Ch. 5 Employee versus Contractor Flashcards
What are the main differences for Employee relationships?
limited deductions avaliable
income tax withheld at source
no requirement to register GST
eligible for paid vacations, severance pay
job security
tax return due April of the following year
What are the main differences for contractor relationships?
more expenses are deductible if incurred to earn business income
make quarterly instalments if the threshold is met
must be GST registered if the threshold is met
No severance or job security
tax return due june 15 of the following year - amounts owing are due April 30
What are the main tests to determine whether someone is an employee or contractor?
Control, ownership of tools, chance of profit/risk of loss, integration, specific results, intent
What is defined as control
if someone has the right to determine the time, place, and manner in which the work is to be done
What is the owership of tools test?
The best test is to see if whether the contractor needs to rent or purchase equipment - this would favour the independent contractor relationship. if the major tool required to do the work is knowledge or expertise - then it is inconclsuive.
Chance of profit/risk of loss?
who faces the risk of loss or profit if something goes bad or good, or if the client is upset. Can the amount they make vary depending on how they work?
What is integration?
How integrated is the indiivudal in on the organization. What proportion of the individual’s income is derived from the organization, and is this individual free to work for other entities
Specific reuslts
Are they hired for an ongoing basis or a specific project.
What intent?
CRa will ask whether the two parties intended to enter into a contract of service e or whether they intended to entire into a contract for services (business relationship).
