Chances are, your business has independent contractors as well as employees. If so, it’s important to be aware that the Canada Revenue Agency (CRA) will determine whether a worker is an employee or independent contractor based on the facts and circumstances, not the wording of any contract you may have with theworker. A contract can help, but it won't override other factors.
The CRA will provide a ruling to determine whether a worker is an employee. The CRA looks at the control the employer has over the work - the more control, the more the worker will look like an employee.
The CRA will examine the facts that fall into three additional categories:
• Ownership of tools. What is the amount invested? What is the value of the tools and equipment? Who pays for the maintenance and rental of the tools and equipment? In an employer-employee relationship, the employer generally supplies the tools and equipment
required by the employee.
• Chance of profit or risk of loss. What is the worker’s financial involvement? Does the worker have the chance to make a profit? Does the worker risk incurring losses due to bad debts, damage to equipment or materials, or unforeseen delivery delays? Does the worker cover operating costs? In an employer-employee relationship, the employer alone assumes the risk of loss.
• Integration. This final factor is analyzed from the point of view of the worker not the payer. What is the relationship of the parties, evidenced by the parties' agreements and actions with respect to each other? Where the worker integrates his activities to the commercial activities of the payer, an employer-employee relationship probably exists.
A well-drafted independent contractor agreement supports your company’s position and serves as a blueprint of the working relationship between your business and the independent contractor. The agreement should include factors that support the classification of the worker as an independent contractor. In addition, it should specifically mention that the worker will not be treated as an employee for federal tax purposes.
Wednesday, June 17, 2009
Monday, June 1, 2009
Recession officially here, but worst may be over
It's official. We're in a recession.
Confirming what Canadians have known intuitively for months, Statistics Canada announced today the national economy contracted at an annualized rate of 5.4 per cent in the first quarter.
That follows a 3.7 per cent annualized drop in the fourth quarter of 2008 – formally meeting the technical definition of a recession with two consecutive quarters of declining real gross domestic product.
The declaration may finally be on the books but economists have shifted gears. Some are even suggesting the worst of the crisis could be over.
"Now that we do have two quarterly declines in GDP, it is completely official. But I don't think there was a shadow of a doubt as far back as the turn of the year," said Douglas Porter, deputy chief economist at BMO Capital Markets.
If fact, he believes there is reason for hope because the first-quarter decline was less dire than originally feared. Economists had expected a 6.4 per cent drop, while the Bank of Canada had forecast a much sharper decline of 7.3 per cent.
While a 5.4 per cent annualized drop is still nasty by any definition, Canada's economy appears to be faring better than most G7 countries during the global downturn. For instance, the U.S. economy contracted by 5.7 per cent during the same period, while Japan and Germany both recorded double-digit drops, Porter said.
So far, the Canadian downturn appears on par with the last major recession in the early 1990s. That's encouraging given "loose talk" from some experts earlier this year about the potential for a second Great Depression, Porter said. "I think there is reasonable grounds for optimism that it won't end up being as deep as the downturn in the early 1980s," he added.
Economists are now focusing on the timing of the impending recovery even though many are taking a prudent view of its potential strength. Porter is forecasting that second-quarter GDP will also decline but the drop will be "much, much less severe," coming in an annualized rate of 2.4 per cent.
The third-quarter reading could go either way, he said. There could be early signs of mild growth in Canada starting in July or August, but the global economy remains the wild card.
At first blush, the global backdrop appears favourable. Countries around the world have slashed key interest rates to record lows, while earmarking billions upon billions for fiscal stimulus. Some central banks have even embarked on quantitative easing, a radical measure to jump-start economic growth. While there are no guarantees, economists are hoping those drastic measures will begin reaping more favourable results by the end of this year.
For its part, the Bank of Canada has slashed its trendsetting interest rate to 0.25 per cent and has signalled plans to keep it there well into next year. The central bank makes its next interest rate announcement on Thursday. While no change is expected on rates, economists are eagerly awaiting details of the bank's economic commentary, including its views on the Canadian dollar.
