The Canada Revenue Agency (CRA)

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A Contract of service or contract for service is type arrangement that designate kind of relationship between worker and organization. It is important to determine this relationship, because employment status influences on the compliance of legislation such as the Canada Pension Plan and the Income Tax Act. Contract of service is an agreement to work in return for salary, so it means that the worker is an employee. Contract for service is a business relationship and it means that the worker is self-employed individual. Information to examine worker’s employment status can be found in the Canada Revenue Agency guide. In this case the Canada Revenue Agency (CRA) applies a two-step approach. Step 1: The first step is to establish what the intent was when the worker and the payer entered into the working arrangement. Did they intend to enter into an employee-employer relationship …show more content…

In order to understand the working relationship and verify that the intent of the worker and the payer is reflected in the facts, they will ask a series of questions that relate to the following factors: • the level of control the payer has over the worker • whether or not the worker provides the tools and equipment • whether the worker can subcontract the work or hire assistants • the degree of financial risk taken by the worker • the degree of responsibility for investment and management held by the worker • the worker’s opportunity for profit • any other relevant factors, such as written contracts (PCL, Factors used to determine the type of contract, 1-27) The CRA guide explains each factor and shows indicators that whether the worker is an employee or self-employed individual (https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4110-employee-self-employed.html, p.6). In Tina’s case the factors are detailed as follows

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