Practice Settings - Public and Private
Employment Categories - Employee and Self-Employed Contractor
1. You are an employee when:
• Work activity occurs in the public sector. The public sector is inclusive of government and government institutions, such as hospitals, schools and universities and community;
• Work activity occurs in the private sector in a physiotherapist owned practice or corporation.
2. You are a self-employed contractor when:
• Work activity occurs in the private sector in non-physiotherapist owned practice.
• Work is through contracted services or as a consultant.
• Work meets the criteria for contractor under CRA (Employee or Self-Employed? (RC4110))
What Determines the Employment Category?
Canada Revenue Agency's Four Point Test
• Do you run the risk of incurring losses due to bad debts, damage to equipment or materials, or delays?
• Do you cover the operating costs?If these three things are true, you’re a contractor, not an employee. 4. Integration Independent contractor vs employee: The Canada Revenue Agency states, “Where the worker integrates the payer's activities to his own commercial activities, a business relationship probably exists... Where the worker integrates his activities to the commercial activities of the payer, an employer-employee relationship probably exists.” The CRA's Employee or Self-Employed? seems to treat this point as a summary category. One obvious way of “proving” integration to your own commercial activities is to have multiple clients. The contractor who only has one client makes it too easy for others to perceive his relationship with that client as an employer- employee one.(Note too, that having a single client puts your small business in danger of being declared a personal services corporation by the CRA. See the section Does Being Incorporated Give You Contractor Status? below.) Also, as a contractor, to protect yourself, you should always establish your relationship with each employer in a contract, focusing on the first three points of this four-point test. Having a carefully crafted written agreement setting out the intentions of the parties may offer some protection if one of the parties subsequently changes his or her mind and argues that the relationship is not what it was purported to be. It will also help stave off being recategorized by the Canada Revenue Agency.
Does Being Incorporated Give You Contractor Status?
Safeguard Your Tax Status
• The employer will have to remit unpaid taxes and may be subject to penalties and/or interest.
• CPP and EI premiums will all have to be paid.
• Business expense deductions claimed by the "contractor" will have to be repaid (this can have catastrophic financial repercussions in cases where a "contractor" has several prior years of deductions disallowed by the CRA).
Responsibilities - Self Employed