Section 5 – Employees
Section 5 Introduction
It is essential to determine a person’s tax status as self-employed or employee. The consequences are significant for both the worker and employer. The deductions permitted when calculating an employee’s taxable income are far more restricted than those applying to self-employed workers. In addition, mandatory tax deductions by the employer only exist for employees, which encourages some employers to opt for hiring freelancers.
There is no legislation which clearly defines employed versus self-employed status. Nevertheless, the case law on the issue makes it possible to identify criteria regarding employee status, including:
- Exclusivity of employee services;
- Non-competition clause;
- Professional responsibilities assumed by employee;
- Tools provided by employer;
- Inability for employee to be replaced;
- Employment-related benefits (insurance, pension plans, etc.).
In general, an employee’s income includes all income received in the year by virtue of his/her employment in the form of salary, commissions, bonuses, and tips. Unless otherwise provided, employees are also taxable on the value of the benefits and allowances they receive from their employer.
This document is up to date as of August 1, 2021 and reflects the status of legislation, including proposed amendments at this date.