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[OP]
Newbie
Apr 20, 2012
88 posts
11 upvotes

Independent contractor - PSB

Hi,

I am on a 6 months’ contract working for a publicly traded company through an agency, I basically perform the same task as other employee so I will probably be considered as PSB if Revenue Canada look into it.

If I use the income to fund my other business investment, can they be written off as expense? or are do I have to keep the contractor income separate?

Also, will paying all my income as salary my best option? Once I need to setup a Payroll account, do I have to pay EI or CPP. If I have to pay EI, can I collect EI if the company decide not to renew my contract?

How often I have to pay myself, is monthly or even quarterly ok? Will I be eligible to claim deduction for mileage and 407?
3 replies
Deal Addict
Jan 7, 2014
2589 posts
508 upvotes
Manitoba
yes you run the risk of getting assessed as PSB. I am in same boat
Only expense allowed if you do get assessed as PSB is salary so I play it safe, I take 75 to 80% of my revenue out as salary.
you can pay at whatever frequency as you want just ask your accountant ( or do it yourself) to do payroll deductions and remit to CRA.
EI is not applicable here and not deducted... you can't collect EI
Deal Fanatic
User avatar
Nov 2, 2013
5610 posts
1474 upvotes
Edmonton, AB
sndream wrote:
Also, will paying all my income as salary my best option? Once I need to setup a Payroll account, do I have to pay EI or CPP. If I have to pay EI, can I collect EI if the company decide not to renew my contract?
Salary is usually more expensive because of paying into CPP, so that's why most people like a mix of dividends and salary - just enough salary to claim tax credits and pay into the CPP maximum. But yes there's more of a risk of getting assessed as a PSB the more you pay yourself in dividends and only work with 1 main client.

I have a similar issue as ideally I want to pay myself with 100% dividends from the corp, as I work for another employer as an employee for 5-6 months of the year - for which the employment income is about $70K, so them and I have already over contributed to CPP (CPP maximum is about $55K, so any extra money thrown into it on the employer side is never recoverable).
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