Employee and Self-Employed Worker by François Auger, Department of Justice Canada, 2002

23/08/2010 Employee and Self-employed Worker
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,

bijurilex.org/…/AUGER-Employe_2002_… 1/70
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
technical interpretation 95-011044, November 29, 1995
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.

[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.).
[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.).
[50] Hennick v. Canada, (1995) 179 N.R. 315 (F.C.A.).
[52] Hennick v. Canada, supra, note 50, 316-318.
[54] Haddad v. Canada, [1998] F.C.J. No 581 (F.C.A.).
[56] Id.
[57] A. J. Gaucher, loc. cit, note 43.
[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.
[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.
[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?”.
[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.
[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.
[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.
[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.).
[131] R.P. Gagon, L. Lebel and P. Verge, Droit du travail, Sainte-Foy: Publications de
l’Université Laval, 1991, p.11.
[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
[193] Articles 2089 and 2095 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.
[225] Hetch v. MNR, supra, note 12.
[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.
[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.
[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.
[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).
[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.
[302] Revenue Québec, op. cit., note 134.
[305] Id.
[306] Id.
[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.
[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
[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.”
[327] Sagaz Industries Canada Inc., Sagaz Industries Inc. and Joseph Kavana v. 671122
Ontario Limited [2001 CSC 59].

Employee and Self-Employed Worker by François Auger, Department of Justice Canada, 2002

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23/08/2010 Employee and Self-employed Worker

EMPLOYEE AND SELF-EMPLOYED WORKER

Author: François Auger

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

1.4.1.1 COMPUTATION OF INCOME AND ALLOWABLE EXPENSES

1.4.1.2 ROLE OF THE EMPLOYER: SOURCE DEDUCTIONS,

1.4.1.3 PERSONAL SERVICES BUSINESS

1.4.1.4 GST OBLIGATIONS

1.4.2 IMPORTANCE OF DISTINGUISHING BETWEEN THE CONCEPTS IN

1.4.2.1 EMPLOYER’S LIABILITY FOR THE ACTIONS OF

1.4.2.2 COLLECTIVE RELATIONSHIPS

1.4.2.3 INDIVIDUAL CONTRACT OF EMPLOYMENT

1.5 TERMINOLOGICAL DIFFERENCES

2. RECOGNITION BY THE COURTS OF THE SPECIFIC NATURE OF QUEBEC CIVIL

2.1 COURTS APPLYING FEDERAL TAX LAWS

2.2 COURTS APPLYING QUEBEC TAX LAWS

3. DIFFERENCES BETWEEN THE PRINCIPLES APPLICABLE IN TAX LAW AND

3.1 ANALYSIS OF THE IMPACT AND TAX IMPLICATIONS OF THIS SITUATION

3.2 EVALUATION OF PRACTICAL INTEREST IN THE ISSUE WITH REFERENCE

3.2.1 INCOME TAX ACT

3.2.3 EXCISE TAX ACT

3.2.4 CANADA PENSION PLAN

3.3 OUR PROPOSALS

Analyse the concepts of “employee” and “self-employed worker”. How much of a

“employed” means performing the duties of an office or employment;

“employee” includes officer;

1.1 TESTS ESTABLISHED BY CASE LAW

1.1.1 COMMON LAW TESTS

1.1.2 CHANGES IN THE CONCEPT IN TAX LAW

Tax jurisprudence has

1.1.3 WIEBE DOOR SERVICES LTD.[22]

The benchmark tax case on

1.1.4 DECISIONS AFTER WIEBE DOOR SERVICES LTD.[41]

1.2 FEDERAL ADMINISTRATIVE POSITION

b) the payment for work is by the hour, week or month;

d) a requirement that a worker must work specified hours;

e) the worker provides services for only one payer; and

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:

a) has a chance of profit or risk of loss;

b) provides instruments and other equipment;

d) regularly auditions or makes application for engagements;

e) retains the services of an agent on a continuing basis;

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.

- 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.

a) Describe the nature of your work.

b) Describe the terms and conditions under which you work.