A. Employment is a matter of fact and circumstance. Merely claiming you are self-employed does not make it so. While the Income Tax Act makes no specific distinction between employee and independent contractor, there are certain criteria which CCRA uses as a determination. Not all of these may fit in any circumstance, and none are decisive on their own. CCRA looks at the fact pattern overall to make its determination. In advance, you should decide which best fits your circumstance:
A “master-servant” relationship exists
The employer has the power to direct what is done
The employer has the power to direct how it is to be done
There is only one entity – the employer – that the employee can work for.
Independent Contractor:
The individual (you) has control over what you do and how you do it
The individual (you again) supplies the tools necessary
The individual bears some financial risk (do you purchase goods for the job which will reduce your profit? If you fall ill, do you find someone or arrange to get the job done some other way?)
The individual generally works for many people? (When customers pay, do they make cheques to you or someone else? The essence of this is integration – to what extent are you integrated with the person hiring you?)
CRA has a checklist – which should not be taken as conclusive – which you can access right here.
And most importantly, talk to your accounting professional who will be happy to translate this into