How does the CRA decide if I'm self-employed or an employee?
The Canada Revenue Agency uses several factors to determine whether a working relationship is employment or self-employment. No single factor is decisive; the CRA looks at the whole picture. Key considerations include who controls how and when the work is done, whether you supply your own tools and equipment, and whether you can profit or face financial loss depending on your results.
Other factors include whether you can hire your own helpers, and how integrated your services are into the payer's business. A written contract calling you a contractor is relevant but not conclusive — the CRA looks at economic reality, not just labels.
Getting this wrong has serious consequences. If the CRA reclassifies you as an employee, the business may owe unremitted payroll taxes, CPP, and EI premiums, plus interest. If you're unsure about your status, you can request a ruling from the CRA or speak with a tax lawyer before filing.
Key takeaways
- The CRA examines control, ownership of tools, financial risk, and integration to classify workers.
- A written "contractor" contract is not conclusive on its own.
- Misclassification can trigger liability for unpaid CPP, EI, and income tax.
- A CRA ruling or legal advice can resolve genuine uncertainty before it becomes a problem.