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# Sphinx build info version 1
# This file records the configuration used when building these files. When it is not found, a full rebuild will be done.
config: 7065f63853f6278895418bdb8c6d54f8
config: b2f5032efd54e8bed56ef20304da5624
tags: 62a1e7829a13fc7881b6498c52484ec0

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@@ -274,21 +274,53 @@
4.1.2. Contract for Service (Subcontracting)
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#factors-determining-the-type-of-contract">
4.2. Factors Determining the Type of Contract
</a>
<ul>
<li class="toctree-l3">
<a class="reference internal" href="#factors-determining-the-type-of-contract">
4.1.3. Factors Determining the Type of Contract
<a class="reference internal" href="#control">
4.2.1. Control
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#tools-and-equipment">
4.2.2. Tools and Equipment
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#subcontracting-work-or-hiring-assistants">
4.2.3. Subcontracting Work or Hiring Assistants
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#financial-risk">
4.2.4. Financial Risk
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#responsibility-for-investment-and-management">
4.2.5. Responsibility for Investment and Management
</a>
</li>
<li class="toctree-l3">
<a class="reference internal" href="#opportunity-for-profit">
4.2.6. Opportunity for Profit
</a>
</li>
</ul>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#review-summary">
4.2. Review Summary
4.3. Review Summary
</a>
</li>
<li class="toctree-l2">
<a class="reference internal" href="#review-questions">
4.3. Review Questions
4.4. Review Questions
</a>
</li>
</ul>
@@ -3459,92 +3491,95 @@ invoice alone is not sufficient to confirm self-employment status. Proper assess
sto ensure accurate classification and compliance with tax and labor regulations.
</p>
</section>
<section id="factors-determining-the-type-of-contract">
<h4>
Factors Determining the Type of Contract
<a class="headerlink" href="#factors-determining-the-type-of-contract" title="Link to this heading">
&para;
</a>
</h4>
<p>
The CRA uses a two-step approach to examine the relationship between the worker and the
</section>
<section id="factors-determining-the-type-of-contract">
<h3>
Factors Determining the Type of Contract
<a class="headerlink" href="#factors-determining-the-type-of-contract" title="Link to this heading">
&para;
</a>
</h3>
<p>
The CRA uses a two-step approach to examine the relationship between the worker and the
payer for relationships outside the province of Qu&eacute;bec. The approach used for relationships
in the province of Qu&eacute;bec will be discussed in a later chapter.
</p>
<p>
<strong>
Step 1:
</strong>
The first step is to establish what the intent was when the worker and the payer entered into
</p>
<p>
<strong>
Step 1:
</strong>
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
(contract of service) or did they intend to enter into a business relationship (contract for
service). The CRA must determine not only how the working relationship has been defined
but why it was defined that way.
</p>
<p>
<strong>
Step 2:
</strong>
The CRA then considers certain factors when determining if a contract of service or a
</p>
<p>
<strong>
Step 2:
</strong>
The CRA then considers certain factors when determining if a contract of service or a
contract for service exists. 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:
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
the level of control the payer has over the worker
</p>
</li>
<li>
<p>
whether or not the worker provides the tools and equipment
</p>
</li>
<li>
<p>
whether the worker can subcontract the work or hire assistants
</p>
</li>
<li>
<p>
the degree of financial risk taken by the worker
</p>
</li>
<li>
<p>
the degree of responsibility for investment and management held by the worker
</p>
</li>
<li>
<p>
the worker&rsquo;s opportunity for profit
</p>
</li>
<li>
<p>
any other relevant factors, such as written contracts
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The CRA will look at the answers independently and then together and consider whether or
</p>
<blockquote>
<div>
<ul class="simple">
<li>
<p>
the level of control the payer has over the worker
</p>
</li>
<li>
<p>
whether or not the worker provides the tools and equipment
</p>
</li>
<li>
<p>
whether the worker can subcontract the work or hire assistants
</p>
</li>
<li>
<p>
the degree of financial risk taken by the worker
</p>
</li>
<li>
<p>
the degree of responsibility for investment and management held by the worker
</p>
</li>
<li>
<p>
the worker&rsquo;s opportunity for profit
</p>
</li>
<li>
<p>
any other relevant factors, such as written contracts
</p>
</li>
</ul>
</div>
</blockquote>
<p>
The CRA will look at the answers independently and then together and consider whether or
not they reflect the intent that was originally stated. Considered individually, the response to
each of these questions is not conclusive; however, when weighed together, certain
conclusions may be drawn. When there is no common intent, the CRA will decide if the
answers are more consistent with a contract of service or a contract for service.
