law is no
exception. Whenever a federal statute that is to apply in Quebec uses a private-law concept
but does not define it and the Interpretation Act[219] also has nothing to say, the CCQ is the
instrument that provides the conceptual support needed to ensure the statute. Where this
occurs, the federal legislation is said to be implicitly dependent on the CCQ.[220]
In this instance, the ITA defines the terms "employee", "employment" and "employer", but the
definitions are inadequate. The ITA is implicitly dependent on the CCQ in respect of these
terms, and when the courts have to apply the concepts in a case involving the determination of a
Quebec worker’s status, they should, in principle, refer to the definition of "contract of
employment" set out in the Code.[221]
Section 8.1 has recently been added to the Interpretation Act. The new provisions read as
follows:
8.1 Both the common law and the civil law are equally authoritative and recognized sources of
the law of property and civil rights in Canada and, unless otherwise provided by law, if in
interpreting an enactment it is necessary to refer to a province's rules, principles or concepts
forming part of the law of property and civil rights, reference must be made to the rules,
principles and concepts in force in the province at the time the enactment is being applied.
This amendment reaffirms the rule stated above by making it mandatory and, more importantly,
binding judges to follow it when rendering a decision, particularly in cases where a worker’s
status must be determined. We believe that this amendment will mean better application of the
law, especially where the source of the dispute is located in Quebec.
2.1 COURTS APPLYING FEDERAL TAX LAWS
In Hauser,[222] the Tax Review Board was asked to consider the status of a physician who
was the director of the biochemistry laboratory at St. Mary’s Hospital. The decision made no
reference to the supplemental character of the CCLC, which was in effect at the time, but
instead referred to four tests: control, integration, economic reality[223] and specified result.
The Board wrote with respect to the control test:
This test, which in certain circumstances is still applicable, has been found by the courts to be
too inflexible in determining the issue, particularly in respect of professionals, highly trained and
skilled tradesmen. In this instance, it is clear that the Director of Laboratories could not or
would not interfere in the appellant’s exercise of his professional skills. However, even though
the usual strict control of an employer over the employee’s work employer/employee
relationship does in fact exist.[224]
In Hetch,[225] the Board had to determine whether a teacher who taught full time in one
college and part time in others was an employee or self-employed. The Board also applied four
tests: control, economic reality, specified result and integration. There was no reference to
application of the CCLC. The Board instead looked at the evolution of the control test in
common law and ultimately decided that the test was not conclusive when used alone. After
making a brief statement about the four tests (the same as those used in Hauser[226]), the
Court ruled that the taxpayer was an employee.
In Braive,[227] the taxpayer worked in the film production industry, performing a variety of
tasks. After reviewing the Quebec doctrine on employment relationships and Quebec tax and
civil case law, Mr. Justice Tremblay stated, "the solution of the point is not crystal clear."[228]
He noted that several tests and guides[229] can be used in determining a worker’s status, which
remains a question of fact. In his view, a test can be more important in one case and less in
another, depending on the facts of each case. In the matter before him, he concluded as
follows:
The Board thinks, in that case of this nature, the main measures to be considered must be the
nature and the complexity of the task, and the freedom of action given, i.e. "the nature and
degree of the detailed control over the person alleged to be the servant" as said McCordie, J.
quoted above (par.4.03.3.8), saying it can be considered as a "final test", if there be a final
test."[230]
The issue in Placements Marcel Lapointe Inc.[231] was this: was Placements Marcel
Lapointe Inc. entitled to claim small business deductions? Placements Marcel Lapointe carried
on a business that provided construction cost estimation services for another company, Gératek
Ltée. The services were rendered by the president and principal shareholder, Lapointe, who
was also an accredited appraiser. For the years from 1985 to 1987, the minister had refused to
allow the small business deduction because it deemed Marcel Lapointe to be carrying on a
personal services business. In order to determine whether the taxpayer was carrying on such a
business, the Tax Court of Canada undertook a comprehensive analysis of the distinction
between "employee" and "self-employed".
After expanding on the applicable tests, that is, control or the absence of control over the work
done by Marcel Lapointe, ownership of tools, chance of profit and risk of loss, ownership of
the business and integration of the work into the payer’s business, the Court ruled that none of
those tests was conclusive on its own. However, it focused on chance of profit and risk of loss
test, describing the test as important, even decisive, in distinguishing between "employee" and
"self-employed".[232] The Court also used remuneration and the specified result test to find in
the minister’s favour.
In decisions made after the new CCQ came into force, the courts have tended to take into
account the principles set out in common law.
It is clear from the cases referred to above that the subordination test is not applied the way it
should be in cases where the source of the dispute is located in Quebec. Many decisions are
made on the basis of the tests established in common law, and few are based predominantly on
the tests established in Quebec case law. That is probably what led Mr. Justice Tremblay to
write in Braive,[233] "Those guides […] are expressed by doctrine and by numerous
judgments in civil law, in common law and tax law. In fact, in all of these fields, the guides are
all the same."[234]
The following excerpt from Tedco[235] shows that the subordination test does not appear to
take precedence, even in cases originating in Quebec.
Counsel for the appellant dwelt at length (4.03.1(2)) on the fact that in Quebec the
subordination test is given priority. However, in Quebec as in the other provinces in Canada
further developments have deprived this test of its conclusive effect. At the present time, it often
happens that highly qualified employees or professionals have knowledge or skills much greater
than their employer's capacity. This means that the latter is unable to direct employees, and so
the control test does not apply. Especially when control of the independent contractor's work is
most of the time much closer than that of an employee's work.[236]
That decision was handed down before the new CCQ came into force, and therefore before the
National Assembly reaffirmed the importance of the subordination test in Quebec. It may not
be possible in cases involving professionals and highly skilled workers to determine the
worker’s status based on the subordination test alone. Where that test is inconclusive, other
tests, that is, ownership of tools, chance of profit and risk of loss, and integration into the
payer’s business, must be used to analyse the overall relationship. The Federal Court of Appeal
stated in Wiebe Door Services Ltd.,[237] "Lord Wright's fourfold test is a general, indeed an
overarching test, which involves "examining the whole of the various elements which constitute
the relationship between the parties."[238] Not to diminish the importance of using the
subordination test in Quebec, but some people may believe that the principles set out in Wiebe
Door Services Ltd.[239] are part of a separate federal private law.
In our view, that position is unwarranted, because the subordination test has been and continues
to be applied in decisions where the source of the dispute is located in Quebec.
Thibeault[240] involved a teacher who worked in several schools. The teacher claimed that
because he had several contracts with different schools, he should be considered self-
employed. Without referring specifically to Quebec case law, Mr. Justice Taylor focused on
control,[241] particularly when he said that there is a service contract when the right of control
by the payer is established:
It would appear to me that even if a taxpayer (lawyer, accountant, engineer or teacher) sets out
with the avowed purpose of putting himself into business, but in the process of so doing, he
enters into a contract(s) providing another party with the elements of control (that is he signs a
personal service contract), then for the purposes of the Income Tax Act his alleged plan of
business definition has been aborted.[242]
Regarding the taxpayer’s multiple contracts, the judge found that generally, a self-employed
worker enters into multiple contractual relationships with various parties. If any of those
contracts can be deemed a service contract rather than a contract of enterprise, it may be hard
to show that the other contracts may be contracts of enterprise. Grouping several contracts
together does not make them contracts of enterprise.
In Sauvé,[243] the taxpayer was a dancer in a nightclub. The court was asked to determine
whether she was an employee under the Employment Insurance Act. The judge considered
articles 2085 and 2098 CCQ in concluding that the most important factor in distinguishing
between an employee and a self-employed worker is subordination. He wrote:
Essentially the difference between the two contracts is that in the first there is subordination of
the employee to the employer, in that the former must obey such orders, instructions and
regulations as the latter sees fit to give or to make regarding performance of the task.[244]
Finally, the Court ruled that only the amounts paid by the taxpayer’s employer should be
considered insurable amounts under the Act.
In a recent case, Madam Justice Lucie Lamarre was asked to determine whether an American
aerospace engineer should be considered an employee or self-employed. In Wolf,[245] the
taxpayer was working for Kirk-Mayer and wanted to deduct expenses that had been incurred
in order to earn business income. After consulting the Canada-United States Tax Convention,
Lamarre J. referred to the CCQ and stated:
These provisions of the Civil Code of Quebec reiterate the paramount criterion laid down by
the case law for determining if there is an employer-employee relationship, and that criterion is
control. As for remuneration, it seems to be established in the case law that payment for
services on the basis of time sheets submitted is not exclusive to a contract of employment.
Fixing the amount of remuneration is as much an element of a contract for services as of a
contract of service.[246]
In the end, the Court found that Kirk-Mayer had some control over the work done by the
taxpayer. The judge did a brief analysis of the specified result, risk of loss and ownership of
tools tests and ruled that the taxpayer had to be considered an employee.
2.2 COURTS APPLYING QUEBEC TAX LAWS
In Quebec, the Taxation Act defines the terms "employment", "employee" and "employer".
Because those definitions are unsatisfactory in ambiguous cases, the principles of private law
must be used to accurately describe the legal relationship between the parties.
First, Quebec operates under a bijural system in which there is constant interplay between civil
law and common law. Some authors say it is therefore not surprising to find that the authorities
citied by Quebec judges, when considering the distinction we are dealing with in tax law, step
outside conventional civil law and take into account, at least indirectly, the principles of common
law.[247] But is that approach justified?
It would be useful to look at where the CCLC used to be and then analyse the situation today.
Article 1665a CCL defined lease and hire of work or contract of lease and hire of services, and
such a contract was an agreement under which one person worked for another under that
other person’s direction for remuneration.[248] As early as 1929, the Supreme Court of
Canada[249] recognized the subordination as the determining test.
The decision in Dhame[250] took the same position. The issue in that case was whether the
person working for Dr. Lucien Dhame was an employee or self-employed under section 63d)
of the Quebec Health Insurance Act.[251] Drawing on the concept of lease and hire of
services in the CCLC, the Provincial Court judge ruled that the test for determinig the difference
between employee and contractor is, and always has been, subordination between the parties.
The decision in Beiss[252] contains a very detailed analysis of the various tests developed in
English and Canadian case law and the evolution of those tests over time. The Provincial Court,
in a judgment pertaining to the Taxation Act, reaffirmed the predominance of the subordination
test by finding as follows:
[W]e have applied the various tests generally invoked in jurisprudence in determining the
employer-employee relationship, and in the light of those which are applicable in our opinion the
appellant is certainly not an employee. We are also of the opinion that the control test is still the
most important, if not the only proper one to use.[253]
Other Quebec decisions that came in the wake of Beiss[254] referred to the determining effect
of the control test,[255] despite references to other tests. However, other judges were
influenced by the common law test and found instead that all those tests were of equal
importance.[256] For example, in Beauce Vidéo Ltée v. S.M.R.Q.[257], Fortier J. wrote:
[TRANSLATION] The nature of contractual relationships can be determined only by analysing
various factors or tests. None of those tests is conclusive on its own. In some cases, owing to
the purpose of the contract, a test might actually not apply at all.[258]
We cannot ignore the decision in Dennis Sport Import Ltée,[259] where Mr. Justice Brossard
meticulously applied the rules of civil law in order to determine the status of workers working in
sales in specific geographic areas. The Court had been asked to determine whether the
workers were employees within the meaning of the Quebec Health Insurance Act, which
would mean that the employer would have to pay a contribution to the Minister of Revenue.
