BU357 Chapter Notes - Chapter 3: Unemployment Benefits, Union Dues, Disability Insurance
Document Summary
The benefits of hiring short term contractors rather than full time employees are that a corporation has a reduction in ei, cpp and benefit payments. The distinction between a contractor and employee is important for the following reasons: Typically contractors are able to claim more expense deductions than employees. Employers have to remit income tax, ei, and cpp for employees only. Contractors are treated like businesses and can deduct reasonable expenses incurred for producing business income expect capital outlays. There are a series of tests used to determine the distinction between an employee and a contractor. There are three factors in the economic reality/entrepreneur test: control. Determines who is in the position to give orders or dictate how the work must be done. Typically management of the project or work being done means. Management infers evidence supporting an employee: ownership of tools. The taxpayer performing the work doesn"t supply the funds or equipment in order to complete the job.