It is important to decide whether a worker is an employee or a self-employed individual.
Employment status directly affects a person's entitlement to receive employment insurance (EI) benefits. It can also have an impact on how a worker is treated under other legislation such as the Canada Pension Plan and the Income Tax Act.
The facts of the working relationship as a whole decide the employment status which include but are not limited to:
-ownership of tools
-profit and loss
For example in an employer-employee relationship, the employer has control over the employees place, hours, type etc. of work. Employers are responsible for deducting Canada Pension Plan (CPP) contributions, EI premiums, and income tax from remuneration or other amounts they pay to their employees. Employers must remit these deductions along with their share of CPP contributions and EI premiums, to the Canada Revenue Agency (CRA) on a timely basis.
An employer who fails to deduct the required deductions has to pay both the employer's share and the employee's share of any contributions and premiums owing, plus penalties and interest.
For more information and ensure you are correctly treating your work relationships between you and your worker(s) please contact Minhas CPA