Faced with the shortcomings of the definitions of "employee" and "employer", the judge turned
to the definition of lease and hire of services in the CCLC. Regarding subordination, the judge
maintained that it is an essential characteristic of the employment relationship and that, in
contrast to what is set out in common law, that test is conclusive on its own:
[TRANSLATION] The Court holds the view that one must rely on the private law of Quebec,
which is rooted in France, and finds that the tests used in Quebec case law are primarily
subordination of the worker to the employer and dependence on the employer in the work
method.[260]
In that case, the Court had no trouble determining the status of the workers using the
subordination test alone, given the complete absence of control. In other cases, the extent of
the control test seemed less clear.[261] Some authors[262] believe that these problems with
the control test may account for the trend among judges to look elsewhere for rules of law that
can be used to settle the dispute.
Finally, the decision by the Quebec Court of Appeal in Les distributeurs Clé d'Or[263]
confirmed the predominance of the subordination test; the judge found that the test was, in the
context, the most important.[264] In that case, the Court was asked to determine the status of
Tupperware managers/sales representatives. After laying out four tests, namely ownership of
tools, chance of profit and risk of loss, integration of the work into the business, and control or
subordination, the Court concluded that the four tests did not apply to the managers, who were
therefore not employees.
Among decisions made after the CCQ came into force, the decision by Barbe J. seems to have
clearly stated the principle applicable in determining a worker’s status. In Guenette Textiles
Inc.,[265] the issue was whether the home-based seamstresses whose services were retained
by Guenette Textiles were employees or self-employed. The judge initially focused on the
definition in the Act respecting the Québec Pension Plan, the Quebec Health Insurance Act
and the Taxation Act, then reviewed the body of case law. He drew on the decision in
Montreal v. Montreal Locomotive Works Ltd.[266] to state the primary tests: subordination,
ownership of tools, chance of profit and risk of loss. The judge referred to the decision in
Beauce Vidéo Ltée[267] and qualified the statement that no test is conclusive on its own. He
reiterated that every factor has to be analysed and that in some situations no test may be
applicable.
The judge confirmed the importance of the subordination test, stating that in civil law, the most
important test is still subordination and control. The above-mentioned decisions[268] show that
"[TRANSLATION] the main test to be considered is the subordination of workers to the
employer, although other tests may also be used to determine the workers’ status."[269] The
judge also ruled that the fact the principal exercises a certain amount of control inherent in the
nature of the work assigned does not mean that the worker is subordinate to or controlled by
the principal. The judge made an interesting distinction between control and subordination:
However, regarding the subordination and control test, it is important to distinguish between the
power to say what has to be done – which is not a new test – and the authority to say how the
work should be done. That distinction is not new.[270]
The judge went on to quote Halsbury's Law of England:[271]
In the case of a contract of service the master not only directs what work is to be done but also
controls the manner of doing it, whereas in the case of a contract for work and labour or a
contract for services, the employer is entitled to direct what work is to be done, but not to
control the manner of doing it.[272]
Finally, he noted that tests other than subordination, that is, ownership of tools, chance of profit
and risk of loss, are there simply to supplement the subordination test in cases where the initial
result was not clear. Secondary tests can also be used to clarify the main tests.[273]
However, despite the statement that the subordination test is the determining test under the
CCQ, the fact remains that some decisions appear to be ambiguous in terms of the application
of that test.[274]
The decision in Centre du camion Ste-Foy inc. v. S.M.R.Q.[275] states that changing the way
an employee is remunerated does not change the legal relationship between the parties where
the elements of the contract of employment, in particular subordination, have been proven. In
another decision, the court refused to consider risk of loss once subordination had been
established.[276]
In Clinique de varices docteurs Nadeau, Couture & Ass.,[277] the court was asked to
determine the status of a physician who worked for the clinic. The Court began by pointing out
that subordination in civil law is the essence of a contract of employment and that a relationship
of subordination will in most cases separate a contract of employment from a contract of
enterprise. It nevertheless said that in the case of a professional, the degree of control is less
and will therefore not have any bearing on how the work is done, but rather on the regularity
with which work is done and quality of performance.[278] In a case like this, other tests have
to be used:
[TRANSLATION] The control or subordination test cannot be the decisive test where the case
involves a professional or a person whose services are retained because of a special skill. In
such cases, control is the same whether it is a contract of employment or a service contract, that
is, the control is very loose or simply potential. That is nature of control or subordination in this
case.[279]
Generally, it can be said that most of the indexed decisions applicable to Quebec tax laws
consider subordination to be the most important test, as indicated in the CCQ.


PART III
Where there are differences between the principles applicable in tax law and the
principles of the Civil Code of Québec, analyse the impact and tax implications of the
situation. Evaluate the practical side of the issue by referring to the legislation, such
as the Income Tax Act, the Employment Insurance Act, the Excise Tax Act and the
Canada Pension Plan.
3. DIFFERENCES BETWEEN THE PRINCIPLES APPLICABLE IN TAX LAW
AND THOSE APPLICABLE IN CIVIL LAW[280]
Before stating the differences between the principles applicable to the concepts we have
examined, we should reiterate the importance of the CCQ relative to federal legislation. Where
federal statutes deal with private-law issues, private law can be added (in which case there is
complementarity) or separated (in which case there is dissociation).[281]
When Parliament exercises its legislative authority, it is free to make special rules that are
incompatible with the private-law rules of one, several or all of the provinces. In all cases, the
federal statute takes precedence if there is incompatibility with provincial law and must take the
place of any provincial legislative provisions that would otherwise be applicable.
Authors Brisson and Morel[282] refer to implicit dependence when a federal statute does not
provide all of the elements required to ensure its application and other rules are needed to
complement it. Whenever a provision in a federal statute uses a private-law concept and does
not specifically define it, does not fully govern a particular issue in private law or does not adopt
a formal reference mechanism, private law must be used to fill in the gaps.
As stated earlier, section 248(1) of the ITA defines the terms "employment", "employee",
"employed", "employer" and "business". Because those definitions are far too broadly worded,
the rules of private law have to be used in ambiguous cases.
In Quebec, the civil law test that makes it possible to distinguish between an employee and a
self-employed worker is the actual subordination test. What the test seeks to verify is not only
direct control, but also the right to control the manner in which the work is carried out.
[TRANSLATION] Actual subordination, as the name implies, exists if in fact there is a
relationship of authority between the employer and the worker. Subordination is reflected in the
application of directives and standards set by the employer, who determines the real framework
in which the work is to be done. It is important to look beyond the surface and try to find the
real working conditions that arise from the contract between the employer and the worker.[283]
Actual subordination is a conclusive test, and even minimal subordination has to be taken into
consideration. The test is essential in determining a worker’s status and can alone establish the
relationship between the parties.
Under the CCLC, the subordination test was decisive and essential in establishing an employer-
employee relationship, despite the existence of additional tests. Finally, the subordination test is
particularly conclusive today because the National Assembly specifically reiterated it when the
new CCQ was adopted in 1994. According to the minister’s comments, the sometimes fine line
between a contract of employment and a contract of enterprise has created problems both in
doctrine and in case law, because the subordination test is best suited to the needs of the
field.[284]
In tax matters, it is widely thought that because of changes in the business world, the need to use
other tests has come to the fore. Common law has acknowledged that the control test is not
conclusive on its own. In Qureshi,[285] the Tax Court of Canada wrote:
[T]he development of the law in the last 60 years, and particularly in the last 15 or 20 years,
clearly indicates that the emphasis has shifted and that the test of control is no longer decisive.
Control remains, of course, an important factor, but it no longer has the universal application
which it was thought to have at the turn of the century. The shortfalls of the test of control
became apparent when its application led to the conclusion of the existence of an independent
contractor relationship in cases where it was clear that the relationship was one of
employer/employee. For instance, clearly superintendence and control cannot be decisive
where one is dealing with a professional man or a man of some particular skill and experience.
The case law in the area of taxation has developed many tests in addition to the control test.
Those tests have not been applied consistently, however. The integration test, for example,
when properly applied, complements the economic reality test. Despite the fact that the test
was improperly applied at the beginning, the decision in Wiebe Door Services Ltd[286] helped
clarify the importance of the tests and, more specifically, acknowledge that it must be used
cautiously and is of no value when used alone.[287]
As we saw at the beginning, tax courts believe that the following are elements of a single test:
control, ownership of tools, chance of profit and risk of loss. Common law courts had long
ruled that the control test was inadequate when it was the only one considered and that "the
whole of the various elements which constitute the relationship between the parties" [288] had
to be examined. Finally, the test developed in Wiebe Door Services Ltd.[289] was used in tax
cases in the common law provinces and also in civil law.
3.1 ANALYSIS OF THE IMPACT AND TAX IMPLICATIONS OF THIS
SITUATION
In light of the foregoing, a considerable number of judgments by federal courts in cases
originating in Quebec refer to the tests established in Wiebe Door Services Ltd.[290] and do
not take precedence over the principles of civil law. This situation is theoretically abnormal
given the primacy of civil law where private-law concepts are not defined in federal tax
legislation. Almost all authors agree on the principle whereby texts that come from a non-civil-
law source must not be cited to settle matters in Quebec or federal tax law where the dispute
originates in Quebec.[291]
But what are the real tax implications? Durnford[292] wrote that it is not a disaster if the
control test is applied more stringently in Quebec because of article 2085 CCQ. In his view,
decisions made in a dispute originating in Quebec would be the same as decisions handed down
in a common-law province or at least would probably be few and far between.
3.2 EVALUATION OF PRACTICAL INTEREST IN THE ISSUE WITH
REFERENCE TO THE LEGISLATION
3.2.1 INCOME TAX ACT

The issue underlying this analysis is whether the ITA readily lends itself to making a distinction
between a person who earns employment income and a person who earns business income.
The answer is no, and this lengthy analysis bears witness to that finding. It must be concluded
that the definitions of "employment", "employee" and "employer" referred to earlier are not
complete and adequate. However, to compensate for the shortcomings of the current Act, the
case law has developed a number of tests that can be used to differentiate between employees
and self-employed workers. What we need is to consider whether, despite the lack of clarity in
the ITA, we can still obtain the desired result, that is, a distinction between the two concepts.
3.2.2 EMPLOYMENT INSURANCE ACT

The Employment Insurance Act refers to "insured person" and "insurable employment", which
are defined as:
"insured person" means a person who is or has been employed in insurable employment;[293]
"insurable employment" means employment in Canada by one or more employers, under any
express or implied contract of service or apprenticeship, written or oral, whether the earnings of
the employed person are received from the employer or some other person and whether the
earnings are calculated by time or by the piece, or partly by time and partly by the piece, or
otherwise.[294]
This definition is based on the notion of a contract of service. However, the Act does not
include a definition of "contract of service". We therefore have to rely in principle on the
private-law definition, which can vary depending on the origin of the dispute, that is, whether it is
in Quebec or a common-law province. Note, however, that the courts tend to refer to the case
law arising from application of the ITA before turning to provincial private law. It might
therefore be useful to establish the guidelines applicable in determining a worker’s real status
under the ITA and include a reference to that Act in the definition of "insured person". That
reference would facilitate determination of the worker’s status.
