New Revenu Québec rules a victory for self-employed IT workers in the province
By CO Staff @canadaone | July 3, 2012
QC — In a significant victory for self-employed IT workers in Quebec, Revenu Québec has changed its rules for determining the status of IT workers.
The new rules provide a clear framework to evaluate the employment status of contract worker in the IT sector.
Before the change several contract workers in the IT sector were facing large tax charges, as Revenu Québec deemed them to be a personal service business, not an active business, which left self-employed workers unable to claim the small business deduction (SBD), which is a reduced tax rate that can be claimed by a qualifying Canadian-controlled private corporation (CCPC).
There are unique challenges to determining the status of people in the IT sector, as contracts are often for much longer time periods and other tests to determine a worker's status, like ownership of tools, are often not practical.
A self-employed IT worker cannot bring a server to work, Geneviève Chassé of AQIII explained, and having contract workers bring their own equipment like laptops can create security risks, both in terms of data security and also through the possibility of having viruses introduced into the workplace. As a result ownership of tools is not a good measure an IT worker's status.
The issue came to a head in 2011, when court rulings supported the self-employed status of the owners of two separate, incorporated micro IT businesses.
The decisions led to discussions between Quebec Association of IT Freelancers (AQIII), the Canadian Federation of Independent Business (CFIB) and Revenu Québec that ultimately saw Revenu Québec change the way it determines the status of self-employed IT workers.
"This constitutes major progressing a long-term matter of concern: getting equitable tax status for small IT entrepreneurs. We congratulate Revenu Québec for its cooperation in an issue that takes into account current IT working conditions and that further clarifies the status of workers in the sector who have started businesses or wish to do so. This is excellent news for entrepreneurship.", said Mr. Adrian Dafinei, AQIII's Chairman of the Board.
The details of how micro IT businesses will be assessed are laid out in a PDF document available on the AQIII website (currently available in French only).
"Over the past several years, we have been seeking changes in these rules for computer specialists. We commend Revenu Québec for its decision with respect to these professionals. As the socio-economic situations of those working in different economic sectors evolve, the parameters under which tax audits are conducted should be re-examined. Such action ensures tax compliance better adapted to the situations of self-employed workers operating in a constantly evolving field.", explained Ms. Hébert, Vice President, Quebec, of the CFIB.
After the court ruling was issued Revenu Québec had stopped issuing tax assessments to such workers while it conducted a review of the situation. Revenu Québec has said that this moratorium has now ended.
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