You may consider yourself to be self-employed but you may find yourself having to convince Revenue Canada that this is the case according to the criteria they use to determine this. If you have a few minutes, it might be a good idea to review the“Employee or Self-Employed” article from the Canadian Revenue Agency which explains the criteria in detail.
According to the Revenue Canada website, some of the questions they will ask to determine this relationship are:
- the level of control the payer has over the worker’s activities;
- whether the worker provides the tools and equipment;
- whether the worker can subcontract the work or hire assistants;
- the degree of financial risk the worker takes;
- the degree of responsibility for investment and management the worker holds;
- the worker’s opportunity for profit; and
- any other relevant factors, such as written contracts.
If they rule that you are an employee instead of self-employed, you will not be able to deduct business expenses. And your client may end up owing the government money for Canada Pension Plan (CPP) contributions, EI premiums, and income tax from remuneration or other amounts they pay to their employees.
However, if you are several clients, you have a better chance of being able to prove to the government that you are in fact, self-employed and not an employee.