Michele J. Winger, CPA, CMA

Public Accountant in Medicine Hat

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RC4110 Checklist PDF
CRA Website RC4110
 

You may think you are a subcontractor, or you hired someone as a subcontractor, so employment issues like CPP, EI and vacation pay do not apply.  People ofen get this wrong.  The government has strong opinions on this because they want to:  1) collect CPP and EI revenue from business owners and 2) protect the rights of workers.  The government performs payroll audits and can determine the worker was an employee.  In that case, the employer has to pay the CPP and EI to CRA, out of the employer's pocket and the employer owes the employee for vacation pay, statutory holiday pay, pay in lieu of notice, etc.

The decision of whether or not to work as an independent is difficult.  We can crunch the numbers to see how profitable it might be and discuss the pros and cons of "going out on your own".

The taxation issue of being taxed as a PSB Personal Service Business very important and expensive if you get it wrong.  This is a risk for oilfield and other consultants.

This applies when you hire a person, not a corporation, to do work for your business:  Canada Revenue Agency (CRA)'s guide RC4110  explains the difference  between an employee and a subcontractor.  If CRA audits and decides a worker was an employee, there are negative consequences for both parties.

The following checklist originated in the Canada Revenue Agency's Guide RC4110.  The chart reveals  the factors CRA takes into account when deciding whether a worker is an employee or a subcontractor.

You can see the guide "RC4110 Employee or Self-employed" at the CRA website. 

 

Going out on your own

CRA Guide RC4110

Hiring others

Subcontract Worker or Employee

Medicine Hat Accountants Advice About Subcontract work - oilfield contracting

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