- Ralph Sazio restructured relationship with Hamilton Tiger Cats from Employee to a Contract with his corporation, which then employed him to provide his services
- Apparent goal was to shelter income in the corporation then take it out over time
The Full Story
Ralph Sazio became the head coach of the Hamilton Ticats in 1962. Rather than pay tax at the rates applicable to individuals, Mr Sazio, “on the advice of his auditor and solicitor”, incorporated a corporation, which entered into a contract with the Ticats to provide Mr Sazio’s services as a coach. The corporation earned fees for Mr Sazio’s coaching services and payed taxes at a lower rate. The Minister of National Revenue reassessed Mr Sazio to include the fees in his income, but the Exchequer Court held that the Minister could not ignore the legal relationships created by the parties: the Minister could not impose tax on the “substance” (Mr Sazio was really an employee, said the Minister) over the “form” (the corporation was carrying on business as a provider of coaching services, said the taxpayer). Mr Sazio 7, the Minister 0. See Sazio v MNR,  C.T.C. 579, 69 D.T.C. 5001,  1 Ex. C.R. 373 (Ex.).