Bill 139 Complicated: Tax Edition

A while back, I wrote a (not-so-quick) post on Bill 139, Ontario's new-ish legislation that extends the protections of the Employment Standards Act (ESA) to temporary workers.  I don't have a lot to add right now (nor the time to do it), but a new wrinkle has come our way.

The Canada Revenue Agency (CRA) has their own thoughts on the matter of when an independent consultant becomes an employee, and thus, when they will be taxed as such, when they will have to contribute to EI and CPP, and when a company will be required to withhold taxes and contribute to EI and CPP.  Like the Ministry of Labour, CRA isn't too specific about what constitutes an employee vs. what constitutes an independent contractor.  Thankfully, they are more specific the Ministry.  Further, they take into account the intent of both the consultant and the firm, something conspicuously absent from the information released by the Ministry of Labour.

From what information I have received, it seems that with Bill 139 there will be an inquiry only if one party complains.  Which means that as long as a firm and their consultants are happy, no one will be bothered.  However, it's a different beast with the CRA.  They can launch an investigation without prompting, and they have a financial incentive to find people to be employees.

As well, there's no way to know what implications a CRA finding will have on a Ministry of Labour classification, or vice versa.

So far, we've never had an issue, but there's no way to know how long that will last.

You can read about the CRA's discernment process here (pdf).

Labour Board Karma*

A few months ago, I mentioned that one of our former employees launched a complaint against us with the Ministry of Labour (yet still thought it wise to come visit us and pretend like everything was just fine).  I won't get into the specifics of the case, but this employee was let go for cause.  There's really no way an impartial juror could think otherwise.  Nonetheless, we didn't want to take any chances, and we knew that our former employee made a very sympathetic figure.

Consequently, I spent weeks preparing our case.  I went through email logs, financial records, computer files and personnel files.  It took quite a while, but I was able to present the labour board with a response that consisted of, approximately, 80 pages.  Through her complaint, among other issues, the former employee had put a tremendous administrative strain on our office.  No ethereal form of justice could possibly allow a finding against us.

Today we received a response.  Justice, you'll be happy to know, is alive and well.

*And, yes, before Mrs. JMR, a student of theology, objects, I know that this is totally not what Karma is.  I just wanted a title.