Before going on to indicate that Natural Sciences and Engineering Research Council of Canada fellowships paid to host organizations to cover $30,000 of the minimum $40,000 cost of engaging graduates to engage in authorized research projects likely were employment income “because of the relationship of subordination that appears to exist between the … recipient and the host organization,” and after referring to the Sagaz and Wolf decisions, CRA stated:
As a result of these judgments, the CRA has developed an approach to assess the overall relationship between the parties to determine the nature of the working relationship. Under this approach, a three-step process must be followed:
(1) At the outset, it is necessary to ask the following question: Is the person who has been engaged to provide the services providing them as a self-employed person or as an employee?
(2) Seven well-defined elements must then be analyzed. Those elements are as follows:
- The level of control the payer has over the worker's activities.
- Does the worker provide their own equipment?
- Can the worker subcontract the work or hire assistants?
- What level of financial risk does the worker assume?
- Does the worker have to assume a level of responsibility for investment and management?
- Does the worker have the opportunity to profit from the performance of the work?
- Any other relevant factors.
(3) In addition to the first two components, the CRA must also consider the intention of the parties.