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Hi Hutcheson & Co. LLP,

I recently retired and work as a contractor for the BC Government. My employment duties remain basically the same, other than having some more flexibility in the hours I work. I recently read an article that made me wonder whether or not I should still be considered and employee?

Thanks,

XXXXX

Hi XXXX,

Being self-employed can provide you with some additional options for taxes, but before you determine yourself to be self-employed you will want to ensure that the CRA agrees with you as the determination is not always straight forward and each persons situation or working relationship can be unique. If you or the payer are unable to determine the relationship, you can request a ruling from the CRA. The CRA has also published a great guide to help in determining a person’s status. The guide can be found here: http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-12e.pdf.

One of the main items or tests that the CRA uses in determining whether or not the individual is self-employed or an employee is the level of control that the person or company paying for your services has over you and your work. The CRA considers a self-employed individual to have significant autonomy and control over their daily activities and have the ability to provide their services to other payers at the same time.  For example, if the payer requires you to work strict hours, get approval for sick days, does not allow you to work for other payers, etc. then the relationship may be considered one of an employer-employee.

You will also want to ensure that there is a contract or some form of agreement between yourself and the payer that specifically spells out the relationship as one in which you are a contractor or self-employed. This can help provide evidence of the intent of the working relationship and that both parties are in agreement.

As a self-employed individual you are considered to have a business by the CRA and will be responsible for all the required filings and HST/GST remittances, etc. You will want to ensure that you remain up to date with these to avoid any unexpected penalties and fines.

If you require any further assistance in determining your employment status, please contact one of our experienced professionals.

Regards,

Rob Brown, CA

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Rob Brown

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

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