C. J. McCarty Inc. v. The Queen, 2015 TCC 201 -- summary under Personal Services Business

By services, 28 November, 2015

The taxpayer ("CJ") was a Canadian corporation owned by an engineer ("McCarty"), his wife and their daughter. CJ entered into a series of three "consulting contracts" with a third party ("MEG") for the provision of management services respecting a substantial construction project for hourly fees. In finding that CJ's business was not a personal services business, Lyons J noted that

  • "there was no meaningful degree of control by MEG over Mr. McCarty's work activities" (para. 52) after accepting (at para. 51) the testimony of McCarty that "he was told to ‘go build it'…but was not told what to do nor how to accomplish the desired results."
  • CJ could have worked for third parties but provided services solely to MEG because of the scale of the project and the demands on Mr. McCarty's time (para. 55) so that the services CJ provided were "not integral to MEG's business" (para. 57).
  • Respecting chance of profit and risk of loss, an hourly pay scale was common in the business, there were no fringe benefits or stock options, there were sometimes significant delays in payments for CJ's services, there was an expectation of performing warranty work and there was a risk of being sued
Topics and taglines
Topic
Income Tax Act - s. 125(7) - Personal Services Business
Tagline
CCPC providing services of its engineer shareholder was not a PSB notwithstanding hourly rate and sole client during project management project
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
333885
Extra import data
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