Four brothers and an unrelated individual, who were actively involved in a succession of construction projects, through their respective management corporations (of which they and their spouses were employees), each subscribed for 20% of the shares of the particular ‘Operator” (which had no employees) that was formed to carry out each such construction project. Towards the conclusion of the project, a management fee is paid to the management corporations, equivalent to 20% of sales.
In finding that it was “most likely” that each management corporation carried on a personal services business. CRA stated:
Each of the Individuals carries on the day-to-day management of the Operator as would an officer or employee … [and] the Individuals are all specified shareholders of their management corporation … .
CRA went on to cite the Wiebe tests as to whether an employer-employee relationship would have existed between the Individual and the Operator but for the management corporation.