|
Personal Tax
-> Employee vs contractor
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
control - more control is generally exercised by an employer over an employee than by a client over a self-employed person |
|
chance of profit/risk of loss - self-employed persons usually have some degree of financial risk, and more opportunity for profit than employees |
|
integration - an employee's job will be an integral part of an employer's business, where the tasks performed by a self-employed person will likely be less integrated with the client's business |
|
tools and equipment - self-employed persons are more likely to be supplying their own tools and equipment, as well as being responsible for their maintenance |
These topics are further explained in the CRA publication RC4110 Employee or self-employed. A comprehensive checklist is also provided in this publication. This checklist is useful for a worker or a payer (employer/client) to help determine whether their relationship is a business relationship or an employer/employee relationship.
CRA also has information on the following categories of workers to help determine whether they are employees or self employed for purposes of CPP and EI, in their web page CPP/EI Explained:
|
real estate agents |
|
workers who own and operate heavy machinery |
|
workers engaged in construction |
|
workers engaged in fishing |
Court cases:
|
Supreme Court of Canada 671122 Ontario Ltd. vs Sagaz Industries Canada Inc., June 2001 - although this is a vicarious liability case, not a tax case, it sets out the above criteria in determining the differences between employee and self-employed person. |
|
Tax Court of Canada Preddie v. the Queen, March 2004 - appellant was working as a tutor. The Tax Court determined that he was self-employed, not an employee. |
|
Tax Court of Canada Woodland Insurance vs Minister of National Revenue, February 2005 - this is an Employment Insurance and Canada Pension Plan case, where the Court ruled that Woodland Insurance was liable for EI and CPP premiums, because the worker was an employee, not self-employed. |
|
Employee advantages
Employee disadvantages
|
|||||||||||||||||||||||||||||||||||||||||
|
Self-employed advantages
Self-employed disadvantages
For more information for self-employed individuals, see our Business page. Tax Tip: Determine whether you are an employee or self-employed contractor at the start of your work contract.
Revised: April 13, 2011
|
|||||||||||||||||||||||||||||||||||||||||
