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Ontario Taxes: Contract or Permanent?
Hi there, I am considering a job opportunity that could allow me to be a contractor or permanent. I've been given the impression over the years, that it's more lucrative to go the contractor route. First question: which is more lucrative? Second question: Would you be able to provide me with the details of the taxes that I should take into consideration when I'm negotiating my compensation (i.e. GST, federal taxes, provincial taxes, etc.). Thanks a bunch!
Public Comments
- Hi: In terms of job opportunities depending on the job contractor will be more lucrative. It will give you more time to schedule other things in your life and earn the amount of money you desire. One point I make is that for this type of work you have to be a disciplinary person. In terms of deducting taxes, having free time, and earning what you want to have every month there is another option. If you go to http://www.ytb.com/mykatravel, you can see a presentation that can explain you about it. Is a business in which you can your travel from the taxes. I hope you enjoy it and please write me your opinion about it. Hope to hear from you soon. God Bless.
- First of all, consider carefully what they are suggesting. In general, if your relationship with the company is the same when you are a contractor as when you are an employee, you may still be considered an employee by CRA, if at some point your employer has their payroll records examined - a ruling would be done to determine your eligibility for CPP/EI, and they would retroactively determine you to be an employee. This can wreak havoc on your taxes, since you wouldn't be eligible for any deductions anymore. I'm not sure if your relationship would be identical, but based on your comment that you have the choice, I'm just suggesting you proceed with caution. You should look objectively at the relationship between you and the employer. Could you set your own hours? Could you subcontract the job out (if you are working for yourself you often can do the work yourself or have your own employees perform parts of the job)? Is there any financial risk for you in running this business? Do you have to suppy your own tools, computer, etc? Will you be working from home, or will you have to work for them at their business? There is a guide that helps you determine if your relationship is employee/employer or self employed. http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html Should you determine you are self employed, and proceed with this, the other considerations are: GST - if your gross earnings are over $30,000 per year, you must register and charge the company GST. This is not a problem for them, as they get to claim all of it back when they file their returns as an ITC. No EI - if you lose your job because of economic downturn, you cannot claim EI when you work for yourself. You don't pay into the plan either, though CPP - rather than having CPP deducted from your pay, you will have to pay your CPP directly to CRA with your income taxes. You will have to pay twice as much CPP, as you are essentially responsible for both the "employer" and the "employee" portions when you are self employed. Income taxes - you will not have these deducted at source if you are self employed. You will need to remit these directly to the CRA. You will likely be asked to remit quarterly after you file your next tax return. Tax return filing date - June 15th Final Tax amount due date - April 30th The business and professional income guide explains the types expenses you would be eligible for as a self-employed person. http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html Bear in mind, that depending on your business, and the types of expenses your employer requires you to cover, there are some expenses employees are allowed as well: http://www.cra-arc.gc.ca/E/pub/tg/t4044/t4044-e.html