By midday, the loonie was up another 0.32 of a cent to 91.92 cents (U.S.). Its rapid ascent in recent weeks could be a stumbling block for the economy as businesses, particularly exporters, grapple with lacklustre demand for goods and services.
Diana Petramala, an economist with Toronto-Dominion Bank, believes the Canadian economy will continue to decline through the second and third quarters of 2009 but is among those arguing "the worst of the recession is now behind us."
"We have seen some signs of hope that a recovery may be near – due to an easing in credit conditions, a possible bottom in the U.S. downturn, and a nice rally in stock markets since March," she said in a research note to clients. "We continue to look for a recovery in the last quarter of 2009."
Even if there is a recovery of GDP, there still could be an extended period of high unemployment, warned Erin Weir, an economist with the United Steelworkers union. That has been the pattern in previous recessions, he said, suggesting ordinary Canadians will continue to face tremendous challenges on the jobs front for some time to come.
"While I think there is room to be optimistic that the worst might be over in terms of gross domestic product, I still fear that we are going to see 10 per cent unemployment in Canada," he said.
"Employers initially start ramping up output again by getting their existing employees to work more hours and by taking advantage of whatever productivity improvements are available. And you need enough economic growth to exhaust both of those avenues before employers return to a state of wanting to hire more workers."
That means Canada's job market may not recover until the economy has seen at least two years of positive GDP growth. "In both the early '80s and the early '90s, it was a matter of years, not a matter of quarters, after the recession that the labour market remained extremely harsh," he added.
Statistics Canada will release its May employment report on Friday. The consensus forecast is for a net decline of 42,500 jobs, a move that could push the unemployment rate to 8.3 per cent.
In April, the Canadian economy actually created 36,000 net positions – a surprising gain that was mostly fuelled by a surge of self-employed individuals. That increase left the national unemployment rate unchanged at 8 per cent, a seven-year high.
At the time, the positive job number baffled economists, who had predicted, on average, a loss of about 50,000 jobs for that month. While it is not yet known whether more Canadians joined the ranks of the self-employed in May, some economists consider the trend to be "disguised unemployment." Despite April's increase, overall employment has plummeted by 321,000 since peaking last October.
Statistic Canada's GDP report, meanwhile, said lower business investment in plant and equipment led to "a sharp decline" in exports and imports.
"Business investment in Canada fell at the fastest rate since 1982. Final domestic demand was down 1.5 per cent as personal spending, particularly on durable goods, continued to decline," the federal agency said. "Corporate and personal income also fell in the quarter."
Adjusted for inflation, GDP dropped by 1.4 per cent in the first quarter, "the largest quarterly decrease since 1991," StatsCan said
Courtesy of Toronto Star
Confirming what Canadians have known intuitively for months, Statistics Canada announced today the national economy contracted at an annualized rate of 5.4 per cent in the first quarter.
That follows a 3.7 per cent annualized drop in the fourth quarter of 2008 – formally meeting the technical definition of a recession with two consecutive quarters of declining real gross domestic product.
The declaration may finally be on the books but economists have shifted gears. Some are even suggesting the worst of the crisis could be over.
"Now that we do have two quarterly declines in GDP, it is completely official. But I don't think there was a shadow of a doubt as far back as the turn of the year," said Douglas Porter, deputy chief economist at BMO Capital Markets.
If fact, he believes there is reason for hope because the first-quarter decline was less dire than originally feared. Economists had expected a 6.4 per cent drop, while the Bank of Canada had forecast a much sharper decline of 7.3 per cent.
While a 5.4 per cent annualized drop is still nasty by any definition, Canada's economy appears to be faring better than most G7 countries during the global downturn. For instance, the U.S. economy contracted by 5.7 per cent during the same period, while Japan and Germany both recorded double-digit drops, Porter said.
