Hansen v. The Queen

Hansen v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2003-09-17
Neutral citation
2003 TCC 675
File numbers
2003-477(IT)I
Judges and Taxing Officers
Ronald D. Bell
Subjects
Income Tax Act
Decision Content
Citation: 2003TCC675
Date: 20030917
Docket: 2003-477(IT)I
BETWEEN:
MICHAEL FRANCO HANSEN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
(Delivered orally from the Bench
at Vancouver, British Columbia
on Monday, July 14, 2003)
Bell, J.
[1] It has not been easy, but I do look at those four tests because we have to look at something. I also have a sense of the general nature of the relationship, which is coloured by the fact that you, Mr. Hansen, were working for and with a company which was controlled by your mother. Now, if we look at the test of tools, my reaction and conclusion is that that was neutral. There were things in the office that you used. You also have some things at home that you use so I will not find a compelling reason for either side to be accorded victory on that point.
[2] Chance of profit is not a strong point for the respondent. As Mr. Caux said, that is not a bolt of lightning. I do think that there is some merit in what Mr. Hansen said, that if he worked harder and brought in more clients he would have more income. Mr. Caux's comment on that was that the income would come from Inc., not from your own efforts but indirectly from your efforts because Inc. would be paying you more for what took place. And I am not ignoring the fact that your contract said that that would reduce or neutralize the amount of rent that had to be paid by you for the use of office space, et cetera.
[3] Risk of loss - I clearly am in favour of Mr. Caux's argument for the respondent. You had fixed costs, Mr. Hansen. There was no requirement for them. There was no requirement for you, in the arrangement, to have a home office, et cetera. I believe that it would be hard for you to say you had a loss if you were paid these hourly rates and if you didn't have these other costs that you referred to as your fixed costs. That was voluntary on your part and you may or may not have run into that problem. We do not have any evidence to the effect that you did in either of those years. There is also the matter of the gas allowance and the matter of the lease allowance and bonuses, which likely would not happen in an arms-length relationship.
[4] You sought to make this an independent contract by, in effect, calling it that. You did not use the words "independent contract" but you said, "Michael desires to and is able to provide contract services." I think what this is is an arrangement that you sought by preparing this agreement to give the impression of a result that this was clearly an independent contractual arrangement and that other obligations, the company and employer/employee relationship, did not arise.
[5] Whose business was it was the most compelling point because, as I just stated, and I shall restate, you were paid out of Inc.'s profits, not out of your own, and that identifies you. Even the people that you would bring in as clients, the bills were sent out by Inc. and you were paid by Inc., albeit on an hourly basis. That increased because of the clients that you had brought in, one assumes.
[6] I underline Mr. Caux's comment that you could not really tell the Court when your business started, not being able to say when you became, in your own judgment, an independent contractor. It may not have been a momentous event but I think you would have realized it. The agreement is dated January 3, 1998. I am not suggesting that it was not made on that date. But if you had been able to say "Here is the agreement in answer to your question, Mr. Caux," you would have said it was made at the beginning of 1998. I did not hear that answer in your evidence. And, yes, you had various services in the offices that were available to you. I was also impressed with Mr. Caux's statement that a bookkeeping service without the full-service firm is not something that most people would like.
[7] I do not like having to make these decisions when sometimes they are close, but I am inclined to the view that these circumstances create less of a case for an independent contractor relationship than they do for that of an employer/employee and so you will lose on that basis.
[8] Now, when it comes to employment expenses, I agree entirely with Mr. Caux's submissions that under the Act as it is written there is no ability for you to make the claim for the expenses. There is no ability to file a return with a form that was required to be filed with your Income Tax return for either of those two years. You were not ordinarily required to carry on duties away from home. You were not ordinarily required to pay your own expenses, et cetera. And you do not meet the conditions set out section 8(13) in respect of the home office expenses, the "work space" as it is defined in the Act, about which we have just heard.
[9] So, in summary, you have every right to come here and present your case and you have done it quite well in the circumstances but I am not persuaded that you should be successful. The appeal will be dismissed and you will receive a notice from the Court of that dismissal.
[10] There will be no costs in this case.
Signed at Ottawa, Canada this 17th day of September, 2003.
"R.D. Bell"
J.T.C.C.
CITATION:
2003TCC675
COURT FILE NO.:
2003-477(IT)I
STYLE OF CAUSE:
Michael Franco Hansen v. The Queen
PLACE OF HEARING:
Vancouver, British Columbia
DATE OF HEARING:
September 14, 2003
REASONS FOR JUDGMENT BY:
The Honourable Justice R.D. Bell
DATE OF JUDGMENT:
September 17, 2003
APPEARANCES:
Counsel for the Appellant:
Counsel for the Respondent:
Victor Caux
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada