Judge says Ontario doctors did not exercise significant control over independent contractor
Canada’s Tax Court ruled that an office assistant did not engage in pensionable or insurable employment with a chiropractor and a chiropractic and acupuncture clinic in Ontario under the Canada Pension Plan and the Employment Insurance Act during the relevant period.
Varga v. The King, 2026 TCC 138, revolved around the employment of an office assistant who worked for the appellants – a sole proprietor chiropractor and a professional corporation that ran a chiropractic and acupuncture clinic, both based in Ontario – until March 2025.
On Nov. 25, 2024, the Canada Revenue Agency’s (CRA) Canada Pension Plan (CPP) / Employment Insurance (EI) Rulings Division advised that the CRA had found that the office assistant engaged in pensionable and insurable employment under the Canada Pension Plan and the Employment Insurance Act, 1996 (EI Act), from Jan. 1, 2022, to Nov. 21, 2024.
Tax Court grants appeals
The appellants appealed, with the office assistant as an intervenor.
A doctor who served as the professional corporation’s sole shareholder and director testified that there was a preference for the office assistant to be a contractor, given the limited need for office support.
The doctor – who was aware that Ontario’s Employment Standards Act, 2000, required paying employees for a minimum of three hours per shift – planned around that rule.
The Tax Court of Canada allowed the appeals without costs upon determining that the office assistant did not engage in pensionable or insurable employment with the appellants from Jan. 1, 2022, to Nov. 21, 2024.
Parties’ mutual intention
Affirming the parties’ initial and continuing intentions, the Tax Court emphasized that the parties struck a bargain mutually intending that the office assistant would be an independent contractor.
The court found that the parties:
- did not misunderstand the risks, obligations, and opportunities of the chosen working relationship
- understood the differences between employees and contractors in connection with the associated payroll and tax compliance
- were aware of the lack of any source withholdings and remittances from the office assistant’s compensation
The court noted that the appellants did not make deductions for income tax, CPP, or EI Act premiums, and did not issue the office assistant T4 forms or a record of employment upon the completion of her engagement.
The court added that the office assistant did not charge, collect, or remit any goods and services tax (GST) or harmonized sales tax (HST) and did not file the relevant returns.
Factors for assessing work relationship
The Tax Court acknowledged that the financial factors favoured an employment relationship, while the subcontractor factor did not favour one side or the other.
The court also accepted that the doctors primarily provided the tools and equipment associated with the office assistant’s work at the clinic, but this factor did not merit much weight.
Regarding control, the court held that this factor supported an independent contractor arrangement. The court explained that the doctors did not significantly control the office assistant, who had discretion over when and how to fulfill necessary duties and latitude in scheduling.
Previous Tax Court cases
Here are some recent decisions by the Tax Court of Canada.
The Tax Court issued a July 14 decision dismissing a taxpayer’s appeal against the minister of national revenue’s reassessment based on a finding that the income should have included investment income of $10,529.20 from the return of life insurance premiums.
While accepting that applying the law to the facts might lead to an unreasonable and unjust result, the Tax Court made a Mar. 3 decision denying an appeal against the partial denial of a requested rebate of GST/HST.
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