Areas of Expertise

Independent Contract Worker

Being a contract worker means you are self-employed. Many contract workers are proprietorships. Others are corporate.

The biggest concern about being an Independent Contract Worker is actually remaining “independent.” Otherwise, Canada Revenue Agency could deem you an employee. This would create major problems for you and your employer.

One of the best things you can do to establish the terms of your agreement is a written Contract of Agreement.

Canada Revenue Agency uses four main criteria for maintaining independence:

1. Who is in control? If you the worker decide when, where, and how the work will be done, then there is a business relationship.
2. Who owns the tools or equipment? If you the worker decide to use your own tools and equipment then there is a business relationship.
3. Who takes the chance of profit or loss? If you the worker have a chance to make a profit then there is a business relationship.
4. Is there integration between the parties? If you the worker have more than one client, then there is a business relationship. The contract worker who has only one client makes it easy for Canada Revenue Agency to perceive the relationship as that of employer and employee. This can cause major problems for both parties.

The issue of independence is not always clear. It will depend on the individual facts of each engagement. There are issues to resolve on both sides of the arrangement.

As a result of being self-employed, you lose the benefits of being an employee. Being self-employed means more income tax deductions than an employee.

As a self-employed person you may claim expenses for:

• A home office, if you work from home
• Travel to and from your place of employment
• Equipment used to fulfill your obligations
• Expenses related to your obligations

You are also responsible for paying income tax, and Canada Pension Plan contributions. Also, you may be responsible for charging Harmonized Sales Tax (HST) if your revenue is greater than $30,000.

As you can see, being an Independent Contract Worker can get complicated fast. Are you prepared?

This is where I can help. If you would like to learn more about the tax implications of your decisions we should talk. The best way to get connected is to complete the form below and book a conversation.