3.2.3 EXCISE TAX ACT

The most relevant aspect of the Excise Tax Act is the definition of "service" or, more
accurately, "provision of service". GST is payable depending on whether or not there is a
service. As we stated in the course of this analysis, self-employed workers are service
providers and therefore have a number of obligations.
Self-employed workers who are not small suppliers are required to register under the Act,
collect GST from the recipient and remit the money to CCRA. The Excise Tax Act provides
only vague clues as to the nature of "service" and does not allow us to determine on simple
reading the difference between an employee and a service provider. The administrative and
legal systems will then turn to the principles arising from the ITA in order to make the
distinction. The ITA could become the reference tool in this area if a specific reference to the
ITA were included in the Excise Tax Act.
3.2.4 CANADA PENSION PLAN


The Canada Pension Plan also refers to a service contract in the definition of "employment".
The worker’s status must be determined in order to establish whether the payer is required to
make employer’s contributions and the worker employee’s contributions. Let us quickly look
at the definitions that can help us make that determination:
"Employment" means the performance of services under an express or implied contract of
service or apprenticeship, and includes the tenure of an office.
"Employer" means a person liable to pay salary, wages or other remuneration for services
performed in employment, and in relation to an officer includes the person from whom the
officer receives his remuneration.
"Business" includes a profession, calling, trade, manufacture or undertaking of any kind
whatever, and includes an adventure or concern in the nature of trade but does not include an
office or employment.
"Office" means the position of an individual entitling him to a fixed or ascertainable stipend or
remuneration [. . .].[295]
These definitions are of little or no assistance to us in determining a worker’s status. In fact, the
plan simply borrows the definitions set out in ITA and adds a few elements that are not very
useful in differentiating between an employee and a self-employed worker. Once again, the
shortcomings of the statute force us to look beyond the text, but without losing sight of the
context. We are led to conclude that there should be a specific reference to the principles
arising from the ITA regarding determination of a worker’s status. Finally, the problem stems
from the fact that the definitions set out in the tax laws are insufficient and inadequate. To
compensate for those weaknesses, the tax community has to rely on the case law principles
arising primarily application of the ITA.
3.3 OUR PROPOSALS
We find that tax legislation cannot be easily used to differentiate between an employee and a
self-employed worker. Still, the case law has developed tests that we can use to fill in the
gaps. Despite an inadequate or insufficient statute, we have shown that there is a rule of law in
this matter. The state of tax law is relatively stable, and the courts seem to apply the rule
adequately and consistently.
The fourfold test set out in Wiebe Door Services Ltd.[296], the source of which was the
decision in Montreal v. Montreal Locomotive Works Ltd.,[297] appears to be firmly
established in federal tax law and is a valid test considered sufficiently flexible to adapt to
today’s business environment. It also appears that there is a good understanding of the test
among stakeholders, that is, CCRA, judges, tax experts and taxpayers, which contributes to
consistent application of the rules of law.
As shown by the preceding analysis, no test is perfect, and as author J.E. Magee[298] points
out, there are no "magic" tests that can take the place of a review of the overall employee-
employer relationship.
The business world changes, and so, too, do employee-employer relationships. At first glance,
it would seem better to leave it to the administrative and legal systems to move forward and
develop tests applicable to specific cases.
However, in 1994, the National Assembly consolidated certain principles in the new Civil
Code. We presume that at the time the code was adopted, the legislature was aware of the
state of tax law in the early 1990s, where the decisions in Wiebe Door Services Ltd.[299]and
Montreal v. Montreal Locomotive Works Ltd.[300]were already well-established authorities
for determining a worker’s status. Apparently, however, it chose not to take that into account,
or at least the tax issue was not its primary motivation, as it followed the French doctrine that
was already well established in Quebec.
Although we pointed out the potential for a dichotomy in terms of the application in Quebec of
federal tax laws in determining a worker’s status, we did not identify any imminent problems.
However, it is neither justifiable nor appropriate for the ITA to lay out one system for Quebec
and a different system for the common-law provinces. The state of the economy, the movement
of employees, the establishment of businesses and equity between individuals throughout the
country are all arguments for a single test for determining an employee-employer relationship.
The fact that control or subordination is the number one test in civil law does not seem to create
any major problems regarding the application of this decision to Quebec taxpayers.
Administrative application by CCRA and Revenue Québec essentially brings us to the same
conclusion. It is clear from document RC4110[301] and Interpretation Bulletin RRQ.1-
1/R2[302] that there was a desire to focus on control in order to establish a worker’s status,
and that the other tests must subsequently be studied in order to support a determination based
on control or, simply, to determine the true status.
We showed that Quebec and other Canadian courts use to varying degrees and at their
discretion the tests developed in Montreal v. Montreal Locomotive Works Ltd.[303]and
Wiebe Door Services Ltd.[304] However, the fact remains that the rule of law is still
adequately applied and tends to be tailored to the situation.
But in order to prevent the potential risk of a Quebec taxpayer not receiving the same treatment
as any other Canadian, it seems appropriate to take the analysis a step farther and consider
whether Wiebe Door Services Ltd.[305] truly reflects the tax policy behind the distinction
between "employee" and "self-employed".
Wiebe Door Services Ltd.[306] is the result of the evolution of vicarious liability case law in
common law on which Lord Wright drew in Montreal v. Montreal Locomotive Works
Ltd.[307] Professor Atiyah stated that the control test, established by Baron Branwell in
Regina v. Walker,[308] "wears an air of deceptive simplicity, which … tends to wear thin on
further examination"[309].
In 1928, jurist William O. Douglas had already developed, in his article entitled Vicarious
Liability and Administration of Risk,[310] the business test characterized by control,
ownership, losses and profits. That business test was used again in Montreal v. Montreal
Locomotive Works Ltd.[311]
Lord Wright stated that in earlier decisions, a single test, namely the control test, was used to
determine whether there was a master-servant relationship in a case involving tortious liability.
He ruled that the control test was no longer adequate in the modern age and was not conclusive
on its own. He decided to apply the fourfold test, which struck him as far better suited to the
situation. Lord Wright then commented as follows:
In this way it is in some cases possible to decide the issue by raising as the crucial question
whose business is it, or in other words by asking whether the party is carrying on the business,
in the sense of carrying it on for himself or on his own behalf and not merely for a superior.[312]
Finally, Lord Wright seems to have based his decision on only two tests: ownership of tools,
and risk of loss or chance of profit. The other tests were not otherwise analysed. The decision
raises an interesting question: Whose business is it?
It is possible that neither the tests developed in common law[313] nor the civil-law tests are
adequate for differentiating between "employee" and "self-employed" in tax law. At the risk of
being repetitive, these tests are not rooted in tax law.
In civil law, the subordination test was codified in order to meet a number of objectives. First,
there was a desire to consolidate the case law that had developed around the distinction
between employee and self-employed in matters of labour law and civil liability. Another goal
was to complement labour laws[314] and probably facilitate the determination of a worker’s
status in matters of civil liability.
The purpose of this presentation is not to review all, but to name some, of the objectives and
underlying principles of the distinction between employee and self-employed in civil law.
The Quebec codifier of the first text on the liability of masters and principals, namely the last
paragraph of article 1045 CCLC, took inspiration from the writings of Pothier and other French
authors. Pothier wrote that the master was liable for damage caused by his servants even
though it was not within his power to prevent the offence or near-offence. A master therefore
had to choose good servants.[315] Pothier made the remarks at a time when master-servant
and principal-agent relationships were personalized. According to the author, the idea was to
sanction a master who made a wrong choice. The decision to establish strict liability was made
in order to make masters realize that they should use only good servants.[316] Today, that
reasoning is less appropriate because of changes in the social context and depersonalization of
employee-employer relationships.
This liability is also based on the fact that a principal has to direct his employees, give them
orders and instruct them as to how they are to carry out their duties. The right to monitor and
direct employees, presumed absolutely not to have been exercised or at the least to have been
exercised poorly by the employer, is what makes the employer liable.[317] It is therefore
assumed that if monitoring or control had been adequate, the damage might not have occurred.
This reasoning is directly linked to the subordination test set out in the CCQ .
Generally, there is a tendency to hold the principal liable because the principal controls the work
and imposes a work method. Despite some reasons that could be termed economic,[318] the
fact remains that control is directly linked to the way the work is done and this work method
may be likely to cause damage to this parties.
Quebec private law has defined "contract of employment"[319] and the obligations of the
parties.[320] Depending on the individual’s status, the legal regime to which the person is
subject can vary. The CCQ sets out the obligations of the parties to the contract and in so
doing creates a relationship between them. It is primarily the subordination test that allows us to
show that the employer is the person with power over the other in the contractual relationship.
Subordination is therefore a cornerstone of the contract of employment because it governs the
obligations of the parties. As Professor M.-F. Bich stated, subordination of the employee to the
employer is the very essence of a contract of employment: there would be no such contract
without subordination of the worker to the employer, that is, without evidence of the state of
subjection the employee, in order to merit that label, must be in relative to the employer.[321]
We believe, based on our analysis, that the subordination test is appropriate in matters of civil
liability and in labour law, but is probably not conclusive on its own in tax matters, because the
objectives and policies are different from those underlying the distinction between employee and
self-employed. Finally, the preceding analysis shows that the civil-law tests and the various
common-law tests may not be suitable or sufficient for differentiating in tax matters.
The main objectives of our tax system are equity, economic effectiveness and simplicity. There
is no universally accepted definition of equity, but a distinction is usually made between
horizontal equity and vertical equity. Horizontal equity means that people in a similar or
equivalent situation must be taxed the same way, taking into account the benefits they reap from
public resources. Vertical equity means that people in different situations must be subject to
different levels of taxation. The notion of economic effectiveness is linked to economic growth
and job creation, as an economy is considered to be effective when optimum use is being made
of resources. For example, the tax system can undermine economic effectiveness if it skews the
decisions made by businesses and entrepreneurs to explore profitable economic
opportunities.[322] Finally, simplicity means that every effort must be made to minimize the
cost to taxpayers of complying with tax rules and administrative costs for governments.
Generally, the objectives of our tax system are rooted in economic elements and tend to change
as the needs of business change. Proposals relating to differentiation will have to take these
general objectives into account.
It would be appropriate at this juncture to refer once again to the definitions of "employee" and
"business" in the ITA.
"employment" means the position of an individual in the service of some other person (including
Her Majesty or a foreign state or sovereign) and "servant" or "employee" means a person
holding such a position.
"employed" means performing the duties of an office or employment.
"business" includes a profession, calling, trade, manufacture or undertaking of any kind
whatever and, except for the purposes of paragraph 18(2)(c), section 54.2, subsection 95(1)
and paragraph 110.6(14)(f), an adventure or concern in the nature of trade but does not include
an office or employment.
In 1997, the Technical Committee on Business Taxation produced the following definition of
"business":
A business is an economic entity whose purpose is to make a profit from an industrial or
commercial activity and which is very independent from other businesses in managing its
activities. This definition includes Crown corporations (provincial and federal Crown
corporations, for example) that carry on commercial activities, as well as the commercial
activities of charitable and non-profit organizations.[323]
Defining and establishing the characteristics of a business could be useful in differentiating
between an employee and a business owner. With that in mind, we turn to Lord Wright, who
said in 1949, "In this way it is in some cases possible to decide the issue by raising as the crucial
question whose business is it".
