Quote:
Originally Posted by Cecil Terwilliger
Random question if any of the tax experts want to chime in.
How is it determined if commission income is claimed as employment income or as self employed commissions?
If I made a base of $60k and got a T4 but made another $50k in commission, would the commission income generate a T4 or a T4A? How is it determined? Does my employer choose? If it’s T4A, then the employee would claim it a BFS commissions right? But then wouldn’t pay CPP premiums etc on it? And would be able to deduct BFS expenses?
I’m confused as to why some employers pay commissions as employment income and some pay it as self employed commissions. Especially for an employee who earns a base salary as an employee.
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DoubleF did a pretty good job there.
The important distinction he makes is the 'exposure to risk.'
Canada is making full employment so expensive that employers have to leverage their risk. So the thing is...does the employee have a pension plan, retirement savings (through the company) and really...are they an employee or not?
If they serve multiple customers to sell goods then maybe they're contractors, but if they sell only one company's goods they might not be?
DoubleF is right on many fronts, but as with most things accounting, the Devil is in the details.