What are the criteria that the CRA uses to determine if your worker is an employee or independent contractor?
- What does the agreement indicate in terms of intent of the two parties?
- Does the worker have control over where and how the work is carried out?
- Can the worker hire assistants or sub-contract work?
- Does the worker provide his or her own tools?
- Has the worker taken a financial risk?
What are the advantages of working as an employee versus an independent contractor?
A worker has the benefit of receiving EI benefits should he be laid off, pension benefits after retirement, workman’s compensation if there is an injury, and rights and privileges under the employment Standards Act including vacation pay, statutory holiday pay, eating periods, overtime pay, parental leave, etc.
What are the advantages of working as an independent contractor versus an employee?
An independent contractor can deduct a host of business expenses from his gross income, lowering his taxes. He does not have to pay into EI, CPP, or workman’s compensation. He can invest his income throughout the year and pay his taxes once at the end of the year.
