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Sole Proprietor and CPP/EI

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  • Jul 12th, 2015 6:20 pm
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[OP]
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Sep 18, 2004
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Sole Proprietor and CPP/EI

I work as a sole propietor contractor for one of the big five banks. I just realized they are deducting CPP/EI from my paycheck. As a sole propietor, do I also have to pay CPP/EI when I file my taxes at the end of the year?
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Deal Addict
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Dec 26, 2010
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Calgary
I'd more likely assume you're an employee instead of a contractor. Are you collecting sales tax?
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Newbie
Feb 14, 2015
60 posts
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Surrey, BC
I've worked various contracts where I've been given the option for the "employer" to deduct taxes, CPP and EI. This was usually with a placement agency. They will deduct on your behalf the employee contributions however you will still be responsible for the employer contributions (unless you are infact an employee). My preference is to avoid this situation, especially since you can opt out of EI entirely as a sole prop contractor.
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Jan 30, 2012
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TORONTO
Airbum88 wrote: I work as a sole propietor contractor for one of the big five banks. I just realized they are deducting CPP/EI from my paycheck. As a sole propietor, do I also have to pay CPP/EI when I file my taxes at the end of the year?
Are you really a sole proprietor? The word paycheck (paycheque in Canada) is typically used in regards to employees, not businesses (and a sole proprietorship is a business). Businesses tend to send invoices to their customers and charge GST/HST/PST.

If you are a sole proprietor, you will pay CPP when you file your taxes.

For a very long time, sole proprietors did not pay into or receive benefits from EI. A few years back the rules changed and they could opt in to the EI system:

http://www.servicecanada.gc.ca/eng/sc/e ... ndex.shtml

However, look over the rules carefully since it is quite likely that you won't receive a net benefit (most employees pay much more into EI than they get out of EI). Once you're in as a sole proprietor, it's nearly impossible to get out: http://www.servicecanada.gc.ca/eng/sc/e ... ling.shtml
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Nov 9, 2003
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Unless you show some sort of risk to lose money, or have multiple contracts with multiple places of work, you would likely be deemed an employee.

However as someone who is self employed the company you work for shouldn't be deducting anything from your paycheque; it looks like an employee relationship
[OP]
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Sep 18, 2004
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Yes, I am a sole contractor. There are multiple threads on RFD where people are sole props but they are paying CPP/EI. It seems like it's something that the big banks do. They said they are required to do that if I am hired through their internal agency. Whether they are actually required to do that or not, I am not really sure. But that's the way they do it.
[OP]
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Sep 18, 2004
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wm009 wrote: I'd more likely assume you're an employee instead of a contractor. Are you collecting sales tax?
Yes, I am collecting sales tax.

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