The Law is quite clear. For Self-employed persons (Sole Proprietors) billing for work through an Employment Agency, deductions are made for Canada Pension Plan (CPP) and Employment Insurance (EI) but not for Income Tax.

The only exceptions are those who are billing through a Partnership, Incorporation, or Limited Company (Ltd.). No deductions will be made to Consultants who bill through either of these methods. For Self-Employed persons who are 65 years of age and can prove that they are collecting CPP, then no CPP deductions will be made.

For those who are billing through their own name or a Sole Proprietorship, we will require your Date Of Birth and your SIN number. For consultants who are billing through this scenario we do not deduct taxes, but do remit CPP and EI as we are required to do so. See http://www.cra-arc.gc.ca

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What does this mean? Are you paying more deductions? The answer is no. If Relief work is a sporadic thing for you and you are currently working as a FT Employee for someone else and they are deducting from you, you are probably making the maximum contributions through them. It just means that what you may pay through someone else (Like RPI), you will get back at the end of the year as an overpayment.

If you are a FT Relief contractor, what this means is that you will pay a bit less CPP and EI at the end of the year than you normally would because someone else has deducted a portion from you. In this scenario, more than likely your Accountant is remitting the correct deductions for you in one lump sum at the end of the year. It just means that He/She will be making a sum that is lower because someone else has paid a portion for you. In this example, you are still considered an independent Contractor.

In both cases, we issue you a T4 at the end of the year. We will mark “Code 11” in the Employment status box to denote an Independent Business Consultant. We will also pay any GST which you may be allowed to charge provided that you have a BN (Business Number)

This guideline is specific to Self Employed Placement and Employment Agency Workers and for people who find work through an Employment Agency. What may add to the confusion is that when a Self-Employed Consultant does work for a Client directly (not through an Agency), then no deductions are taken as long as the Consultant has a registered Business Number. For whatever reason, the Canada Customs And Revenue Agency has set this policy in this manner.

Since RPI Consulting Group Inc. is an Established Employment Agency, we are obligated to follow the letter of the Law. This is done for the protection of all parties involved so as to avoid any future “Surprises”.

For more clarification on this matter, it would be wise to speak to your Certified General Accountant.