Work Relationship : Tax tips

CRA recognizes four tests for the determination of the nature of the work relationship

Businesses often want to retain independent contractors instead of hiring employees to avoid payroll taxes. The Canada Revenue Agency (Canadian income tax department) recognizes four tests for the determination of the nature of the work relationship between a business entity and the worker who provides services to it, as established by case law. They are: “control” test, “ownership of tools” test, “chance of profit or risk of loss” test, and the “integration” test. The risk of taking the position that a person is not an employee is that the business will be reassessed and will have to pay amounts that should have been withheld, as well as penalties and interest.

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"This article provides information of a general nature only. It may no longer be current. It does not provide legal advice nor should it be relied upon. If you have specific legal questions you should consult a lawyer."