The notion of "business" primarily refers to activity. A business is an economic entity; the
reference here is to the notion of organization in the framework of an economy activity. A
business is formed in order to make a profit and carries on a commercial or industrial activity,
which implies that it must invest capital to carry on its activities and assume some risk. In fact, a
self-employed worker carries on a business, and these elements become benchmarks in
determining his or her status. Inversely, an employee does not make a profit, but rather earns
wages. An employee faces no business risk as defined in the ITA.[324] Employees do not
usually need to make an investment to do their job. Finally, employees do not usually own a
business; they are integrated into their employer’s business.
We stated in the first part of the analysis that one of the main differences between an employee
and a self-employed worker from a tax perspective is entitlement to deductions related to their
type of income. In the case of employment income, the ITA gives a list of allowable deductions
and states that no other deduction may be made in computing income. These deductions from
employment income are far more limited than the amounts that can be deducted from business
income or property income. Business income is primarily the profit for the year. Profit is
calculated by subtracting from the total income what it cost to earn that money. The ITA states
that an expense may be deducted provided it was incurred in order to earn or generate income.
The allowability of deductions gives rise to many disputes. When the courts are called upon to
make a distinction between employee and self-employed from a tax standpoint, it is usually in a
dispute over allowable deductions based on the income the taxpayer generated. It is interesting
to see that Parliament chose to allow a small number of deductions from employment income
but a considerable number for taxpayers who earn their income from a business.
Parliament probably allows more deductions to a person who owns a business and takes a
business risk as a way of helping that person generate income that will later be taxed. The
objective is not to hurt employees, but rather to help self-employed workers. Since employees
received a fixed salary and do not take any business risk per se, Parliament does not need to
help them earn income.
The aim of the tax policies behind the distinction between "employee" and "self-employed"
seems to be to identify those who own a business, as Lord Wright stated in Montreal v.
Montreal Locomotive Works Ltd.[325]
There are a number of consolidation options: create a new definition of "employee", add
elements to the existing definition of "business" or create a new concept, that is, "self-employed
worker".
We earlier put forward the idea that the subordination test is probably not appropriate or
sufficient for distinguishing between employee and self-employed in tax law. As we stated many
times, the objective in making that distinction is mainly to identify those who own a business.
We believe that the ownership of tools and chance of profit or risk of loss tests are more likely
to identify those who own a business, as they are directly related to the notion of business.
Legislation could be passed to consolidate the tests set out in Wiebe Door Services Ltd.[326]
The purpose of the consolidated test would be to create a tool for identifying businesses or
people taking a business risk. With that in mind, the predominant control test, as recognized in
the CCQ, should give way to the chance of profit or risk of loss and ownership of tools tests.
Finally, we cannot ignore the recent decision of the Supreme Court of Canada in Sagaz
Industries[327] where in a non-tax context, the court had to determine the status of a person as
an employee or as an independent contractor.
Justice Major, for an unanimous Court, ratify unequivocally the reasoning of justice MacGuigan
in the Wiebe Door Services Ltd. case. Note the following excerpts:
"However, control is not the only factor to consider in determining if a worker is an employee or
an independent contractor. For the reasons discussed below, a reliance on control alone can be
misleading, and there are other relevant factors which should be considered in making this
determination.
[...]
Although there is no universal test to determine whether a person is an employee or an
independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is
that taken by Cooke J. in Market Investigations, supra. The central question is whether the
person who has been engaged to perform the services is performing them as a person in
business on his own account. In making this determination, the level of control the employer has
over the worker’s activities will always be a factor. However, other factors to consider include
whether the worker provides his or her own equipment, whether the worker hires his or her
own helpers, the degree of financial risk taken by the worker, the degree of responsibility for
investment and management held by the worker, and the worker’s opportunity for profit in the
performance of his or her tasks.
It bears that the above factors constitute a non-exhaustive list, and there is no set formula as to
their application. The relative weight of each will depend on the particular facts and
circumstances of the case."
The test that allows us to make that determination must be broad and factual. It is important to
remember that the worker-payer relationship is still mostly a question offact, and the test has to
adapt to the changing world of business.

BIBLIOGRAPHY

LEGISLATION
Civil Code of Lower Canada
Civil Code of Québec, S.Q. 1991, c. 64.
Labour Code, R.S.Q., c. C-27.
An Act respecting industrial accidents and occupational diseases, R.S.Q., v. A-3.001.
An Act respecting collective agreement decrees, R.S.Q., c. D-2.
Pay Equity Act, R.S.Q., c. E-12.001.
Taxation Act, R.S.Q., c. I-3.
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.).
An Act respecting labour standards, R.S.Q., c. N-1.1.
Québec Pension Plan Act, R.S.Q., c. R-9.
An Act respecting labour relations, vocational training and manpower management in
the construction industry, R.S.Q., c. R-20.
An Act respecting occupational health and safety, R.S.Q., c. S-2.1.

GOVERNMENT DOCUMENTS
Revenue Canada, Interpretation Bulletin IT-525R, "Performing Artists", August 17, 1995.
Revenue Canada, Interpretation Bulletin IT-73R5, "Small Business Deduction", February 5,
1997.
Revenue Canada, form CPT 1 (request for a decision on a worker’s status for purposes of the
Canada Pension and/or the Employment Insurance Act).
Revenue Canada, Form CPT 2 (request by a worker for a decision on his or her status under
the Canada Pension Plan and/or the Employment Insurance Act).
Revenue Canada, F981026 "Employee or self-employed".
Revenue Québec, Interpretation Bulletin IMP. 135.2-1 "Entreprise de services personnels"
[personal services business], January 31, 1994.
Revenue Québec, Interpretation Bulletin IMP. 128-12, "Dépenses d’un artiste interprète
oeuvrant à titre de travailleur autonome" [expenses of self-employed performing artist], July 31,
1995.
Revenue Québec, Interpretation Bulletin RRQ. 1-1/R2, "Status of Worker", October 30,
1998.
Ministère de la Justice, Commentaires du ministre de la Justice, Code civil du Québec, t. III,
Quebec City: Les Publications du Québec, 1993, p. 694.

JURISPRUDENCE
Québec Asbestos Corporation v. Couture, [1929] S.C.R. 166 (S.C.C.).
Mattocks v. Supertest Petroleum Corporation Ltd., 1941 C.S. 154 (S.C.).
Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161 (Privy Council).
Stevenson, Jordan and Harrisson Ltd. v. Macdonald and Evans, [1952] 1 T.L.R. 101.
Di Franscesco v. MRN, (1964) 34 Tax A.B.C. 380 (T.A.B.).
Foods Drivers, Commission Salesman, Dairy and Ice Cream Workers, Local Union no
973 v. J.J. Joubert Ltée, A-65-25, no 1683-10 (DCRT 1683-10).
Abrahams v. MRN, [1966] C.T.C. 694 (C.E.).
Syndicat des vendeurs d'automobiles du District de Québec (CSN) v. Giguère Automobile,
[1967] R.D.T. 321 (T.R.B.).
Alexander v. MRN, [1969] C.T.C. 715 (C.E.).
MacDonald v. MNR, [1974] C.T.C. 2204 (T.R.B.).
Rosen v. MRN, [1976] C.T.C. 462 (F.C., Trial Div.).
Syndicat des employés de Publications Québécor (CSN) v. Publications Québécor Inc.
[1977] T.T. 46.
Latimer v. MRN, 77 D.T.C. 84 (T.R.B.).
Laurent v. MRN, 78 D.T.C. 1311 (T.R.B.).
Hôpital Notre-Dame de l’Espérance v. Laurent, [1978] 1 S.C.R. 605 (S.C.C.).
Hauser v. MRN, 78 D.T.C. 1532 (T.R.B.).
Les Pétroles Inc. et les Pétroles Irving Inc. v. Le Syndicat international des travellers des
industries pétrolières, chimiques et atomiques, locaux 9-700, 9-701, 9-702, 9-703, 9-704,
(1979) T.T. 209.
Gaston Breton Inc. v. L'Union des routiers, brasseries, liqueurs douces et ouvriers de
diverses industries, Local 1999, [1980] T.T. 471.
Braive v. MRN, 81 D.T.C. 748 (T.R.B.).
Lalonde v. MRN, 82 D.T.C. 1341 (T.R.B.).
Beauce Vidéo Ltée v. SMRQ, [1983] R.D.F.Q. 3 (C.P.).
Gagné v. MRN, 83 D.T.C. 474 (T.R.B.).
Thibeault v. MNR, 83 D.T.C. 182 (T.R.B.).
Wiebe Door Services Ltd. v. MRN, [1986] 2 C.T.C. 2000 (F.C.A.).
Marotta v. The Queen, 86 D.T.C. 6192 (F.C., Trial Div.).
Campbell v. MRN, 87 D.T.C. 47 (T.C.C.).
Bradford v. MRN, 88 D.T.C. 1661 (T.C.C.).
Les distributeurs Clé d'Or v. SMRQ, [1988] R.D.F.Q. 30 (C.A.).
Moose Jaw Kinsmen Fins v. MRN, 88 D.T.C. 6090 (F.C.A.).
Ville de Brossard v. Syndicat des employés de la Ville de Brossard (C.S.N.), [1990] T.T.
337, D.T.E. 90T-865.
Sous-Ministre du Revenu du Québec v. Les Pétroles Veltra (1989) Ltée, No 500-09-
000687-871, March 18, 1991(C.A.).
Abdul Razzad Qureshi v. MRN, 92 D.T.C. 1150 (T.C.C.).
Commission des Normes du Travail v. North American Automobile Association Ltd.,
(1993) 55 Q.A.C. 212, D.T.E. 93T-429 (C.A.).
Placements Marcel Lapointe Inc. v. MRN, 93 D.T.C. 821 (T.C.C.).
Re Sauvé v. MRN, 132 D.L.R. (4th) 114 (C.F.A.).
Les Plastiques Simport Ltée v. SMRQ, [1996] R.D.F.Q. 297 (C.Q.).
Boulangerie Weston Québec Inc. v. Syndicat International des travailleurs-euses de la
boulangerie, confiserie et du tabac. Section locale 324, D.T.E. 96T-951 (C.T.).
Guenette textiles Inc. v. Sous-Ministre du revenu du Québec, [1996] R.D.F.Q. 211 (C.Q.).
Pointe Claire (City) v. Quebec (Labour Court), [1997] 1 S.C.R. 1015 (S.C.C.).
Les Modes Sola Ltée v. SMRQ,, N.500-02-036097-918, October 17, 1997 (C.Q.).
Beauport (Ville) v. SMRQ, [1998] R.D.F.Q. 184 (C.Q.).
Lamarche v. Service d'interprétation visuelle et tactile, D.T.E. 98T-533 (C.T.).
Natrel Inc. v. Tribunal du travail et al., [1998] R.J.D.T. 104 (S.C.).
Syndicat des communications graphiques, Local 41-M v. Messagerie Québécor Inc.,
[1998] R.J.D.T. 176 (T.T.).
Bergeron v. SMRQ, [1998] R.D.F.Q. 163 (C.Q.).
Trudel v. SMRQ, [1998] R.D.F.Q. 153 (C.Q.).
Centre du camion Ste-Foy v. SMRQ, [1998] R.D.F.Q. 269 (C.Q.).
