The Impact of Intent in the Characterization Analysis of a Worker

The Tax Court of Canada and the Federal Court of Appeal are regularly asked by taxpayers and the Canada Revenue Agency to determine whether a worker is an employee or an independent contractor. The distinction has significant tax consequences. The analysis and various legal tests used by the courts to determine the characterization of a worker have been through significant transformations over the last 15 years. The analysis remained objective for several years. However, in 2002, courts began to consider the common intent held between the taxpayer and the worker when characterizing that worker’s status as either an employee or an independent contractor. Since its introduction, the courts have placed various levels of importance on this common intent in the characterization process. This paper seeks to quantify the varied emphasis placed by the courts on the intent held between a taxpayer and its worker.MAS