+ The worker is an employee when: +
++++++
+- +
++ The payer supplies most of the tools and equipment. +
+- +
++ The payer retains the right of use over the tools and equipment provided to the worker. +
+- +
++ The worker supplies the tools and equipment and the payer reimburses the worker for their use +
+
+ The worker is a self-employed individual when: +
+++ ++++
+- +
++ The worker provides the tools and equipment required and is responsible for the cost of repairs, insurance and maintenance and retains the right over the use of these assets. +
+- +
++ The worker supplies his or her own workspace, is responsible for the costs to maintain it, and does substantial work from that site. +
+
+ As subcontracting work or hiring assistants can affect a worker’s chance of profit or risk of loss, this can help determine the type of business relationship. +
++ The worker is an employee when: +
++++++
+- +
++ The worker cannot hire helpers or assistants. +
+- +
++ The worker must perform the services personally. +
+
+ The worker is a self-employed individual when: +
++++++
+- +
++ The worker does not have to perform the service personally. +
+- +
++ They can hire another party to complete the work, without consulting with the payer. +
+
+ The CRA will examine if there are any fixed ongoing costs incurred by the worker or any +expenses that are not reimbursed. Employers will usually reimburse employees for any +expenses incurred in the performance of their job. Self-employed individuals can have +financial risk and incur losses as they usually have ongoing monthly expenses whether or not +work is being performed. Both employees and self-employed individuals may be reimbursed +for business or travel expenses, however it is the expenses that are not reimbursed that are +examined. +
++ The worker is an employee when: +
++++++
+- +
++ The worker is not usually responsible for any operating expenses. +
+- +
++ The worker is not financially liable if he or she does not fulfill the obligations of the contract. +
+- +
++ The payer determines and controls the method and amount of pay. +
+
+ The worker is a self-employed individual when: +
++++++
+- +
++ The worker is financially liable if he or she does not fulfill the obligations of the contract. +
+- +
++ The worker does not receive any protection or benefits from the payer. +
+- +
++ The worker hires helpers to assist and pays them. +
+- +
++ The worker advertises the services offered. +
+
+ If the worker is required to make an investment in order to provide the services, this is +evidence that a business relationship may exist. Another factor indicating the existence of a +contract for service is if the worker is responsible for making the business decisions that +affect their profits or losses. +
++ The worker is an employee when: +
++++++
+- +
++ The worker has no capital investment in the business. +
+- +
++ The worker does not have a business presence. +
+
+ The worker is a self-employed individual when: +
++++++
+- +
++ The worker has capital investment, manages his or her staff, hires and pays individuals to help perform the work, and has established a business presence. +
+
+ A business relationship likely exists where the worker can realize a profit or incur a loss as +this indicates the worker controls the business aspects of the services rendered. Selfemployed individuals have the ability to accept contracts as they wish. They can negotiate +the rate for their work and can accept more than one contract at the same time. In order to +carry out the terms and conditions of their contract, they often incur expenses which they +must manage to increase their profit. +
++ Employees normally do not have a chance of profit or a risk of loss. While some employees +who are paid by commission have an opportunity to increase their earnings based on their +sales, this is not a profit as it is not an excess of income over expenses. As well, employees +generally do not share in profits or suffer losses incurred by the business they work for. +
++ The CRA will look at the degree to which the worker can control their revenues and +expenses. They will also look at the method of payment. Employees are typically guaranteed +their earnings according to an established rate (hourly, daily, weekly, annual) and pay +frequency. While self-employed individuals may be paid on an hourly basis, if they are paid +a flat rate for the work performed, it generally indicates a business relationship, especially if +they incur expenses while performing the services. +
++ The worker is an employee when: +
++++++
+- +
++ The worker is not in a position to realize a business profit or loss. +
+- +
++ The worker is entitled to benefit plans that are normally only offered to employees. +
+
+ The worker is a self-employed individual when: +
++++++
+- +
++ The worker is compensated by a flat fee. +
+- +
++ The worker can hire and pay a substitute. +
+
+ The worker is an employee when: +
++ The worker is a self-employed individual when: +
What is the primary objective of the payroll department?
+++++ The primary objective of the payroll department is to pay employees accurately and +on time, in compliance with the legislative requirements for a full annual payroll +cycle. +
+
List four definitions of payroll.
@@ -1797,6 +2088,32 @@ financial penalties or legal action may be imposed to enforce adherence and prom ++ What is the difference between a contract of service and a contract for service? +
++ What are the factors that the Canada Revenue Agency (CRA) considers when +determining if a contract of service or a contract for service exists? +
++ Please consider the following scenario. +
+++++ You are a payroll professional working for a large manufacturing company. Your +organization has had many change initiatives over the last number of years including +three mergers and two large group terminations. Your company endorses the use of +consultants rather than growing the number of permanent employees. +
++ Write a memo to your supervisor, who is the Chief Financial Officer of the company, to +explain why your role must coordinate with the Accounts Payable Department to ensure +that these payments are being handled correctly. Please prepare your answer in a separate +document. +
+