At times, services are provided to the University under arrangements other than regular employee appointments. When the relationship between the worker and the University is not clearly one of employment, this guide documents the process the University uses to determine whether a worker is an employee or an independent contractor for income tax purposes. This guidance should be consulted regardless of whether the proposed contract will be with an individual, partnership or corporation.
It is important to properly determine whether a worker should be engaged as an employee or an independent contractor for income tax purposes based on the individual circumstances of each arrangement in accordance with the Canada Revenue Agency’s (CRA’s) employment classification guideline (RC4110 Employee or Self‐employed? and our page Determination Factors). Failure of the University to do so can result in costs to the University due to non‐compliance with the Income Tax Act, Canada Pension Plan, Employment Insurance Act, and other related legislation.
It is imperative to begin the process with enough lead time to ensure all of the steps can be completed before the work is to begin.
When does this process apply?
Please refer to this process if you are:
- Seeking to engage an independent contractor (rather than seeking to engage an employee), or
- Seeking to engage a worker who is requesting treatment as an independent contractor (rather than being treated as an employee).
This process applies when you are seeking to engage corporations when:
- We are engaging the services of a specific worker, and
- The specific worker is a shareholder or owner of the corporation being engaged.
Where do I start?
When you have identified the need for a worker of some type, you need to determine whether you to consult your HR Advisor or Procurement & Contract Services.
- Does the type of work appear in the Service Types lists? There are a number of categories of workers who have been pre-classified as either employee or independent contractor.
- If this list indicates that the work is employment in nature, the individual worker must be engaged as an employee and the University’s regular hiring practices followed.
- If the arrangement has been deemed or appears to be employment in nature, it is not necessary to complete the ICON process. Contact your Human Resources Advisor for guidance on how to proceed.
- If the pre-determined conclusion does not appear in one of the sections below and the worker is seeking to be engaged as an independent contractor, or a corporation is seeking to be engaged to perform the services an Independent Contractor (ICON) Questionnaire must be completed and sent to email@example.com for assessment.
- The questionnaire is designed to draw out the relevant circumstances of the engagement to be assessed against the Determination Factors outlined by the CRA.
- Two weeks lead time must be provided for the ICON team to make an assessment.
- Further notice may be necessary to complete the hiring processes (if the worker is an employee) or for procurement practices to be followed (if the individual worker is a contractor or a corporation or partnership is going to be engaged).