Tax Court Rules Chiropractor's Assistant Not Engaged in Pensionable Employment

• The Tax Court of Canada found that an office assistant working for a chiropractor in Ontario was not engaged in pensionable or insurable employment under the Canada Pension Plan and Employment Insurance Act.
• The court allowed the appeals without costs, determining that the parties had mutually intended for the office assistant to be an independent contractor.
• The ruling highlights the importance of correctly classifying workers as employees or independent contractors to avoid potential liabilities under Canadian tax law.

The Tax Court allowed the appeals without costs, determining that the parties had mutually intended for the office assistant to be an independent contractor.

In a recent ruling, the Tax Court of Canada found that an office assistant working for a chiropractor and a chiropractic clinic in Ontario was not engaged in pensionable or insurable employment under the Canada Pension Plan and the Employment Insurance Act. The case, Varga v. The King (2026 TCC 138), involved the appellants' appeal against the Canada Revenue Agency's (CRA) decision that the office assistant was a pensionable employee from January 1, 2022, to November 21, 2024. The Tax Court allowed the appeals without costs, determining that the parties had mutually intended for the office assistant to be an independent contractor.

The ruling is significant because it highlights the importance of correctly classifying workers as employees or independent contractors. Under the Canada Pension Plan and the Employment Insurance Act, employers are required to make contributions for pensionable and insurable employment. The court's decision emphasizes that the parties' intentions at the outset of the arrangement are crucial in determining the nature of the relationship. In this case, the appellants had planned around Ontario's Employment Standards Act, 2000, which requires paying employees for a minimum of three hours per shift. However, the Tax Court found that the financial factors did not favor an employment relationship, and the subcontractor factor was neutral.

The ruling has implications for lawyers advising clients on hiring independent contractors. The decision highlights the importance of carefully considering the nature of the working arrangement to avoid potential liabilities under the Canada Pension Plan and Employment Insurance Act. Employers should be aware that simply labeling a worker as an independent contractor does not necessarily mean they are exempt from making contributions. The court's emphasis on the parties' intentions at the outset of the arrangement underscores the need for clear communication and mutual understanding between employers and workers.

Lawyers advising clients on hiring independent contractors should be aware of the Tax Court's ruling, which may impact their clients' obligations under the Canada Pension Plan and Employment Insurance Act.

Source: Original reporting via Canada’s Tax Court