New job, can work as temp employee or contractor, which better?

[bjstare]

I don't have any additional info, but can echo the concerns about incorporating and then acting as an employee in effect; also +1 for not as many benefits anymore. The benefits become more material if you can afford to leave a pile of money in the company (maybe you can?).

My vote is employee.

[cidley69]

Thanks for all the insightful replies.

Couple more specifics about my situation.

If employee: get stat holidays paid, get 4% vacation pay, am overtime eligible at 1.5x hourly rate, can participate in group benefit program; no other perks, no RSP matching, no HSA, no short/long term retention bonus, no bonus at all

If contractor, none of the above.

From what I am hearing here, the quantity of tax deductible business expenses is one deciding factor, the other is if CRA designates me a PSB.

This job will be 90% office work in downtown Calgary, 10% travel to field. Companies preferred mode of transport for field work is flying to nearest airport and rental truck. Field gear required is minimal, computer, maybe dedicated camera, PPE, that's about it.

[Mitsu3000gt]

Still for only a $5/hr ($10K/yr roughly) difference I would go employee.

The stat holidays alone are worth almost $5K (gross) compared to not getting paid those days at all which I assume is the alternative. One visit to the dentist can easily be the same amount depending what you need, or if you have a family who will be sharing the plan.

[Buster]

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I don't have any additional info, but can echo the concerns about incorporating and then acting as an employee in effect; also +1 for not as many benefits anymore. The benefits become more material if you can afford to leave a pile of money in the company (maybe you can?).

My vote is employee.

Not really any more. They really are changing things to punish passive income in a corporation

[ExtraSlow]

Employee no question in this case.

[Thaco]

I didn't read all the comments, but i just went through this, i'd go as an employee, then you get WCB, stat pay, vacation, sick time, benefits,... I got talked in to doing independent and totally regret it, i didn't realize how much i was giving up by doing it, definitely not worth like 5% a year... Typically vacation is 4% anyway so with stat coverage that easily covers the extra 1% and then all the other stuff is bonus.

[ercchry]

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Still for only a $5/hr ($10K/yr roughly) difference I would go employee.

The stat holidays alone are worth almost $5K (gross) compared to not getting paid those days at all which I assume is the alternative. One visit to the dentist can easily be the same amount depending what you need, or if you have a family who will be sharing the plan.

That’s like 18 extra paid days (2 week vacation, 8 stat) ...then 10% field with paid OT... employee all the way

[Mitsu3000gt]

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That’s like 18 extra paid days (2 week vacation, 8 stat) ...then 10% field with paid OT... employee all the way

I thought we had 9 stat holidays, which is what I was basing that on. 9 days X 8hr days X $65/hr = $4680. But yeah, it's a no-brainer decision to be an employee IMO. Once you add vacation and everything else it's no contest.

[ercchry]

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I thought we had 9 stat holidays, which is what I was basing that on. 9 days X 8hr days X $65/hr = $4680. But yeah, it's a no-brainer decision to be an employee IMO. Once you add vacation and everything else it's no contest.

Right, I was doing it in my head haha... could potentially be even more than 9 if they give employees any of the optional holidays too

[Mitsu3000gt]

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Right, I was doing it in my head haha... could potentially be even more than 9 if they give employees any of the optional holidays too

Yeah, the last couple places I've worked they seem to offer fewer flex days (2-4) but give you parade day off and a bonus day on every single long weekend so they're all 4 days long, which ends up being a bit better so long as you don't mind not being able to choose the days off yourself.

[Misterman]

I found that whether your spouse has benefits or not already through her own job makes a big difference to this equation. The fact I don't have to shell out an extra 400$/month for benefits makes it much easier to stay on contract.

The only employee benefits OP is getting are vacation pay, potential for cheap benefits if needed, and 1.5x OT rate. It's easy enough to do the math and see that you'll take home 900$ less every 2 weeks(typical 40 hour work week) as an employee, including the vacation pay. So if you require benefits because you're not on a spouses plan already, that'll eat into that 1800$ a month right away, but you're still ahead of the game by a good bit. Add in the expenses you require as a contractor that don't apply in the employee scenario(insurance, wcb, etc) and see where it lands.

In my personal situation where I don't need benefits, and my WCB and insurance would be covered in the very first month of extra pay as a contractor, it is a no brainer to go contract and keep the extra 1800$/month x 11months= 19,800$ in my own pocket. Unless of course it was outlined up front I would be working 528 hours of OT or more through the year(that's the hours you need to work to make 19,800$ take home pay at 60$/hr)

[Buster]

The risk of getting declared a PSB here is too high, the rest of the details are secondary.