Clinique de varices docteurs Nadeau, Couture & ass. v. SMRQ, [1999] R.D.F.Q. 127
(C.Q.).
Côté v. MRN, 99 D.T.C. 5215 (F.C., Trial Div.).
Aaron Braun v. MRN, 2000 D.T.C. 2222 (T.C.C.).
Lawrence Wolf v. The Queen, No 98-2647(IT)G (October 23, 2000) (T.C.C.).
Dansereau v. The Queen. [2001 FCA 305].
Sagaz Industries Canada Inc., Sagaz Industry Inc. and Joseph Kavana v. 671122 Ontario
Limited [2001 CSC 59].

MONOGRAPHS
Jean-Yves BRIÈRE and Jean-Pierre VILLAGGI, Le contrat de travail : vos droits, vos
obligations, Farnham: Les Publications CCH/FM ltée, 1996.
Marie-France BICH, "Le contrat de travail", La Réforme du Code civil, Obligations,
contrats nommés, compilation by the Barreau du Québec and the Chambre des notaires du
Québec, Sainte-Foy: Les Presses de l’Université Laval, 1993, pp.741-796.
Pierre CIMON, "Le contrat d’entreprise ou de service", La Réforme du Code civil,
Obligations, contrats nommés, compilation by the Barreau du Québec and the Chambre des
notaires du Québec, Sainte-Foy: Les Presses de l’Université Laval, 1993, pp. 797-844.
Innis CRISTIE, Geoffrey ENGLAND and Brent COTTER, Employment Law in Canada,
Toronto: Butterworths Canada Ltd., 1993, pp. 9-27.
DESJARDINS DUCHARME STEIN MONAST, L’entreprise et ses salariés, Montreal: Les
Éditions Transcontinental inc., 1996.
Canadian Tax Guide, 47th Edition, 2000, Farnham: Publications CCH Ltée, pp. 27-30.
Guy LORD, Jacques SASSEVILLE and Diane BRUNEAU, Les principes de l’imposition au
Canada, 12th ed., Montreal: Wilson & Lafleur, 1998.
Hélène OUIMET and Pierre LAPORTE, Travail plus, le travail et vos droits, 3rd ed.,
Montreal: Wilson & Lafleur, 1998.

PROFESSIONAL JOURNALS, SYMPOSIUMS AND CONFERENCES
Pierre ARCHAMBAULT, "Employé et travailleur autonome : Distinction juridique et le
problème des sources du droit", (1987), Vol. 9, No. 2 Revue de planification fiscale et
successorale 287-302.
Pierre BARSALOU, "Impact du droit civil dans l’application des lois fiscale", in 1999
Conference Report, Toronto: Canadian Tax Foundation, 1999, p. 8 :1-31.
Jean-Pierre BEAUREGARD, "Interaction du droit civil et de la Loi de l’impôt", in 1985
Conference Report, Toronto: Canadian Tax Foundation, 1985, p. 25 :1-5.
Marie-France BICH, "Droit du travail québécois – Genèse et generation" in Droit québécois
et droit français; communauté autonomie et concordance, H.P. Glenn, ed., Cowansville:
Les Éditions Yvon Blais Inc., 1993, pp. 515-531.
Jean-Maurice BRISSON, "L’impact du Code civil du Québec sur le droit fédéral : une
problématique", (April-June 1992), Tome 52, No 2 R. du B. 345-360.
Jean-Maurice BRISSON, "Droit fédéral et droit civil : complémentarité, dissociation" (1996)
75 Can. Bar. R. 297-334.
Alexandre BUSWELL, "La transformation de l"emploi : implications juridiques et perspectives
d’avenir", in Congrès 2000, Montreal: Association de planification fiscale et financière, 2000.
Mario DION, "Le bijuridisme canadien : Perspective du ministère de la Justice", (1998) 29
R.G.D. 253-257.
Jonh W. DURNFORD, "Employee or Independent Contractor? The Interplay Between the
Civil Code and the Income Tax Act", in Mélanges offerts par ses collègues de McGill à Pierre-
André Crépeau, Cowansville: Les Éditions Yvon Blais Inc., 1997, 273-309.
Alain J. GAUCHER, "A worker’s status as employee or independent contractor : its
significance for tax and general law, its determination and planning considerations", in 1993
Conference Report, Toronto: Canadian Tax Foundation, 1993.
Patrick GLENN, "Persuasive Authority", (1987) 32 Vol. 2 R.D.McGill 262-297.
Renée M. GOYETTE, "À la recherche du véritable statut : salarié ou travailleur autonome", in
Développements récents en droit du travail 1998, Continuing Education Division, Barreau du
Québec, Cowansville: Les éditions Yvon Blais, pp. 19-53.
Pierre LESSARD and André MORISETTE, "The new civil Code of Quebec" in 1993
Conference Report, Toronto: Canadian Tax Foundation, 1993.
Joanne E. MAGEE, "À qui appartient l’entreprise : employés ou entrepreneurs independents",
(1997) Vol. 45, No. 3 Revue fiscale canadienne 604-627.
Christopher R. MOSTOVAC, "Lorsque peu de choses séparent le travailleur autonome du
salarié/employé… ", in Congrès 2000, Montreal: Association de planification fiscale et
financière, 2000.
André PARADIS, "Conséquences fiscales de la réforme du Code civil", in Congrès 92,
Montreal: Association de planification fiscale et financière, 1992, p.29.
Ginette PELAND, "Statut de travailleur autonome : Champ de cotisation privilégié par les
autorités fiscals", in Colloque de l’APFF no 80, Montreal: Association de planification fiscale
et financière, 1997, pp. 2-80.
Brian J. WILSON, "Employment Status under the Income Tax Act", in 1991 Corporate
Management Tax Conference, Toronto: Canadian Tax Foundation, 1991, p. 2 :1-60.
COMPUTER SERVICES
Collection fiscale (electronic tax information service), Farnham, Quebec: Publications CCH
Ltée, technical interpretation 95-010566, May 30, 1995
Collection fiscale (electronic tax information service), Farnham, Quebec: Publications CCH
Ltée, technical interpretation 95-011044, November 29, 1995
Collection fiscale (electronic tax information service), Farnham, Quebec: Publications CCH
Ltée, technical interpretation 96-010173, May 22, 1996
Collection fiscale (electronic tax information service), Farnham, Québec, Publications CCH
Ltée, technical interpretation 97-011117
Collection fiscale (electronic tax information service), Farnham, Québec, Publications CCH
Ltée, technical interpretation 99-010488, July 27, 1999



* The author acknowledges with thanks the assistance of Julie Gaudreault-Martel (student-
at-law) in the researching and the writing of this paper.
[1] Mario Dion, "Le bijuridisme canadien : Perspective du ministère de la Justice", (1998) 29
R.G.D. 253, 254.
[2] R.S.C. 1985, v. 1 (5th Supp.) (hereinafter "ITA").
[3] In Regina v. Walker, (1858) 27 L.J.M.C. 207, Baron Bramwell wrote at page 208: "It
seems to me that the difference between the relations of master and servant and of principal and
agent is this: the principal has the right to direct what the agent has to do; but a master has not
only that right, but also the right to say how it is to be done."
[4] Diamond, The Law of Master and Servant, 2nd Edition (1946), p. 1.
[5] Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161 (C.P.).
[6] Yves Thivierge, "L’évolution jurisprudentielle de la distinction entre employé et travailleur
autonome", (1984), Vol. 6, No. 2, Revue de planification fiscale et successorale, Montreal:
Association québécoise de planification fiscale et successorale, p. 20.
[7] Hauser v. MNR, 78 D.T.C. 1532 (T.R.B.).
[8] Id.
[9] Id., 1534.
[10] Montreal v. Montreal Locomotive Works Ltd., supra, note 5. This decision is often
cited in tax matters and is one of many examples where tax jurisprudence has drawn on another
field of law, namely tort liability.
[11] Id., 169.
[12] Latimer v. MNR, 77 D.T.C. 84 (T.R.B.), Hauser v. MNR, supra, note 7, Hetch v.
MNR, 80 D.T.C. 1432 (T.R.B.), Marotta v. The Queen, 86 D.T.C. (F.C., Trial Division),
Bradford v. MNR, 88 D.T.C. 1661 (T.C.C.).
[13] (1910), 1 K.B. 543, 553.
[14] Id.
[15] Alexander v. MNR, 70 D.T.C. 6006, 6011 (Exchequer Court).
[15] Hauser v. MNR, supra, note 7.
[16] Stevenson, Jordan and Harrison Ltd. v. MacDonald and Evans, [1952]1 T.L.R. 101.
[17] Id., 111.
[18] See the decisions in Rosen v. MNR, 76 C.T.C. 462 (F.C., Trial Division) and Skyview
Photos Ltd. v. MNR, CCH Canadian Employment Benefits and Pension Guide Reports, 6097,
where the board stated, "The tests of control and integration are not necessarily separate and
distinct from one another, but can be to an extend interrelated. The control test is the primary
one, and it is only when the facts of the case are such that this primary test does not provide a
ready answer to the problems they raise that the integration test should be considered.
Integration is a secondary test and can be applied in cases where some elements of control are
present to confirm or negate the existence of the relationship of employer and employee."
[19] Co-Operators Insurance Association v. Kearney, [1965] S.C.R. 106 (S.C.C.). Spence
J. wrote on behalf of the Court, "Under the pressure of novel situations, the courts have become
increasingly aware of the strain on the traditional formulation [of the control test], and most
recent cases display a discernible tendency to replace it by something like an 'organization' test.
Was the alleged servant part of his employer's organization? Was his work subject to co-
ordinational control as to 'where' and 'when' rather than 'how'?"
[20] Rosen v. MNR, supra, note 18, Campbell v. MNR, 87 D.T.C. 47 (T.C.C.), David T.
McDonald Co. Ltd. v. MNR, 92 D.T.C. 1917 (T.C.C.).
[21] Marc Noël, "Contract for services, contract of services – A tax perspective and analysis",
in Twenty-ninth Tax Conference, 1977, Canadian Tax Foundation, p. 726.
[22] Wiebe Door Services Ltd. v. MNR, 87 D.T.C. 5025 (F.C.A.).
[23] Id.
[24] Montreal v. Montreal Locomotive Works Ltd., supra, note 5.
[25] That is, control, ownership of tools, chance of profit and risk of loss.
[26] Stevenson, Jordan and Harrison Ltd. v. MacDonald and Evans, supra, note 16.
[27] Wiebe Door Services Ltd. v. MNR, supra, note 22, 5029.
[28] Hôpital Notre-Dame de l'Espérance et Théoret v. Laurent, [1978] 1 S.C.R. 605.
[29] André NADEAU, Traité pratique de la responsabilité civile délictuelle, Montreal:
Wilson & Lafleur Ltée, 1971, p.387.
[30] Curley v. Latreille, [1920] 60 S.C.R. 131.
