IBM Canada Ltd. v. Ontario (Minister of Finance), 2008 ONCA 216

• Judge: Doherty, Rosenberg and Blair, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: Monday March 03, 2008
• Jurisdiction: Ontario
• Citations: 2008 ONCA 216;(2008), 235 O.A.C. 161 (CA)

IBM Can. Ltd. v. Ont. (2008), 235 O.A.C. 161 (CA)

MLB headnote and full text

Temp. Cite: [2008] O.A.C. TBEd. AP.008

IBM Canada Ltd. (applicant/respondent/appellant by way of cross-appeal) v. The Minister of Finance for Ontario (respondent/appellant/respondent by way of cross-appeal)

(C46655; 2008 ONCA 216)

Indexed As: IBM Canada Ltd. v. Ontario (Minister of Finance)

Ontario Court of Appeal

Doherty, Rosenberg and Blair, JJ.A.

April 1, 2008.

Summary:

The Minister of Finance (Ont.) assessed IBM Canada under the Employer Health Tax Act (Ont.) in respect of remuneration paid by IBM Canada to IBM Canada employees on temporary assignment (the "expatriates") with foreign IBM affiliates. The affiliate reimbursed IBM Canada for the remuneration. IBM Canada appealed for each of the four subject years and applied for a declaration.

The Ontario Superior Court, in a decision reported [2007] O.T.C. 148, allowed the appeals and granted the declaration. The court declared that an expatriate remained an employee of IBM Canada but that they were not remunerated by IBM Canada. The Minister appealed. IBM Canada cross-appealed against the finding that IBM Canada was the employer of the expatriates while they were working for the foreign affiliate.

The Ontario Court of Appeal allowed the Minister's appeal and dismissed IBM Canada's cross-appeal.

Sales and Service Taxes - Topic 6642

Employer health tax - Assessment - Employee defined - [See Sales and Service Taxes - Topic 6643].

Sales and Service Taxes - Topic 6643

Employer health tax - Assessment - Employer defined - The Employer Health Tax Act (Ont.) required employers to pay a tax calculated as a percentage of the "taxable total Ontario remuneration paid by the employer" during the applicable year (s. 2(2)) - IBM Canada remunerated IBM Canada employees on temporary assignment (the "expatriates") with foreign IBM affiliates - The affiliate reimbursed IBM Canada for the remuneration - The Ontario Court of Appeal held that, for the purposes of the Act, IBM Canada was an "employer", the expatriate was an employee, and the monies paid to the expatriates was "remuneration paid" - IBM Canada was liable for the tax - See paragraphs 1 to 51.

Sales and Service Taxes - Topic 6645

Employer health tax - Assessment - Levy based on employee remuneration - [See Sales and Service Taxes - Topic 6643].

Words and Phrases

Employee - The Ontario Court of Appeal discussed the meaning of the word "employee" found in s. 1 of the Employer Health Tax Act, R.S.O. 1990, c. E-11 - See paragraphs 27, 30 to 43.

Words and Phrases

Employer - The Ontario Court of Appeal discussed the meaning of the word "employer" found in s. 2(2) of the Employer Health Tax Act, R.S.O. 1990, c. E-11 - See paragraphs 27, 30 to 43.

Words and Phrases

Remuneration paid - The Ontario Court of Appeal discussed the meaning of the expression "remuneration paid" found in s. 2(2) of the Employer Health Tax Act, R.S.O. 1990, c. E-11 - See paragraphs 7, 9, 27, 44 to 50.

Cases Noticed:

Progressive Packaging Ltd. v. Ontario (Minister of Finance) (1998), 85 O.T.C. 91 (Gen. Div.), affd. (1999), 131 O.A.C. 70 (C.A.), refd to. [para. 22].

Placer Dome Canada Ltd. v. Ontario (Minister of Finance), [2006] 1 S.C.R. 715; 348 N.R. 148; 210 O.A.C. 342; 2006 SCC 20, consd. [para. 28].

Pointe-Claire (Ville) v. Syndicat des employées et employés professionnels-les et de bureau, section locale 57 (S.E.P.B. - U.I.E.P.B. - C.T.C. - F.T.Q.), [1997] 1 S.C.R. 1015; 211 N.R. 1; 97 C.L.L.C. 143,431, consd. [para. 32].

Statutes Noticed:

Employer Health Tax Act, R.S.O. 1990, c. E-11, sect. 2(2) [para. 1].

Counsel:

Lori E.J. Patyk and Frank S. Stopar, for the appellant;

Chia-Yi Chua and R. Brendan Bissell, for the respondent.

This appeal was heard on March 3, 2008, by Doherty, Rosenberg and Blair, JJ.A., of the Ontario Court of Appeal. The following decision of the Court of Appeal was delivered by Doherty, J.A., and released on April 1, 2008.