Court of Appeal of Quebec

Agence du revenu du Québec c. Distributions Maroline inc.

Cotnam, Sansfaçon, Baudouin

Appeal from a judgment of the Court of Québec allowing a contestation of assessments. Allowed.

The respondent is a corporation that does business with Quebec and Ontario retailers. To promote the sale of its products, the respondent paid awards to the sellers who work for the retailers, which constitute wages paid to the retailers’ employees. The respondent paid contributions to the Health Services Fund and the Québec Pension Plan (QPP) based on the awards paid to the Quebec retailers’ sellers.

The appellant sent the respondent notices of assessment for the QPP and the HSF, which were calculated based on the awards paid to the Ontario retailers’ sellers. The trial judge concluded that those awards were not subject to the obligation to contribute to the HSF and the QPP.

The legal bases of the tax contribution regimes set out in the Act respecting the Régie de l'assurance maladie du Québec (CQLR, c. R-5) and the Act respecting the Québec Pension Plan (CQLR, c. R-9) are identical. For this reason, the Court focused its analysis on the interpretation of sections 34 and 34.0.1 of the Act respecting the Régie de l'assurance maladie du Québec.

The trial judge erred by analyzing sections 34 and 34.0.1 of the Act respecting the Régie de l'assurance maladie du Québec in a vacuum. Although it is true that section 34 considered in isolation does not apply, he should have considered the interaction between that provision and section 34.0.1 of the Act. Like sections 34.0.0.1 to 34.0.0.4, section 34.0.1 establishes a presumptions regime that extends the contribution obligation to other circumstances. Section 34.0.1 of the Act provides that the obligation of an employer having an establishment in Québec to contribute to the HSF may be extended, under certain circumstances, beyond the employer’s own employees to other persons who are then deemed to be that employer’s employees within the meaning of the Act respecting the Régie de l'assurance maladie du Québec. Pursuant to this provision, the Ontario sellers are deemed to be the respondent’s employees. Indeed, no one contests that the awards paid are considered wages that are not covered by sections 43, 43.3, 47 or 47 of the Taxation Act (CQLR, c. I-3). In addition, the actual employer in Ontario is not required to pay a contribution under section 34 of the Act respecting the Régie de l'assurance maladie du Québec. Last, the Ontario sellers are not required to report for work at the respondent’s establishment. They are therefore deemed to be employees within the meaning of the Act respecting the Régie de l'assurance maladie du Québec, even if they do not render services in Quebec. The application of the statute results from the fact that the wage is paid by the respondent from an establishment in Quebec.

The judge also wrongly concluded that the interpretation recommended by the appellant confers an extraterritorial scope on the Act respecting the Régie de l'assurance maladie du Québec, insofar as the criterion determining whether it applies is not the place of residence of the employee, but the fact that the wage is paid from an establishment located in Quebec.                                                                                              

Legislation interpreted: sections 34 and 34.0.1 of Act respecting the Régie de l'assurance maladie du Québec 

Text of the decision: http://citoyens.soquij.qc.ca

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