[31] Hôpital Notre-Dame de l'Espérance et Théoret v. Laurent, supra, note 28, 613. It
should be noted that the reference to Curley v. Latreille was an obiter by the Supreme Court
in its decision. In Curley v. Latreille, the issue was whether the employee-chauffeur, while
driving his employer’s car for personal purposes, in violation of the instructions from his
employer and at excessive speed, should be held liable for the death of the appellant’s son. In
that case, it was acknowledged that the defendant was an employee and the issue was whether
his actions were taken in the course of performing his duties. Anglin J., writing for the
majority, stated the phrase in the course of performing his duties can be analysed in the light
of common law decisions, because "English decisions can be of value in Quebec cases involving
questions of civil law only when it has been first ascertained that in the law of England and that
of Quebec the principles upon which the particular subject matter is dealt with are the same and
are given the like scope in their application, and even then not as binding authorities but rather as
rationes scriptae: and it is only on that footing and for purposes of comparison that I shall refer
to them." The judge added in passing that the bases for the employer’s liability are the same in
France and England.
[32]. Wiebe Door Services Ltd. v. MNR, supra, note 22.
[33] Hôpital Notre-Dame de l'Espérance et Théoret v. Laurent, supra, note 28.
[34] Wiebe Door Services Ltd. v. MNR, supra, note 22, 5027, Footnote 1.
[35] Montreal v. Montreal Locomotive Works Ltd., supra, note 5.
[36] Montreal v. Montreal Locomotive Works, supra, note 5.
[37] Wiebe Door Services Ltd. v. MNR, supra, note 22, 5029.
[38] Id., 5029.
[39] This question was raised in Montreal v. Montreal Locomotive Works Ltd., supra, note
5.
[40]Joanne E. Magee, "Whose Business Is It: Employees or Independent Contractors?",
(1997), Vol. 45, No. 3, Personal Tax Review, 604, 609. The Court referred to the decision
by Cooke J. in Market Investigations Ltd. v. Ministère de la Sécurité sociale [1968] 3 All
E.R. 732 (Q.B.D.) which reads at pages 737 and 738: "The observations of LORD WRIGHT,
of DENNING, L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the
fundamental test to be applied is this: "Is the person who has engaged himself to perform these
services performing them as a person in business on his own account?" If the answer to that
question is "yes", then the contract is a contract for services. If the answer is "no" then the
contract is a contract of service. No exhaustive list has been compiled and perhaps no
exhaustive list can be compiled of considerations which are relevant in determining that question,
nor can strict rules be laid down as to the relative weight which the various considerations
should carry in particular cases. The most that can be said is that control will no doubt always
have to be considered, although it can no longer be regarded as the sole determining factor; and
that factors, which may be of importance, are such matters as whether the man performing the
services provides his own equipment, whether he hires his own helpers, what degree of financial
risk he takes, what degree of responsibility for investment and management he has, and whether
and how far he has an opportunity of profiting from sound management in the performance of
his task. The application of the general test may be easier in a case where the person who
engages himself to perform the services does so in the course of an already established business
of his own; but this factor is not decisive, and a person who engages himself to perform services
for another may well be an independent contractor even though he has not entered into the
contract in the course of an existing business carried on by him."
[41] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[42] Id.
[43] For a more comprehensive analyse, see the paper by Alain J. Gaucher entitled "A
worker’s status as employee or independent contractor: its significance for tax and general law,
its determination and planning considerations", in 1999 Conference Report, Toronto: Canadian
Tax Foundation, 1999.
[44] Moose Jaw Kinsmen Fins v. MNR, 88 D.T.C. 6090 (F.C.A.).
[45] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[46] Moose Jaw Kinsmen Fins v. MNR, supra, note 44, 6100.
[47] Sutherland v. MNR, 91 D.T.C. 5318 (F.C., Trial Division).
[48] Standing v. MNR, (1992) 147 N.R. 238 (F.C.A.).
[49] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[50] Hennick v. Canada, (1995) 179 N.R. 315 (F.C.A.).
[51] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[52] Hennick v. Canada, supra, note 50, 316-318.
[53] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[54] Haddad v. Canada, [1998] F.C.J. No 581 (F.C.A.).
[55] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[56] Id.
[57] A. J. Gaucher, loc. cit, note 43.
[58] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[59] We found only two decisions that did not cite Wiebe Door Services Ltd. v. MNR, supra,
note 22: Sciarra v. The Queen, [1996] 3 C.T.C. 2137 (T.C.C.) and Carter v. The Queen, 95
D.T.C. 303 (T.C.C.). See the article by J. E. Magee, loc. cit., note 40, 610, and the article by
A. J. Gaucher, loc. cit., note 43, in which he provides a list of all decisions that followed Wiebe
Door Services Ltd., supra, note 22.
[60] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[61] MacDonald Co. Ltd. v. MNR, 92 D.T.C. 1917 (T.C.C.) 1922.
[62] Placements Marcel Lapointe Inc. v. MNR, 93 D.T.C. 821 (T.C.C.).
[63] Bradford v. MNR, 88 D.T.C. 1661 (T.C.C.).
[64]Wiebe Door Services Ltd. v. MNR, supra, note 22. See also Canada v. Roussel, (1990),
124 N.R. 339 (F.C.A.).
[65] The reference here is to control, ownership of tools, chance of profit and risk of loss, and
integration.
[66] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[67] Tedco Apparel Management Services Inc. v. MNR, 91 D.T.C. 1391 (T.C.C.).
[68] Abdul Razzad Qureshi v. MNR, 92 D.T.C. 1150 (T.C.C.).
[69] Id.
[70] Haddad v. Canada, supra, note 54.
[71] Bass v. MNR, 87 D.T.C. 666 (T.C.C.).
[72] Martinez v. The Queen, [1995] 1 C.T.C. 2923 D (T.C.C.).
[73] Talbot v. MNR, 92 D.T.C. 1994 (T.C.C.).
[74] Bart v. MNR, 91 D.T.C. 884 (T.C.C.).
[75] Hennick v. Canada, supra, note 50.
[76] A. J. GAUCHER, loc. cit., note 43.
[77] Hereinafter "CCRA".
[78] Revenue Canada, Interpretation Bulletin IT-73R5, "The Small Business Deduction",
February 5, 1997.
[79] Revenue Canada, Interpretation Bulletin IT-525R, "Performing Artists", August 17, 1995.
[80] Id., para. 3
[81] Id., para.4
[82] Revenue Canada, Document RC4110 – "Employee or Self-Employed?".
[83] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[84] Revenue Canada, op. cit., note 82.
[85] Revenue Canada, F981026 "Employee or Self-employed?", October 1998.
[86] J. E. Magee, loc. cit., note 40, and Revenue Canada, op. cit., note 82.
[87] Revenue Canada, op. cit., note 82.
[88] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[89] A. J. Gaucher, loc. cit., note 43.
[90]Revenue Canada, Form CPT 1 (request for a decision on a worker’s status for purposes of
the Canada Pension and/or the Employment Insurance Act), and Revenue Canada, Form
CPT 2 (request by a worker for a decision on his or her status under the Canada Pension Plan
and/or the Employment Insurance Act).
[91] R.S.C. 1985, c. E-5.6.
[92] Hauser v. MNR, supra, note 7.
[93] Hereinafter "CCLC".
[94] Marie-France Bich, "Droit du travail québécois – Genèse et génération", in Droit
québécois et droit français; communauté autonomie et concordance, H.P. Glenn, Ed.,
Cowansville: Les Éditions Yvon Blais Inc., 1993, p. 519. It should be noted that the drafters in
1866 drew on France’s Civil Code, almost verbatim.
[95] Id.
[96] Dictionnaire pratique, Vol. 2, "Louage", p. 864.
[97] Lambert v. Blanchette, [1926] 40 K.B. 370.
[98] Québec Asbestos Corporation v. Gédéon Couture, 1929 S.C.R. 166. Other decisions
have confirmed that subordination is a characteristic essential to the recognition of employee
status, in particular Mattocks v. Supertest Petroleum Corporation Ltd., 1941 S.C. 154.
[99] Montreal v. Montreal Locomotive Works Ltd., supra, note 5.
[100]Id.It should be noted that the decision set a precedent in Quebec, as it was a case in
which the City of Montreal was demanding certain property taxes from Montreal Locomotive
Works Ltd. under the city’s charter. The company had a contract with the Dominion of
Canada, and the Court had to determine whether it was acting as an agent or an independent
contractor. The determination had to be based on Quebec civil law. This is a decision involving
provincial taxation in Quebec.
[101]Côté et al.v. Rheault, [1962] Q.B. 797, Food Drivers, Commission Salesman, Dairy
and Ice Cream Workers, Local Union No. 973 v. J.J. Joubert Ltée, A-65-25, no 1683-10
(DCRT 1683-10), Syndicat des vendeurs d'automobiles du District de Québec (CSN) v.
Giguère Automobile, [1967] R.D.T. 321 (L.R.B.), Syndicat des employés de Publications
Québécor (CSN) v. Publications Québécor Inc. [1977] T.T. 46, Hôpital Notre-Dame-de-
l’Espérance v. Laurent, [1978] 1 S.C.R. 605 (S.C.C.), Les Pétroles Inc. et les Pétroles
Irving Inc. v. Le Syndicat international des travailleurs des industries pétrolières,
chimiques et atomiques, locaux 9-700, 9-701, 9-702, 9-703, 9-704, (1979) T.T. 209,
Gaston Breton Inc. v. L'Union des routiers, brasseries, liqueurs douces et ouvriers de
diverses industries, local 1999, [1980] T.T. 471, Les distributeurs Clé d'Or v. S.M.R.Q.,
[1988] R.D.F.Q. 30 (C.A.) and Ville de Brossard v. Syndicat des employés de la Ville de
Brossard (C.S.N.), [1990] T.T. 337, D.T.E. 90T-865.
[102] Syndicat des employés de Publications Québécor (CSN) v. Publications Québécor
Inc., [1977] T.T. 46.
[103] Ville de Brossard v. Syndicat des employés de la Ville de Brossard, supra, note 101.
[104] Id., 381. See also pages 385 and 386, where the judge sets out a number of tests for
determining whether there is legal or economic subordination.
[105] Jean-Louis Beaudoin, La responsabilité civile délictuelle, Montreal: Les Presses de
l’Université de Montréal, 1973, p. 232, No. 348.
[106] Id., p. 226, No. 337.
[107] S.Q. 1991, c. 64 (hereinafter "CCQ").
[108] Came into force on January 1, 1994.
[109] Marie-France Bich, "Le contrat de travail", La Réforme du Code civil, Obligations,
contrats nommés, compilation by the Barreau du Québec and the Chambre des notaires du
Québec, Sainte-Foy: Les Presses de l’Université Laval, 1993, p. 744.
[110] Ministère de la Justice, Commentaires du ministre de la Justice, Code civil du Québec,
t. III, Québec, Les Publications du Québec, 1993, p. 694.
[111] Id., p. 695.
[112] Id.
[113] Pierre Cimon, "Le contrat d’entreprise ou de service", La Réforme du Code civil,
Obligations, contrats nommés, compilation by the Barreau du Québec and the Chambre des
notaires du Québec, Sainte-Foy: Les Presses de l’Université Laval, 1993, p. 805.
[114] M.-F. Bich, loc. cit., note 109, p. 746.
[115] R.S.Q., c. N-1.1.
[116] R.S.C. 1985, c. L-2.
[117] M.F. Bich, loc. cit., note 109, 746.
[118]An Act respecting labour relations, vocational training and manpower management
in the construction industry, R.S.Q., c. R-20, s.1(r), Pay Equity Act, R.S.Q., c. E-12.001,
s. 8, and An Act respecting the Québec Pension Plan, R.S.Q., R-9, s.1(g).
