8 December 2004 Ministerial Correspondence 2004-0102781M4 - Employee vs. Self-Employed

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Employee vs. Self-employed

Position: Criteria used by the CRA to determine whether an individual is an employee or self-employed have been established by the courts.

December 8, 2004

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable John McCallum, Minister of National Revenue, has asked me to reply to your correspondence addressed to the Honourable Ralph E. Goodale, Minister of Finance, regarding the determination of whether an individual is considered an employee or self-employed. Minister Goodale forwarded a copy of your correspondence to Minister McCallum on October 8, 2004.

The criteria used by the Canada Revenue Agency (CRA) to determine whether an individual is an employee or self-employed have been established by the courts. The question to be determined is whether the contract between the parties is a contract of service, which is evidence of an employer/employee relationship, or a contract for services, which indicates a client and independent contractor relationship. The determination of whether there is an employer/employee relationship requires a review of the facts of each case. Many factors must be taken into consideration in making this determination and no one factor, in and of itself, will be conclusive.

The CRA makes every effort to ensure that taxpayers are fully aware of its administrative practices and interpretations. In this regard, the criteria the CRA uses to determine whether an individual is an employee or is self-employed have been published in pamphlet RC4110, Employee or Self-Employed?, which is available on the CRA's Web site at www.cra.gc.ca/menu-e.html. In addition, taxpayers wishing to resolve employee/self-employed issues may seek the assistance of the CPP/EI Rulings Division at their local tax services office.

I trust that the information provided will be helpful.

							Yours sincerely,

							Ed Gauthier
							Deputy Assistant Commissioner
							Tax and Regulatory Affairs
							Policy and Planning Branch  

c.c.: The Honourable Ralph E. Goodale, P.C., M.P.

Minister of Finance
House of Commons
Ottawa ON K1A 0A6

Minister's Office
Political Assistant

K. Power
957-8968
2004-010278
November 25, 2004
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