Each of these factors will be discussed in the material and indicators showing whether the
worker is an employee or self-employed will be provided.
</p>
<p>
<strong>
Control
</strong>
</p>
</p>
<section id="control">
<h4>
Control
<a class="headerlink" href="#control" title="Link to this heading">
&para;
</a>
</h4>
<p>
One of the key factors in determining a worker&rsquo;s status is the extent to which the payer has the ability, authority, or
right to control both what work is performed and how it is carried out. Equally important is the level of independence the
@@ -3626,11 +3661,14 @@ used&mdash;that holds the most weight in determining the nature of the working r
</ul>
</div>
</blockquote>
<p>
<strong>
Tools and Equipment
</strong>
</p>
</section>
<section id="tools-and-equipment">
<h4>
Tools and Equipment
<a class="headerlink" href="#tools-and-equipment" title="Link to this heading">
&para;
</a>
</h4>
<p>
Ownership of tools and equipment is not a definitive factor in determining the nature of a working relationship or the type
of contract in place. While self-employed individuals often use their own tools to fulfill contractual obligations&mdash;making
@@ -3695,11 +3733,14 @@ replacement, and insurance, rather than mere ownership itself.
</ul>
</div>
</blockquote>
<p>
<strong>
Subcontracting Work or Hiring Assistants
</strong>
</p>
</section>
<section id="subcontracting-work-or-hiring-assistants">
<h4>
Subcontracting Work or Hiring Assistants
<a class="headerlink" href="#subcontracting-work-or-hiring-assistants" title="Link to this heading">
&para;
</a>
</h4>
<p>
As subcontracting work or hiring assistants can affect a worker&rsquo;s chance of profit or risk of loss, this can help determine
the type of business relationship.
@@ -3742,11 +3783,14 @@ the type of business relationship.
</ul>
</div>
</blockquote>
<p>
<strong>
Financial Risk
</strong>
</p>
</section>
<section id="financial-risk">
<h4>
Financial Risk
<a class="headerlink" href="#financial-risk" title="Link to this heading">
&para;
</a>
</h4>
<p>
When evaluating the nature of a working relationship, the Canada Revenue Agency (CRA) considers whether the individual
incurs fixed, ongoing costs or unreimbursed expenses. In traditional employee arrangements, employers typically reimburse
@@ -3812,11 +3856,14 @@ relationship, reflecting the independence and financial responsibility character
</ul>
</div>
</blockquote>
<p>
<strong>
Responsibility for Investment and Management
</strong>
</p>
</section>
<section id="responsibility-for-investment-and-management">
<h4>
Responsibility for Investment and Management
<a class="headerlink" href="#responsibility-for-investment-and-management" title="Link to this heading">
&para;
</a>
</h4>
<p>
When assessing whether a business relationship exists, one important indicator is the worker&rsquo;s financial investment in the
services they provide. If an individual is required to invest in equipment, materials, or other resources to complete the
@@ -3861,11 +3908,14 @@ reflect the autonomy and financial risk typically associated with self-employmen
</ul>
</div>
</blockquote>
<p>
<strong>
Opportunity for Profit
</strong>
</p>
</section>
<section id="opportunity-for-profit">
<h4>
Opportunity for Profit
<a class="headerlink" href="#opportunity-for-profit" title="Link to this heading">
&para;
</a>
</h4>
<p>
A business relationship is often indicated when a worker has the ability to realize a profit or incur a loss, reflecting their
control over the financial and operational aspects of the services they provide. Self-employed individuals typically