[119] Labour Code, R.S.Q., c. C-27, s. 1(l).
[120] An Act respecting labour standards, R.S.Q., c. N-1.1, s. 1(10).
[121] An Act respecting collective agreement decrees, R.S.Q., c. D-2, s. 1(j).
[122] An Act respecting industrial accidents and occupational diseases, R.S.Q., c. A-
3.001, s. 2.
[123] An Act respecting occupational health and safety, R.S.Q., c. S-2.1, s. 1.
[124] Taxation Act, R.S.Q. c. I-3, s. 1.
[125] Syndicat des vendeurs d'automobiles du District de Québec (CSN) v. Giguère
Automobile, supra, note 101.
[126] Gaston Breton Inc. v. L'Union des routiers, brasseries, liqueurs douces et ouvriers
de diverses industries, supra, note 101, and Boulangerie Weston Québec Inc. v. Syndicat
International des travailleurs-euses de la boulangerie, confiserie et du tabac, Section
locale 324, D.T.E. 96T-951 (C.T.). See also the article by Renée M. Goyette, "À la
recherche du véritable statut : salarié ou travailleur autonome", in Développements récents en
droit du travail 1998, Service de la formation permanente du Barreau du Québec,
Cowansville: Les éditions Yvon Blais, p.36.
[127] See the discussion in M.-F. Bich, loc. cit, note 109, which states that it is rare today for a
contract of employment to be signed on the strength of the actual person. "[TRANSLATION]
The highly impersonal nature of the hiring methods used in many businesses, where prospective
employees are virtually interchangeable provided they meet certain minimum conditions, makes
it difficult to accept the idea that the contract might in some cases by intuitu personae."
[128] Gaston Breton Inc. v. L'Union des routiers, brasseries, liqueurs douces et ouvriers
de diverses industries, supra, note 101, Boulangerie Weston Québec Inc. v. Syndicat
International des travailleurs-euses de la boulangerie, confiserie et du tabac, Section
locale 324, supra, note 126, and Syndicat des communications graphiques, Local 41-M v.
Messagerie Québécor Inc., [1998] R.J.D.T. 176 (T.T.).
[129] Pointe-Claire (City) v. Quebec (Labour Court), [1997] 1 S.C.R. 1015 (S.C.C.).
[130] M.-F. Bich, loc. cit., note 109, p. 752.
[131] R.P. Gagon, L. Lebel and P. Verge, Droit du travail, Sainte-Foy: Publications de
l’Université Laval, 1991, p.11.
[132] M.-F. Bich, loc. cit., note 109, p. 753.
[133] Pointe-Claire (City) v. Quebec (Labour Court), supra, note 129, para. 45.
[134]Revenue Québec, Interpretation Bulletin RRQ. 1-1/R2, "Status of Workers", October
30, 1998.
[135] Id.
[136] Actual control is especially important. It is established by many elements characteristic of
the employer-employee relationship: assignment of duties, training and development required by
the payer, establishment of safety standards by the payer, evaluation and verification of work,
list of clients belonging to the payer, worker with an obligation of means, payer assuming cost of
damages caused by worker, and approval of forms and contracts.
[137] Personal performance is analysed in terms of whether the work is done by someone else.
The following elements are considered: opportunity to arrange a replacement from time to time
and opportunity to hire assistants.
[138] Consideration will be given to: term of the contract, exclusivity of work for the payer, and
creations, inventions and copyright owned by the payer, guaranteed volume of work, and
disciplinary measures.
[139] Revenue Québec, Interpretation Bulletin IMP. 135.2-1, "Entreprise de services
personnels" [personal services business], January 31, 1994, and Revenue Québec,
Interpretation Bulletin IMP. 128-12, "Dépenses d’un artiste interprète oeuvrant à titre de
travailleur autonome" [expenses of self-employed performing artist], July 31, 1995.
[140] See Collection fiscale (electronic tax information service), Farnham, Quebec:
Publications CCH Ltée, Technical Interpretation 95-010566, May 30, 1995, Collection
fiscale (electronic tax information service), Farnham, Quebec: Publications CCH Ltée,
Technical Interpretation 95-011044, November 29, 1995, and Collection fiscale (electronic
tax information service), Farnham, Quebec: Publications CCH Ltée, Technical Interpretation
96-010173, May 22, 1996, which confirm the preceding statement.
[141] Para. 8(1)e) to j) ITA.
[142] Subsection 8(2) ITA.
[143] ss. 9 and 20 ITA.
[144] subsection 18(1) ITA.
[145] s. 63 ITA.
[146] subpara. 8(1 )i) and iii) ITA.
[147] para. 8(1) f) and g), 18(1) l and 67.1(1) ITA.
[148] para. 8(1) e), f) and g) ITA. For a more comprehensive discussion, see also the articles
by A. J. Gaucher, loc. cit., note 43, and Brian J. Wilson, "Employment Status under the
Income Tax Act", in 1991 Corporate Management Tax Conference, Toronto, Canadian
Tax Foundation, 1991, p. 2:2-13.
[149] Expenses related to a home office (8(1) (i), (ii) and (iii)) or to a computer (8(1)f)).
[150] subsection 153(1) ITA. and Reg. 101 ITA.
[151] subsection 156(1) ITA.
[152] para. 153(1)g) and 105 ITA.
[153] para. 5(1)a).
[154] s. 82.
[155] ss. 67 and 68.
[156] R.S.C. 1985, c. C-8 (hereinafter "CPP").
[157] s. 8.
[158] s. 2. Note that s. 6 of the Canada Pension Plan lists employment specifically excepted
from the plan.
[159] s. 9.
[160] ss. 10 and 13.
[161] "Active business carried on by a corporation" is defined in subsection 125(7) ITA as
"any business carried on by the corporation other than a specified investment business or a
personal services business and includes an adventure or concern in the nature of trade".
[162] s. 125(7) ITA.
[163] See paragraph 3 of Interpretation Bulletin IT-525, op. cit., note 79, which states, "A
contract of service generally exists if the person for whom the services are performed has the
right to control the amount, the nature, and the management of the work to be done and the
manner of doing it. A contract for services exists when a person is engaged to achieve a defined
objective and is given all the freedom required to attain the desired result."
[164] A specified shareholder is a shareholder who directly or indirectly holds at least 10% of
any class of shares of the capital stock in the corporation issued at any time during the year.
[165] para. 18(1)(p) ITA.
[166] A. J. Gaucher, loc. cit., note 43.
[167] R.S.C. 1985, c. E-15 (hereinafter "ETA").
[168] s. 165 ETA.
[169] s. 148 ETA.
[170] s. 166 ETA.
[171] s. 123 ETA.
[172] Id.
[173] See section 34.1 ITA.
[174] See Interpretation Bulletin IT-179R, "Change of fiscal period, May 28, 1993.
[175] Hereinafter "SR&ED".
[176] 127(5) ITA.
[177] Namely, accountant, dentist, lawyer, notary, physician, veterinarian and chiropractor.
[178] Subsection 20(10) ITA may be limited by section 67.1 ITA; see also Interpretation
Bulletin IT-131R2, "Convention Expenses", November 24, 1989.
[179] Ministère de la Justice, Commentaires du ministre de la Justice, op. cit., note 110, p.
892.
[180] See the decisions in Québec Asbestos Corporation v. Gédéon Couture, supra, note
98, Hôpital Notre-Dame v. Villemure, [1970] C.A. 538, Gagné v. Gagné, [1994] R.R.A.
223 (C.A.), Desmeules v. Corps des cadets, 2869 de Laterrière, [1995] R.R.A. 693 (S.C.)
and Extrusions de Polyfilm Ltée v. Entreprises d’électricité N.D. Inc. J.E. 96-1071 (C.A.).
[181]s. 3.
[182] Id.
[183]s. 1(l) Note that the definition includes casual and part-time employees.
[184] This exception pertains only to public servants covered by the Public Service Act,
R.S.Q. c. F-3.1.1.
[185] These are covered by the Act respecting the syndical plan of the Sûreté du Québec,
R.S.Q. c. R-14.
[186] See also the article by Alexandre Buswell, "La transformation de l'emploi : implications
juridiques et perspectives d’avenir", in Congrès 2000, Montréal, Association de planification
fiscale et financière, 2000.
[187] Article 2087 CCQ
[188] Article 2085 CCQ
[189] Article 2091 CCQ
[190] Article 2092 CCQ
[191] Article 2094 CCQ
[192] Article 2097 CCQ
[193] Articles 2089 and 2095 CCQ
[194] Article 1732 CCQ
[195] In some instances, self-employed workers are specifically included in the definition of
"worker" or "employee", while in others, the definition is broad enough to include the notion of
"self-employed".
[196] Ten or more.
[197] Le Nouveau Petit Robert, Paris: Les dictionnaires Le Robert, 1993, p. 2156.
[198] Guenette textiles Inc. v. S.M.R.Q. [1996] R.D.F.Q. 211 (C.Q.).
[199] Art. 1665a CCLC.
[200] Art. 1666 CCLC.
[201] Subsection 248(1) "employment".
[202] Id.
[203] Dictionnaire de Droit privé, Cowansville: Les Éditions Yvon Blais, 1990, pp. 354 and
355.
[204] Ministère de la Justice, Commentaires du ministre de la Justice, op. cit., note 110, s.
2088, p. 695.
[205] Articles 2085, 2087, 2088, 2089, 2092, 2093, 2095, 2096 CCQ
[206] Articles 2085, 2087, 2088, 2089, 2092, 2093, 2095, 2096 CCQ
[207] Articles 2085, 2090, 2097 CCQ
[208] Articles 2099, 2102, 2103, 2104, 2109 CCQ
[209] Articles 2099, 2100, 2102, 2103, 2104, 2109 CCQ
[210] Articles 2098, 2110, 2111, 2113, 2114 CCQ
[211] Art. 2098 CCQ
[212] Art. 1463 CCQ
[213] The CCLC used the terms "maîtres" and "commettants", which were translated as
masters and employers; the terms "ouvriers" and "domestiques" were translated as workmen
and servants. (Art. 1054 CCLC).
[214] s. 1(7) An Act respecting labour standards; s. 2 An Act respecting industrial
accidents and occupational diseases; s. 1 An Act respecting occupational health and
safety; and s. 3-4 Pay Equity Act.
[215] s. 1(10) An Act respecting labour standards and s. 8 Pay Equity Act.
[216] s. 2 An Act respecting industrial accidents and occupational diseases and s. 1 An
Act respecting occupational health and safety.
[217] a. 2 An Act respecting industrial accidents and occupational diseases and s. 1 Pay
Equity Act.
[218] s. 105.1 ITR and s. 5(1)a) Employment Insurance Act.
[219] R.S.C. 1985, c. I-21.
[220] Jean-Maurice Brisson, "L’impact du Code civil du Québec sur le droit fédéral : une
problématique", (April-June 1992), Vol. 52, No. 2 R. du B. 345, 352 and 353.
[221] Art. 2085 CCQ
[222] Hauser v. MNR, supra, note 7. That same year, the Board rendered a decision on the
status of a Quebec worker. In Laurent v. MNR, 78 D.T.C. 1311 (T.R.B.), the taxpayer was
employed by Hydro-Québec and also taught courses at a CEGEP and two universities. In a
decision that considered only the contract between the parties, the Board found that the
taxpayer was an employee even when he taught his courses.
