Employment Status - Going from Employee to Contractor

[TheGrimm]

Originally Posted by Locke

Considering the massive, massive tax advantages that they have reaped for over 20+ years, I find there is little grounds for complaint.

I think it's the fact that most of us don't have a choice to magically become employees.

The entire reasoning behind these changes was to stop people who were in employee positions from becoming corporations and doing the same work while avoiding some taxation.

This simply isn't how most of us became contractors, most of us weren't provided an option to be an employee with our companies as the companies themselves enjoy the flexibility and lack of risk associated with contracting out.

Now if the government will step in and inform "said" company that they must either hire the contractor as an employee or restructure the contracts so that they fit within the guidelines I would be fine.

These changes are nothing but a money grab and do nothing to change the current environment for positions such as IT contractors.

[FLAMESRULE]

Wow this was a well timed thread. I'm seriously considering starting a small consulting company (1 "worker", me) for O+G in Calgary. I was originally thinking that it'd be working evenings + weekends alongside my full time job. Likely max out a 1 - 5 clients. Have two shareholders (me and wife). Payout dividends to wife only. Keep it small + clean.

After reading through this (and not to derail the OP) I now have no idea where to even begin now...is it even worth it if they're going to force the no deductions, 50% tax, etc?? Anyone with ideas (legal + accounting) feel free to PM...don't think its thread worthy on its own.

[TheGrimm]

I'm starting to wonder if it is in-fact worth a thread of it's own. I'd venture a guess there are a lot of us who could be falling into the PSB category very soon. Would be nice to have a place to help each other fumble through it.

As far as your situation goes, if you can keep your client count closer to 5 and control your activity to a high degree, you may not be at a high risk of being classified as a PSB. There seems to be a lot of factors such as:



Indicators that the worker is an employee

* The relationship is one of subordination. The payer will often direct, scrutinize, and effectively control many elements of how and when the work is performed.
* The payer controls the worker with respect to both the results of the work and the method used to do the work.
* The payer determines and controls the method and amount of pay. Salary negotiations may still take place in an employer-employee relationship.
* The worker requires permission to work for other payers while working for this payer.
* Where the schedule is irregular, priority on the worker's time is an indication of control over the worker.
* The payer determines what jobs the worker will do.
* The worker receives training or direction from the payer on how to do the work. The overall work environment between the worker and the payer is one of subordination.
* The payer chooses to listen to the worker's suggestions but has the final word.

Indicators that the worker is a self-employed individual

* A self-employed individual usually works independently within a defined framework.
* The worker does not have anyone overseeing his or her activities.
* The worker is usually free to work when and for whom he or she chooses and may provide his or her services to different payers at the same time.
* The worker can accept or refuse work from the payer.
* The working relationship between the payer and the worker does not present a degree of continuity, loyalty, security, subordination, or integration, all of which are generally associated with an employer-employee relationship.

Indicators that the worker is an employee

* The worker cannot hire helpers or assistants.
* The worker does not have the ability to hire and send replacements. The worker has to perform the services personally.

Indicators that the worker is a self-employed individual

* The worker does not have to perform the services personally. He or she can hire another party to either complete the work or help complete the work, and pays the costs for doing so.
* The payer has no say in whom the worker hires.

and plenty more, I think it's one of those things where you will be at risk if you don't hit the majority of indicators.

[Ironhorse]

One person I know that was working as a contractor that has been tagged by this. He's lucky they only went back one year; 21K assessment.