Questions? Call 416-367-4222
3 taxi cabs in a row

Published: May 9, 2023

Last Updated: May 9, 2023

The British Columbia Court of Appeal (BCCA) in Beach Place v. Employment Standards Tribunal (2022) upheld the decision of the Employment Standards Tribunal (EST) stating that the respondents (taxicab drivers) were employees of Beach Place Ventured Ltd. and Black Top Cabs Ltd. (the appellants) for the purposes of the Employment Standards Act, RSBC 1996, c 113.

The appellant’s arguments relied heavily upon the Tax Court of Canada decision in Beach Place Ventures Ltd. v. The Queen, 2019 TCC 24. They argued res judicata, that the Tax Court of Canada’s judgment prevented the Employment Standards Tribunal from raising an already decided issue. Their arguments for issue estoppel were rejected by the British Columbia Court of Appeal since the Tribunal adjudicated the matter under an entirely different legislative framework.

Tax Court of Canada holds that taxicab drivers in Vancouver are engaged in self-employment

The Tax Court of Canada in Beach Place Ventures Ltd. v. The Queen, 2019 TCC 24 held that taxicab drivers in Vancouver were self-employed and not employees of Beach Place Ventures Ltd. or its parent company, Black Top Cabs Ltd.

This determination was important for the cab company because the Canada Revenue Agency (CRA) assessed Beach Place for unremitted Canada Pension Plan (CPP) and Insurance Premium payments on behalf of its taxicab driver ‘employees’. For the driver, Mr. Abadi (intervenor), being an employee would allow him to claim benefits to which he would not otherwise be entitled if he were deemed self-employed. For the respondent (the CRA), the determination would help solve a simple yet important tax problem – who remits the tax?

Mr. Abadi, a taxicab driver in Vancouver filed his taxes as self-employed from 2008-2013. However, in 2014 and 2015, he filed his taxes claiming employment income. To analyze Mr. Abadi’s new position, it is important to understand how the Vancouver taxi industry operates. Taxicab owners, who are also shareholders of Black Top Cabs, lease their taxis to other drivers in exchange for a daily tariff. The lessees are further allowed to sub-lease the taxicabs to other drivers, provided they are on a list of approved drivers. Beach Place (owned by Black Top Cabs) acts as the intermediary between the cab owners and lease drivers.

The CRA submitted that Beach Place had a contract for service as an employer with its taxicab drivers due to its degree of control over vehicles & equipment, its ability to sanction & discipline drivers arbitrarily and, the inability of its drivers to decline certain clients while accepting others.

The tax court did not hold this as sufficient evidence of an employer-employee relationship. The rules in place by Beach Place were administrative directions to enhance the safety of the drivers, rather than those showing control of an employer. The appellant could be likened to a financial clearing house or a regulatory body for taxicab drivers rather than their employer. The cab driver was in business on his own because he bore the primary risk of loss and the chance for profit. If Mr. Abadi’s receipts were less than his daily tariff to ‘rent’ the cab, he was responsible for paying the difference out of pocket. Employee wages are not contingent on whether a business makes a profit or a loss.

Furthermore, the controls placed by Beach Place were terms and conditions to rent their ‘equipment’, the taxicabs. The daily rate paid by Mr. Abadi was his investment to acquire the means of production. The court also noted that for 7 years between 2008-2013, he deducted his expenses, claimed (input tax credits) ITCs, remitted GST and calculated his profits. There was no material change in facts between 2008 and 2014-15, therefore, Mr. Abadi was self-employed and not an employee of Beach Place Ventures or Black Top Cabs.

The Employment Standards Tribunal operates under a different legislative framework than the Tax Court of Canada

The cab owner appellants submitted multiple arguments before the BCCA in Beach Place v. Employment Standards Tribunal (2022). The primary argument centred upon the Tax Court’s judgment in Beach Place v. The Queen (2019) The appellants sought res judicata (a matter judged), claiming that since the Tax Court of Canada has already adjudicated over the matter and come to a decision regarding Mr. Abadi’s self-employment, the Employment Standards Tribunal should be estopped from raising the same issue.