[223] The judge gave reasons why his decision differed from the Exchequer Court decision in
Alexander v. MNR, supra, note 15, where the status of a pathologist had to be determined.
[224] Hauser v. MNR, supra, note 7.
[225] Hetch v. MNR, supra, note 12.
[226] Hauser v. MNR, supra, note 7.
[227] Charles L. Braive v. MNR, 81 D.T.C. 748 (TRB).
[228] Id., 761.
[229] At page 761, the judge listed the following tests established by the doctrine and the case
law: "Right to control; Right to dismiss; The nature of the task; The freedom of action given; The
magnitude of the contract amount; The manner in which it is to be paid; Ownership of tools;
Chances of profit; Risks of loss; and Integration to payer's business".
[230] Id., 762.
[231] Placements Marcel Lapointe Inc. v. MNR, supra, note 54.
[232] Id., 818.
[233] Charles L. Braive v. MNR, supra, note 227.
[234] Id., 2803.
[235] Tedco Apparel Management Services Inc. v. MNR, supra, note 67.
[236] Id., 1411.
[237] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[238] Id., 5028.
[239] Id.
[240] Jean Thibeault v. MNR, 83 D.T.C. 182 (TRB).
[241] See also Jean Lafleur et Michael Polis v. MNR, 84 D.T.C. 1478 (TCC), where the
judge noted the importance of the control test but did not indicate it outweighed the others.
[242] Jean Thibeault v. MNR, supra, note 240.
[243] Sauvé v. MNR, 132 D.L.R. (4th) 114 (F.C.A.).
[244] Id., 117.
[245] Lawrence Wolf v. The Queen, 2000 D.T.C. 2595 (T.C.C.).
[246] Id., para. 24.
[247] Pierre Archambault, "Employé et travailleur autonome : Distinction juridique et le
problème des sources du droit", (1987), Vol. 9, No. 2 Revue de planification fiscale et
successorale 287, 290.
[248] Jean-Pierre Beauregard, "Interaction du droit civil et de la Loi de l’impôt", in 1985
Conference Report, Toronto, Canadian Tax Foundation, 1985, p. 25:4.
[249] Québec Asbestos Corporation v. Gédéon Couture, supra, note 98.
[250] Dhame v. S.M.R.Q., C.P. Montréal 500-02-028-729-791.
[251] 1970 L.Q., v. 37.
[252] Sarah Beiss v. S.M.R.Q., [1981] R.D.F.Q. 48.
[253] Id., 57.
[254] Id.
[255] Entreposage et déménagement Morgan Ltée v. S.M.R.Q., [1982] R.D.F.Q.1, 5 and
Levitsky v. S.M.R.Q., [1982] R.D.F.Q. 8, 11
[256] See S.M.R.Q. v. Les Pétroles Veltra (1989) Ltée, No 500-09-000687-871, March
18, 1991(C.A.), where the judge rejected the subordination test, despite the presence of such a
relationship between the parties and opted instead for the chance of profit and risk of loss tests.
[257] Beauce Vidéo Ltée v. S.M.R.Q. [1983] R.D.F.Q. 3 (C.P.).
[258] Id., 7.
[259] Dennis Sport Import Ltée v. S.M.R.Q. (February 3, 1987), Montreal 500-02-015213-
866 (C.P.)
[260] Id., 5.
[261] Les Modes Sola Ltée v. S.M.R.Q. (January 8, 1987), Montreal 500-02-033930-855
(C.P.).
[262] J.-P. Beauregard, loc. cit., note 245.
[263] Les distributeurs Clé d'Or v. S.M.R.Q., supra, note 101.
[264] Id, 33.
[265] Guenette textiles Inc. v. S.M.R.Q., supra, note 198. See also the recent decision
9046-2953 Québec inc. v. S.M.R.Q. (June 20, 2000) 460-02-000400-988, which is identical
to this case.
[266] Montreal v. Montreal Locomotive Work Ltd., supra, note 5.
[267] Beauce Vidéo Ltée v. S.M.R.Q., supra, note 257.
[268] Dennis Sport Import Ltée v. S.M.R.Q., supra, note 259, Québec Asbestos
Corporation v. Gédéon Couture, supra, note 90 and Sarah Beiss v. S.M.R.Q., supra, note
252.
[269] Inns of Canada Ltd. v. S.M.R.Q., C.Q. Montreal 500-02-000859-871, 1990-01-25,
p. 3, quoted by Barbe J. in Guenette textiles Inc. v. S.M.R.Q.,, supra, note 198.
[270] Id.
[271] Halsbury's Law of England, Vol. 25, 3rd ed. No. 878.
[272] Id., p. 452.
[273] Secondary tests are: the parties’ perception of their relationship, terms of remuneration,
hiring and dismissal conditions; work schedule; personal performance of work; place of work;
integration into the payer’s business.
[274] Les Plastiques Simport Ltée v. S.M.R.Q., [1996] R.D.F.Q. 297 (C.Q.), Les Modes
Sola Ltée v. S.M.R.Q., supra, note 261, Ville de Beauport v. S.M.R.Q., [1998] R.D.F.Q.
184 (C.Q.) et Trudel v. S.M.R.Q., [1998] R.D.F.Q. 153 (C.Q.), where the issue was whether
a person practising law privately and also working as a municipal was an employee or self-
employed. The judge ruled that under the Act respecting the Québec Pension Plan, he was
self-employed. He also concluded that in the case and owing to the nature of he duties assigned
to the judge, none of the tests applied.
[275] Centre du camion Ste-Foy inc. v. S.M.R.Q., [1998] R.D.F.Q. 269.
[276] Ville de Beauport v. S.M.R.Q., supra, note 274.
[277] Clinique de varices docteurs Nadeau, Couture & Ass. v. S.M.R.Q., [1999] R.D.F.Q.
127.
[278] See the recent decision in Khan v. S.M.R.Q., C.Q. Montreal 500-02-056209-971 and
500-02-077664-998, where the fact that the applicant was an accountant did not permit a
finding that the control test alone could not be decisive and therefore made it necessary to
analyse the other tests. In that case, the decision in Wiebe Door Services Ltd. v. MNR, supra,
note 22, was argued but not taken up by the judge in his reasons for decision.
[279] Clinique de varices docteurs Nadeau, Couture & Ass. v. S.M.R.Q., supra, note 275.
[280] For a comprehensive analysis, see John W. Durnford, "Employee or Independent
Contractor? The Interplay Between the Civil Code and the Income Tax Act", in Mélanges
offerts par ses collègues de McGill à Pierre-André Crépeau, Cowansville: Les Éditions Yvon
Blais Inc., 1997, 273-309.
[281] Jean-Maurice Brisson and André Morel, "Droit fédéral et droit civil : complémentarité,
dissociation", (1996) 75 Can. Bar. R. 297, 299.
[282] Id., p. 309.
[283] Collection fiscale (electronic tax information service), Farnham, Quebec: Publications
CCH Ltée, technical interpretation 95-011044, November 29, 1995, p. 2.
[284]Ministère de la Justice, Commentaires du ministre de la Justice, op. cit., note 110, p.
694 and 695.
[285] Abdul Razzad Qureshi v. MNR, supra, note 68, p. 1159.
[286] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[287] Macdonald v. MNR, [1974] C.T.C. 2204 (C.R.I.) et Rosen v. MNR, supra, note 18.
[288] Montreal v. Montreal Locomotive Works Ltd., supra, note 5, and Pierre Archambault,
loc. cit., note 245.
[289] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[290] Id.
[291] P. Archambault, supra, note 246, J.-P. Beauregard, supra, note 245.
[292] J. W. Durnford, loc. cit., note 278.
[293] Paragraph 2(1).
[294] s. 5(1)a).
[295] Subsection 2(1).
[296] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[297] Montreal v. Montreal Locomotive Works Ltd., supra, note 5. It should be noted that
the decision set a precedent in Quebec, as it was a case in which the City of Montreal was
demanding certain property taxes from Montreal Locomotive Works Ltd. under the city’s
charter. The company had a contract with the Dominion of Canada, and the Court had to
determine whether it was acting as an agent or an independent contractor. The determination
had to be based on Quebec civil law.
[298] J. Magee, supra, note 40, 608.
[299] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[300] Montreal v. Montreal Locomotive Works Ltd., supra, note 5.
[301] Revenue Canada, op. cit., note 82.
[302] Revenue Québec, op. cit., note 134.
[303] Montreal v. Montreal Locomotive Works Ltd., supra, note 5.
[304] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[305] Id.
[306] Id.
[307] Montreal v. Montreal Locomotive Works Ltd., supra, note 5.
[308] Regina v. Walker, supra, note 3.
[309] P.S. Atiyah, Vicarious Liability in the Law of Torts, London: Butterworths, 1967, p.
41.
[310] William O. Douglas, Vicarious Liability and Administration of Risk (1928-29), 38
Yale L.J. 584.
[311] Montreal v. Montreal Locomotive Works Ltd., supra, note 5.
[312] Id., 169.
[313] Author Kim Kreutzer Word, in Remedies in Tort, Vol. 4, 2000, Carswell, wrote the
following at page 26-45, regarding application of the tests developed in common law:
Several tests have been used by the courts to determine whether an employer-employee
relationship exists, namely the "control" test, the "four-fold" test, and the "organization"
test. Conversely, some tests are inapplicable to this issue. For instance, the test used to
determine if an individual is an employee for the purposes of a wrongful dismissal action
is not necessarily the same as the inquiry made to determine if there is vicarious liability.
Similarly, statutory definitions of "employee" are only applicable to the defining
legislation, and do not affect the common law tests
[314] Ministère de la Justice, Commentaires du ministre de la Justice, op. cit., note 110.
[315] J.-L. Baudoin, Loc. cit., note 105.
[316] Bugnet, Oeuvres de Pothier, Traité des obligations, no 21.
[317] André Nadeau, loc. cit., note 29, p. 383.
[318] The theory of representation was first introduced by Mazeaud and later reiterated by
Baudoin, who also set out the theory of profit from activity in J.L. Beaudoin, loc. cit., note 105,
pp.251-259. It must be remembered that the legislator made the employer’s liability strict
because it wanted to give victims a better chance of receiving compensation for injury sustained,
as the principal is usually more solvent than the servant..
[319] Article 2085 CCQ.
[320] Articles 2087 and 2088 CCQ
[321] M.-F. Bich, loc. cit., note 109, p. 752.
[322] For a more comprehensive study, read the report of the Technical Committee on
Business Taxation, December 1997, p. 1.2.
[323] Id, p.2.5.
[324] Revenue Canada, Interpretation Bulletin IT-459, "Adventure or concern in the nature of
trade", September 8, 1980. An employee faces a risk inasmuch as he or she is likely to lose his
or her job. That risk must not be construed as a business risk. Note the recent Federal Court
of Appeal decision in Dansereau v. R. [2001 FCA 305] where J. Noël was of the opinion that:
"The expansive definition of the term «business» in section 248 is not exhaustive. It extends to
any endeavour that occupies time labour and attention with a view to profit."
[325] Montreal v. Montreal Locomotive Works Ltd., supra, note 5.
[326] Wiebe Door Services Ltd. v. MNR, supra, note 22.
[327] Sagaz Industries Canada Inc., Sagaz Industries Inc. and Joseph Kavana v. 671122
Ontario Limited [2001 CSC 59].