My name is Paul-André Robitaille. In 1998, I started a company and I went into business. Since then I have started several other businesses. In 10 minutes, it is very difficult to describe the extent of the despair that my family and myself have experienced since the spring of 2006, when we received our notice of assessment from the revenue department.
I did a lot of research before deciding to go into business and when I did that, I consulted with professionals, mainly accountants. I was never told about this PSB concept, not in 1998, nor in 2003 when I started my other business. Perhaps that is normal, given that these are anti-avoidance measures, therefore punitive measures that usually target a restricted group of individuals. It had nothing to do with our business. None of the accountants raised it. If I had known what the intentions of the tax authorities were, I would have never left the well- paid job I had with Hydro-Quebec in order to go into business. As Mr. Fahey said earlier, going into business was my choice.
At the end of the 1990s, we learned that the taxation department had warned the larger consulting firms about the risks they were running when they used registered self-employed workers. Almost all the subcontractors had to set up a company. That was when the trap was set, in a scenario worthy of the Vincent Lacroix, Bernie Madoffs and company.
In my case, I install SAP software packages for clients, in this case large businesses. I believe these are the highest-selling software packages in the world. I therefore work in the context of projects representing several tens of millions of dollars and unfolding over several months and in several stages. I therefore have nothing to do with the day-to-day workings of these businesses.
In the case of the Gaz Métro project, the technical team included 14 consultants, of which 13 were self-employed individuals, and one was an employee of the intermediate company, CGI. That gives you an idea of how our industry works. Was I, from a legal point of view, in some way the subordinate of CGI? No one from CGI nor from the client ever came to tell me what to do or to monitor my work. On the contrary, I was the one with the expertise. The only time I set foot in CGI's building was to sign a service agreement with that business.
In the course of his work, the self-employed IT worker incurs various expenses. This happens in all businesses. Those expenditures included computers, specialized software, printers, fax machines, Internet access, telephone lines, cell phones, paper, business cards, accounting and legal costs, professional association dues paid to the FCEI and the AQIII, that is, the Association québécoise des informaticiennes et informaticiens indépendants, symposia, travel, accommodation, and, very importantly, training.
Training is fundamental for all computer specialists. It is an issue of survival for us as self-employed individuals, because our area is constantly and quickly evolving. Training costs are huge, varying between $500 and $700 a day. One course can easily take two weeks. During their training, self-employed workers have no income. It is therefore very difficult and demanding, in terms of time and money, for a self-employed worker to remain in demand. That is one of the biggest risks we face. However, officials tell us that we face no risks, whether they be financial or other.
How do the tax authorities react to training costs? In order to ensure the quality and relevance of my own services within a specific mandate, I left the project for one week to do some training in Toronto. I received no payment during that week but I spent $5,000 on courses and accommodation. This is what the tax authorities told me: “Mr. Robitaille, we regret to tell you that given that you are considered by us to be an employee, you cannot deduct this expense. Furthermore, we have disallowed all of your expenses, including your accounting costs. An employee who uses an accountant to do his income tax statement is not eligible for that deduction”. And yet, a consulting firm or a client who decides to send an employee for the same training can deduct all costs related to that training. In fact, I would not be surprised if they could even deduct the employee's salary. Is that not an illustration of a “double standard”?
Clients use us at specific times because for the most part we are super specialists, at the very leading edge of information technology. That is in fact the niche of self-employed individuals. The fact that the technical team for the Gaz Métro project was made up of 14 consultants, including 13 self-employed individuals, is an illustration of this. I can tell you that the Gaz Métro people had very good things to say about our service. You can see those comments on CGI's website, actually.
In short, it is easy to become a self-employed IT worker, but it is much harder to remain so. We have to deal with the ups and downs of the market and the risk of our knowledge becoming obsolete.
The reason I am before you today is because the name of my business was on a list of CGI subcontractors, which Revenue Canada used as a basis to lay charges against a whole bunch of people, without prior verification of the facts and because it has limitless power and full impunity. The original accusation was solely based on the Carreau decision, a first instance decision, it goes without saying—and the CGI standard contract.
The November 10, 2009, issue of Le Devoir revealed that the crown jewel of Canada's IT consulting sector was abolishing 500 jobs and would hire 500 new people in its offices in India, claiming that it could not do otherwise because it was acting at the request of its clients. Honestly, it is unbelievable that Canadian companies are asking to work with people in India. All joking aside, is there an economist who can tell me what impact the outflow abroad of capital will have on the Canadian economy? What is being done in the meantime to replenish the state's tax coffers? Self-employed workers are being attacked, yet we spend our money in Canada.
I will now talk about the advantages of working for oneself. Self-employed workers reflect the dynamism of individuals who no longer count on governments and corporate welfare bums to secure their future. We only count on ourselves. We invest in ourselves. We represent the new tertiary economy and we operate within virtual networks of contacts. We are the new creators of jobs. I dare you to name one large corporation that has created new jobs without receiving any kind of subsidy in the last ten years. Because of our specialized skills, we are helping Canadian companies to be more competitive on a global scale. Therefore, we help to create jobs. We are healthy competition for the large consulting companies that are increasingly outsourcing their jobs abroad.
Before concluding, I would like to raise a couple of other issues. Who will benefit from our disappearance? Make no mistake, if we are found guilty, it will mark the end of self-employed IT workers. What can one say about a law that attacks only the little guy, the most vulnerable guy, the guy who takes all the risks and who does all the work? What is the point to this anti-avoidance law? What is the underlying spirit of this law? Since the Income Tax Act is based on the principle of voluntary declaration, how am I to know whether my next job will be as a contractor and not as an employee? How can one predict such a thing? Are we not perverting the spirit of the law?
Originally, this law was probably aimed at professional athletes who, by way of complex financial manoeuvres, hid their money abroad to avoid paying taxes. But now, all of us are being tarred with the same brush and labelled guilty as charged, and Revenue Canada is hoping for a tax bonanza.
In conclusion, I would say that this issue is not a legal one, but rather a political one, and especially an economic one. Bureaucrats are forcing us to defend ourselves in court, which will result in an economy based on court rulings paid for by our savings. Rather, this vision should come from our lawmakers and not from our judges, who must apply laws that are not commensurate with the new economy and globalization.
To verify the application of this punitive law, the judge who will hear my case will ask himself the following question: Was Mr. Robitaille working as an employee or as a contractor? If the answer is that I am considered an employee, then my family and I will end up on the street. If the answer is that I am a contractor, then I will owe Revenue Canada nothing. We will only have lost tens of thousands of dollars in legal fees, and the last four years of our lives will have been marked by stress and anxiety, not to mention grey hair and hair loss!
It is high time that we have a public debate on this issue and that people speak more openly about this situation.
Thank you.