A group of professionals (e.g., dentists), each operating as sole proprietors, hire common staff members (e.g., receptionists, file clerks, etc.) Can the professional who is acting as agent in employing the staff make all payroll remittances under the professional's own Payroll account, without jeopardizing the status of the other professionals as employing the staff as employer, i.e., does CRA require each of the principal employers to remit payroll amounts under their own Payroll accounts in order that no GST/HST be exigible on the services provided by the staff members? CRA responded:
…Both common law and civil law’s approach to partnership require an element that relates to profit sharing.
[Here] the professionals.. agree to share certain expenses but do not operate as a partnership as they do not carry on a business in common with a view to sharing profits; rather, they only share expenses. They jointly hire a group of employees who will work for each of the professionals. Each professional is an employer at law; however, there is an agreement that one of them will act as an agent of the others in regards to the employment expenses. It is understood that the support staff is hired under a contract of service and not under a contract for services (that is, it is an employment contract).
[T]he actual employer… is the group of dentists who all came together and hired the support staff. That group of dentists, that association or as what is referred to as a non-trading or non-commercial partnership, or a partnership of employment or occupation, is the actual employer. The dentists are jointly responsible for any source deductions required from the remuneration paid to the employees. The group of dentists could open a Business Number (BN) payroll account for payroll purposes and remit and report under that BN.
It is also possible for one of the members to act on behalf of the group of dentists and to pay, deduct, remit and report the wages of the support staff under its own BN. Once again, the dentists would be jointly responsible for any source deductions…..
When a person pays the salary or wages of an employee employed in pensionable and/or insurable employment, that person who paid is deemed to be the employer in addition to the actual employer. The deemed employer is then required under both the Canada Pension Plan…and the Employment Insurance Act…to pay, deduct, remit and report as if he were the actual employer. These deeming provisions do not negate the fact that the dentists are the actual employers.