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Employee Or Independent Contractor: Does Intention Matter?

Canada
30 Mar 2011

Recent judgements made by the Tax Court of Canada (the "TCC") have found that certain individuals were operating as independent contractors rather than employees. The court examined the intention of the parties, since in both cases the appellants believed that their status had changed from independent contractor to employee over the course of the relationship.

Taxand Canada focuses on the rulings and implications of two recent decisions in detail.

As can be seen from the two cases if it is established that the terms of the agreement or arrangement, considered in the appropriate factual context, are consistent with the legal relationship that the parties profess to have intended, then their stated intention will be considered in the context of the relevant jurisprudence.

Taxand's Take


Undoubtedly the intentions of the parties will play a role in determining whether an individual is an employee or independent contractor for taxation purposes. The role of the court is to essentially ensure that the conduct of the parties is consistent with their intentions. In a case where the terms of the agreement or arrangement do not reflect the legal relationship that the parties assert to have intended, then intention will not be a relevant factor and will be disregarded. On the other hand, where the terms of the agreement or arrangement are consistent with the intentions of the parties, much like in the rulings analysed, then their stated intention will be considered in the context of the relevant law in determining whether an individual is an employee or independent contractor.

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Your Taxand contact for further queries is:
Ash Gupta
T. +1 416 369 7366
E. ash.gupta@gowlings.com

Taxand's Take Author