A “Wolf” in employee’s clothing?

Court disagrees with revenue agency’s view of contractor’s status
By Gordon Sova
|Canadian HR Reporter|Last Updated: 05/27/2002

The evolution of work arrangements in an increasingly fluid world of work has been the focus of practical innovation and academic musings. The courts have also wrestled with it. A recent income tax case heard by the Federal Court of Appeal illustrates the current state of uncertainty about the law regarding the boundary between employees and independent contractors.

Lawrence Wolf, a mechanical engineer specializing in aerospace testing, was placed at Montreal aircraft manufacturer Canadair Ltd. by Calgary technical placement firm Kirk-Mayer of Canada. Wolf, who came to Canada from Florida, worked under four contracts between 1990 and 1995.

The contracts were explicit that the relationship was one with a consultant and not an employee; however, taxes and premiums were withheld by Kirk-Mayer. Wolf filed his income tax return in the U.S. but the Canada Customs and Revenue Agency claimed Wolf was effectively an employee of Kirk-Mayer, a resident of Canada and assessed him as such. The Tax Court of Canada found in favour of the revenue department in an appeal of the assessments in 2000. Wolf appealed to the Federal Court of Appeal.