Entrepreneurship & Small Business

Independent contractor - PSB

  • Last Updated:
  • Sep 23rd, 2017 7:40 am
Jr. Member
Apr 20, 2012
102 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
2722 posts
549 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
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Deal Fanatic
User avatar
Nov 2, 2013
5697 posts
1522 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).
Accountant (Public Practice)

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