In a December 31, 2015 Tax Court of Canada case (Big Bird Trucking Inc. vs. H.M.Q., 2015-1041(EI), 2015-1051(CPP)), at issue was whether truck drivers hired by the taxpayer were employees or ICs, and, therefore, subject to CPP and EI withholdings.
The taxpayer clearly intended to hire the drivers as ICs.
The Court put little weight into the Agreement reflecting the driver’s intentions.
The Court then looked to the well-established test as follows:
- Equipment – The Court noted that ownership of the trucks was not determinative, as drivers may be in the driving business without a truck. The drivers could provide the services which required the necessary qualifications and licence. In this case the hirer owned the trucks, allowing the workers to use them. The owner also allowed the drivers to use the “trucks for other jobs provided that he got a cut”. This was not indicative of an employment relationship.
- Risk of Loss – If the taxpayer did not offer loads to be transported, the worker had to find loads elsewhere. Further, if the customer of the taxpayer did not pay for the transport, the taxpayer would not pay the drivers. As there was some risk, this favoured IC status.
- Chance of Profit – The workers were paid a specific amount per load which took about a week. The loose arrangement did, however, permit the driver to arrange his own time to take advantage of other opportunities if presented.
- Degree of Responsibility for Investment and Management – There was little investment required by the worker. Although invoices were prepared, there was contradictory evidence as to who did it. This slightly favoured employment.
Although the traditional factors were not as helpful as they sometimes are, the Court found on the balance, the factors favoured IC status: the drivers were in the business of providing services.
For further information see VTN Monthly Tax Update Seminar, Issue No. 416