This test looks at the control the University has over the person performing the service. court rulings, have applied four tests to help determine if an employment relationship exists: The Income Tax Act does not define an employee. Cost of University contributions to EI and CPP borne by the hiring department through the standard benefit rate.Withholding and remittance of income taxes, EI and CPP.Potential greater income tax cost because of the limited deductions against employment income versus other types of income in arriving at taxable income.Cost of contributions to the Employment Insurance and Canada Pension plans.On behalf of the individual, the University deducts and remits to Canada Revenue Agency amounts in respect of income taxes, employment insurance contributions (EI) and Canada Pension Plan contributions (CPP).Earnings are classified as pensionable earnings for purposes of future benefits from the Canada Pension Plan.Earnings are classified as insurable earnings for purposes of employment insurance should the individual be in position to require benefits.Where an employment relationship exists with respect to a specific service rendered, there are both benefits and costs to the individual, and related obligations and costs for the University. The following sub-sections highlight the issues and guidelines in this area, and should be read in conjunction with the Income Tax Guide – Employee or Independent Contractor: Implications of Employment Relationship Contact the Manager, Payroll Department at 41 for additional assistance.Sample agreement between University of Toronto and the independent contractor.Communication of final assessment to the service provider to let them know the basis for the decision.Adjudication processes and example court cases.Types of services that are provided to the University of Toronto, and a matrix which assists in determining the relationship, communication required and processing method.Types of service provider relationships.Parameters for assessing service provider relationships.Requirement to keep clear and understandable notes about each particular situation.Questions you should ask when determining whether a service provider is an employee or an independent contractor.The document includes the following sections: The document “ Income Tax Guide – Employee or Independent Contractor “, maintained by the Payroll Department, Office of the Assistant Vice-President, should be referred to for detailed guidance surrounding this important decision. Integral to determining the appropriate tax treatment is the determination of an individual’s relationship with the University in respect to a particular service, i.e. ![]() Individuals who receive payment for services from the University may, in some cases, be required to collect Harmonized Sales Tax (HST) in respect to those payments (see Payroll and the HST). The University is required to apply the appropriate tax treatment, under the Income Tax Act, to payments made to persons providing services to the University.Īll payments must be processed through HRIS, except for specific exceptions listed below in the section “ What method (HRIS or FIS) should be used to pay an individual?“. What method (HRIS or FIS) should be used to pay an individual? Updates and Changes to the Guide to Financial ManagementĮmployee versus Independent Contractor and Taxation of Payments (HRIS vs FIS).Investment, Internal Financing and Loans.Employee versus Independent Contractor and Taxation of Payments (HRIS vs FIS).
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