[Misterman]

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The risk of getting declared a PSB here is too high, the rest of the details are secondary.

I'm not sure why someone would say this without knowing any of the details required to take a guess on the matter?

[Buster]

From his comments, he sounds like one of the cases for which the CRA practically invented PSBs.

[ercchry]

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I found that whether your spouse has benefits or not already through her own job makes a big difference to this equation. The fact I don't have to shell out an extra 400$/month for benefits makes it much easier to stay on contract.

The only employee benefits OP is getting are vacation pay, potential for cheap benefits if needed, and 1.5x OT rate. It's easy enough to do the math and see that you'll take home 900$ less every 2 weeks(typical 40 hour work week) as an employee, including the vacation pay. So if you require benefits because you're not on a spouses plan already, that'll eat into that 1800$ a month right away, but you're still ahead of the game by a good bit. Add in the expenses you require as a contractor that don't apply in the employee scenario(insurance, wcb, etc) and see where it lands.

In my personal situation where I don't need benefits, and my WCB and insurance would be covered in the very first month of extra pay as a contractor, it is a no brainer to go contract and keep the extra 1800$/month x 11months= 19,800$ in my own pocket. Unless of course it was outlined up front I would be working 528 hours of OT or more through the year(that's the hours you need to work to make 19,800$ take home pay at 60$/hr)

I think you’re marthing the shit out of this.

Assuming zero deductions and 2080hrs @$65 only 27% of his income as an employee goes to taxes... this of course would be even less if he contributed to an rrsp, had medical expenses, etc

[Xtrema]

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In my personal situation where I don't need benefits, and my WCB and insurance would be covered in the very first month of extra pay as a contractor, it is a no brainer to go contract and keep the extra 1800$/month x 11months= 19,800$ in my own pocket. Unless of course it was outlined up front I would be working 528 hours of OT or more through the year(that's the hours you need to work to make 19,800$ take home pay at 60$/hr)

Your case is $1800/mth. OP's case is $800/mth. Big difference.

[sabad66]

For only $5/hr difference, i'd go employee

[Misterman]

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I think you’re marthing the shit out of this.

Assuming zero deductions and 2080hrs @$65 only 27% of his income as an employee goes to taxes... this of course would be even less if he contributed to an rrsp, had medical expenses, etc

Total deductions are going to be around 40%. Obviously there is numerous ways to steward ones finances, and that is exactly why this isn't just a cut and dry situation as it's being made out to be. OP should be considering all the info from both sides to make an educated decision. That was the whole point, there is a number of people trying to wildly over simplify this and they don't even understand his situation because they've only ever worked a regular job.

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Your case is $1800/mth. OP's case is $800/mth. Big difference.

I don't follow? I used OP's numbers. If I used my own numbers it is even more lopsided. But my rate is a lot higher.

[Xtrema]

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I don't follow? I used OP's numbers. If I used my own numbers it is even more lopsided. But my rate is a lot higher.

OP only get paid $5/hr more as contractor. 160 hr month = $800 more per month.

You get paid $1800/mth more as contractor.

On top, OP get stats and vac pay. Stats alone is already $5200/year as Mitsu pointed out. Effectively reduce the differential from $5/hr to $2.50/hr.

I think at $65/hr, I don't think OP will hit any of the new limits set by the Liberals. But at that low differential, it's not worth it to incorporate unless OP already set one up. I think doctors and SMB that clears over $150K revenue per year are the one being targeted by the Liberals.

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Total deductions are going to be around 40%. Obviously there is numerous ways to steward ones finances, and that is exactly why this isn't just a cut and dry situation as it's being made out to be. OP should be considering all the info from both sides to make an educated decision. That was the whole point, there is a number of people trying to wildly over simplify this and they don't even understand his situation because they've only ever worked a regular job.

I hope you have talked with your tax accountant in the last year or so after the rule change.

There is a reason why the doctors are pissed:
https://obj.ca/article/new-tax-rules...ian-physicians

[ercchry]

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Total deductions are going to be around 40%. Obviously there is numerous ways to steward ones finances, and that is exactly why this isn't just a cut and dry situation as it's being made out to be. OP should be considering all the info from both sides to make an educated decision.





I don't follow? I used OP's numbers. If I used my own numbers it is even more lopsided. But my rate is a lot higher.

If he writes off 40% of his income in expenses as a PSB... the CRA is going to bend his ass over so hard!