Ask an Expert
Employee or Self-employed?
Expert: Bernard Trop
I am currently working for a company in Toronto as an independent contractor. I am invoicing the company I am working for and they do not deduct CPP and EI premiums on my behalf.
After reading some of the information at your site, I realized that I rather am an employee than an independent contractor, because I am working out of their office with their equipment and their scheduled hours.
My question is, if I am an employee do I have to make remitances myself? And in these cases can I still deduct expenses related to self employment?
Bernard Trop answered:
First, you must be confirm your status: are you, in fact, an employee? Each employment is unique and must be examined and analyzed individually, based on the facts, taking into account the context of the employment. To help in making that determination, you can use Pamphlet RC4110(E), Employee or Self-employed?. The pamphlet will help you examine and analyze the terms and conditions of your employment as they relate to four factors: control, ownership of tools, chance of profit/risk of loss and integration. You should be aware that this pamphlet is strictly a tool to assist you in determining if a worker is an employee or a self-employed individual. It does not replace the formal ruling requests. If you are still in doubt after you use this pamphlet, contact your tax services office. Note that you have until June 30 of the following year to request a ruling.
If you are an employee, your employer must do the following: withhold income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums on amounts paid to you; remit the amounts withheld as well as the required employer's share of CPP/QPP contributions and EI premiums to CCRA; report your income and deductions on the appropriate information return; and give you copies of your T4 slips by the end of February of the following calendar year.
As an employee, you may be able to deduct some expenses if you meet certain conditions. In order for you to claim employment expenses, your employer must complete Form T2200, Declaration of Conditions of Employment. The first and most important condition is that your contract requires you to pay your own expenses to earn your employment income. The expenses you can deduct are different if you earn commission income or if you earn a salary. See Guide T4044, Employment Expenses, for more information.
If you also perform other work as a self-employed individual, you may be able to claim expenses related to this work. For more information, see Guide T4002, Business and Professional Income.
All our publications are available on our website at www.ccra.gc.ca.
You may also want to check out our electronic services, including our Interactive Information Service, at www.ccra-adrc.gc.ca/eservices/tax/individuals/menu-e.html.
If you need more help after visiting our site, call General Enquiries (1-800-959-8281) or, for self-employment questions, Business Enquiries (1-800-959-5525).
About the author
Bernard Trop is the Manager of Communications with the Canada Customs and Revenue Agency.