So far, the Canadian downturn appears on par with the last major recession in the early 1990s. That's encouraging given "loose talk" from some experts earlier this year about the potential for a second Great Depression, Porter said. "I think there is reasonable grounds for optimism that it won't end up being as deep as the downturn in the early 1980s," he added.
Economists are now focusing on the timing of the impending recovery even though many are taking a prudent view of its potential strength. Porter is forecasting that second-quarter GDP will also decline but the drop will be "much, much less severe," coming in an annualized rate of 2.4 per cent.
The third-quarter reading could go either way, he said. There could be early signs of mild growth in Canada starting in July or August, but the global economy remains the wild card.
At first blush, the global backdrop appears favourable. Countries around the world have slashed key interest rates to record lows, while earmarking billions upon billions for fiscal stimulus. Some central banks have even embarked on quantitative easing, a radical measure to jump-start economic growth. While there are no guarantees, economists are hoping those drastic measures will begin reaping more favourable results by the end of this year.
For its part, the Bank of Canada has slashed its trendsetting interest rate to 0.25 per cent and has signalled plans to keep it there well into next year. The central bank makes its next interest rate announcement on Thursday. While no change is expected on rates, economists are eagerly awaiting details of the bank's economic commentary, including its views on the Canadian dollar.
By midday, the loonie was up another 0.32 of a cent to 91.92 cents (U.S.). Its rapid ascent in recent weeks could be a stumbling block for the economy as businesses, particularly exporters, grapple with lacklustre demand for goods and services.
Diana Petramala, an economist with Toronto-Dominion Bank, believes the Canadian economy will continue to decline through the second and third quarters of 2009 but is among those arguing "the worst of the recession is now behind us."
"We have seen some signs of hope that a recovery may be near – due to an easing in credit conditions, a possible bottom in the U.S. downturn, and a nice rally in stock markets since March," she said in a research note to clients. "We continue to look for a recovery in the last quarter of 2009."
Even if there is a recovery of GDP, there still could be an extended period of high unemployment, warned Erin Weir, an economist with the United Steelworkers union. That has been the pattern in previous recessions, he said, suggesting ordinary Canadians will continue to face tremendous challenges on the jobs front for some time to come.
"While I think there is room to be optimistic that the worst might be over in terms of gross domestic product, I still fear that we are going to see 10 per cent unemployment in Canada," he said.
"Employers initially start ramping up output again by getting their existing employees to work more hours and by taking advantage of whatever productivity improvements are available. And you need enough economic growth to exhaust both of those avenues before employers return to a state of wanting to hire more workers."
That means Canada's job market may not recover until the economy has seen at least two years of positive GDP growth. "In both the early '80s and the early '90s, it was a matter of years, not a matter of quarters, after the recession that the labour market remained extremely harsh," he added.
Statistics Canada will release its May employment report on Friday. The consensus forecast is for a net decline of 42,500 jobs, a move that could push the unemployment rate to 8.3 per cent.
In April, the Canadian economy actually created 36,000 net positions – a surprising gain that was mostly fuelled by a surge of self-employed individuals. That increase left the national unemployment rate unchanged at 8 per cent, a seven-year high.
At the time, the positive job number baffled economists, who had predicted, on average, a loss of about 50,000 jobs for that month. While it is not yet known whether more Canadians joined the ranks of the self-employed in May, some economists consider the trend to be "disguised unemployment." Despite April's increase, overall employment has plummeted by 321,000 since peaking last October.
Statistic Canada's GDP report, meanwhile, said lower business investment in plant and equipment led to "a sharp decline" in exports and imports.
"Business investment in Canada fell at the fastest rate since 1982. Final domestic demand was down 1.5 per cent as personal spending, particularly on durable goods, continued to decline," the federal agency said. "Corporate and personal income also fell in the quarter."
Adjusted for inflation, GDP dropped by 1.4 per cent in the first quarter, "the largest quarterly decrease since 1991," StatsCan said
Courtesy of Toronto Star
Subscribe to:
Posts (Atom)