This was a CPP appeal by the employer. The employee was a US resident. There were two issues: (1) was he an employee (subject to CPP) or an independent contractor (not subject to CPP) and (2) because he was a non-resident, how much of his pay was subject to CPP rules?
Hogan J. decided that the worker was an employee, even though he owned 25% of the corporation and operated from his US home office. So, the remaining issue was whether the CPP applied to this non-resident’s pay.
Justice Hogan noted that s. 16 of the CPP Regulations defines “employment in Canada” to include “employment outside Canada … that would be pensionable employment if it were in Canada, if the employee employed therein (a) ordinarily reports for work at an establishment in Canada of his employer … “
Justice Hogan decided that this employee spent 80% of his time managing the Jet boating business in the US and 20% of his time at Niagara-on-the-Lake, Ontario. So, he said that only 20% of pay was subject to CPP.
Hogan J. could have read the rule in s. 16 to mean that none of the pay was subject to CPP. He noted that “‘ordinarily’ … means most of the time, generally, usually, etc.” (Para. 55) So, he could have said that “most of the time” the employee reported for work in the US. That would have been a reasonable interpretation of the rule. In that case, none of the employee’s pay was subject to CPP.
Instead, Justice Hogan assumed that s. 16 has a “percentage rule”; so that you can be “ordinarily” employed in the US 80% of the time and “ordinarily” employed in Canada 20% of the time. This seems an odd but not impossible reading. It just doesn’t seem to fit the general intent of the CPP rule. It seems more sensible to suppose that the rule is all-or-nothing. You’re either deemed employed in Canada or not, depending on where you report “most of the time”.
Like all CPP appeals, this was an informal procedure appeal. So, this decision may not be a binding precedent. (But the Tax Court of Canada Act rule in s. 18.28 that says that informal procedure decisions aren’t binding precedents is not one of the rules that expressly applies to CPP cases: TCCA s. 18.29.) Justice Hogan is an excellent TCC judge; so one must respect and confront his reasons. Still, his reasons seem worth a second look in another case.
See Niagara Gorge Jet Boating Ltd. v. M.N.R., (2013 TCC Hogan)