Mainstay Insurance does NOT allow Sub-Contracted employees to be enrolled in our plan sponsor benefit plans. There are a number of reasons for this rule.
- Insurer contracts do not recognize “non-employees”. As a result, a claim can be declined and the contract invalidated, leaving the employer at great risk
- CRA has several tests they use to determine what an employee “is”. A wrong determination can cost both parties in withholdings and back taxes as well as penalties
- The risk of being deemed a Personal Service Business (PSB) is one that no one should take lightly.
The article below provides a great explanation of the ins and outs of using contracts.
Employee vs Contractor Rules in Canada: What CRA Actually Looks At
If you’re a Canadian small business owner, hiring a “contractor” can feel like the easy button: pay an invoice, skip payroll, and move on. But CRA doesn’t assess employee vs contractor status based on what you call it.
CRA looks at the real working relationship – what happens day to day – and then decides whether it’s employment (an employee) or a business relationship (a contractor/self-employed).
READ ARTICLE HERE