The BCCA rejected this argument, noting that employment status was a mixed question of fact and law that lay exclusively under the jurisdiction of the Employment Services Tribunal They further noted that the Employment Services Tribunal was not bound by the decision of the Tax Court of Canada. The court did not analyze the Tax Court’s decision as erroneous but rather that it was decided in an entirely different legislative context to the Employment Services Tribunal. The Supreme Court of Canada in McCormick v. Fasken (2014) articulated this principle by noting that an individual may be an ‘employee’ in one statutory context but not in another.

Therefore, the Tribunal’s job was to determine whether the relationship between the taxicab drivers and Beach Place/Black Top was one of employer & employee for the purposes of the Employment Standards Act. The Income Tax Act has a patently different legislative intention and purpose than the Employment Standards Act, therefore, issue estoppel is inapplicable.

The appellants also chose a line of reasoning arguing that the Employment Services Tribunal decision was patently unreasonable. The patent unreasonableness standard is a higher threshold than the common law standard of reasonableness articulated in Minister of Citizenship & Immigration v. Vavilov. This higher threshold is articulated by the SCC in Law Society of NB v. Ryan as “clearly irrational” or “evidently not in accordance with reason”. The British Columbia Court of Appeal was not compelled to find the decision patently unreasonable since the Tribunal’s decision was consistent with its previous decision and was in line with the statutory interpretation of the Employment Standards Act.

Pro tax tips – Just because the CRA assesses an independent contractor as your employee does not mean you will be forced to remit CPP or Insurance Premium Payments

As an employer, if you exercise significant control over your independently contracted workers then you may have an employment relationship with them. Stipulating the intentions of the parties in a clearly drafted contract by a top tax lawyer could mitigate the risks of being deemed an employer by the Employment Standards Tribunal.

The Canada Revenue Agency can assess you for unremitted Canada Pension Plan or Insurance Premium Payments, however, the Tax Court of Canada has articulated that a central point in determining employment status is the independent contractor’s risk of loss and chance of profit. The court will also look at the parties’ common intention at the time of the contract for services. Retain the legal services of a top Canadian Tax Lawyer if you feel you have been improperly assessed by the CRA.

For taxicab drivers, if your central dispatch agency can discipline you, set your fare, and determine your clientele, then you may be in an employment relationship under the Employment Standards Act. You may still be deemed an employee of the taxicab company even if you have consistently filed your taxes as self-employed.


  1. Is it possible for an independent contractor with which I regularly contract to provide services on my behalf to claim they are my employee for tax purposes?


The determination of employment status will involve factors such as the degree of control over work and the ability to subcontract. However, courts may deem a person to be self-employed if he/she bear the primary risk of loss and chance for profit. Having a written independent contractor agreement prepared by an experienced Canadian tax lawyer in accordance with the guidance provided by Tax Court decisions will maximize your chances of a successful independent contractor argument.


  1. My compensation varies weekly since my wages are primarily comprised of sales-based commissions. Can I be deemed to be self-employed?


If your base salary is not contingent on whether the business makes a profit or loss, then it is unlikely you will be deemed to be self-employed. However, tax cases are highly fact specific. We recommend getting in touch with a Canadian Tax Lawyer for legal advice regarding your employment situation.


  1. What are the tax implications of being self-employed for a taxicab driver?


If you are self-employed, you may be eligible to deduct Input Tax Credits (ITCs) from your expenses if they are incurred providing a taxable supply e.g., fuel costs, while providing taxicab services may be eligible for ITCs and therefore tax-deductible. A taxable supply is subject to GST/HST which will be the responsibility of the self-employed taxicab driver to remit to the Canada Revenue Agency. You will also be able to deduct all employment-related expenses.


“This article just offers general information. It is only up to date as of the publication date. It hasn’t been updated; thus, it might not be applicable anymore. It does not provide legal advice, hence it cannot or should not be relied upon. Every tax situation is different from the cases discussed in the articles since it is specific to its facts. If you have specific legal questions, you should get in touch with a Canadian tax lawyer.”


"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

Get your CRA tax issue solved

Address: Rotfleisch & Samulovitch P.C.
2822 Danforth Avenue Toronto, Ontario M4C 1M1