Quantifying Benefits for Contractor vs Employee

[suntan]

Everybody's playing musical career chairs right now.

It's a common thing in O&G but in IT last time it happened was in 2000.

[schurchill39]

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So lemme play Devil's Advocate, here.
If 40% is the number, who would be prepared to drop the contract where they were at about $200k and take a salary of $143k with benefits? Would that feel like a no-brainer decision?

I'd take that in a heart beat. By my back-of-the-napkin-marth the equivalency number is around 40% when you consider everything everyone here has already mentioned like health benefits, bonus opportunities, vacation, , RRSP matching etc. To me, once you're at an equivalent dollar value the non-tangibles start to play a big role in the decision. Mainly that comes down to job security or what happens if you get laid off. As an employee I'd get some form of severance and I could collect EI, as a contractor I just took equivalent pay with no safety net if I get cut loose. To truly be equivalent on the risk factor I personally would want to be around 60%.

That being said, as a contractor since 2018, I've never actually got 60% much less 40% but beggars can't be choosers when your skillset is very specialized and no one is hiring full time for that role. I've probably only ever begrudgingly averaged around 10% and some years came out under being an employee just because of lack of work = sitting. If you were a true contractor and had multiple clients where you were paid on a per project and kept busy enough to bounce around then it might be worth it, otherwise I've yet to see a role where a fairly paid employee position wouldn't have me out ahead.

[ExtraSlow]

This is a good point. It's not common where you have both options in front of you at the same time, so it's super hard to compare.

[ThePenIsMightier]

I've heard an HR person recently say "it's 30%".
Looking at many typical benefits packages, I find myself saying,
"How much fucking life insurance does a worker need?!? Particularly when it's gone once you retire so when you actually die, you won't be insured. Would you have bought this much life insurance with the extra 30-40% cash you'd be getting as a contractor??"

[ExtraSlow]

So are you a contractor yet or what? Get at it.

[suntan]

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I've heard an HR person recently say "it's 30%".
Looking at many typical benefits packages, I find myself saying,
"How much fucking life insurance does a worker need?!? Particularly when it's gone once you retire so when you actually die, you won't be insured. Would you have bought this much life insurance with the extra 30-40% cash you'd be getting as a contractor??"

If you have a company with employees that make a lot of insurance claims, it will raise the premiums for everybody.

Vacation is considered a benefit and requires a monetary value and subsequent liability on the balance sheet.

Life insurance and STD/LTD has been creeping up because millennials and gen Y are actually less healthy than gen x and boomers at the equivalent age.

[CompletelyNumb]

30% Minimum.

Whether or not a person thinks it's a "good deal" and takes an offer is on them. We're coming into a generation of kids that want double the pay to work remotely part time. In all industries.

[ThePenIsMightier]

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If you have a company with employees that make a lot of insurance claims, it will raise the premiums for everybody.

Vacation is considered a benefit and requires a monetary value and subsequent liability on the balance sheet.

Life insurance and STD/LTD has been creeping up because millennials and gen Y are actually less healthy than gen x and boomers at the equivalent age.

It's not about claims. The point I'm making (that you're failing to see) is that when the benefits are on silly items that you never would have purchased if given the opportunity with even double the cash, then aside from a monetary value on paper, they have no value to the employee.
Tricking Killramos into dropping his contract to take a $50k hit but he gets a "free" Chrysler and a box of Android phones isn't putting him ahead.

The emphasis on excessive layers of overlapping Life/ADD/LTD/etc insurance within many benefits policies is a false benefit.
Free massages, glasses, braces, computers, sporting goods and so on are far more valuable to far more people. (And *gasp, more rare).

[suntan]

Oh no I agree, just saying a lot of it is what is termed "non-cash expense".

Although I'd say STD/LTD is very important, and also super cheap if you get it through a group plan with lots of members.

Come on, the private hospital room benefit not doing it for ya?

Drugs and dental claims are what raises premiums since everybody uses them.

[ThePenIsMightier]

These types of insurance are more important to me when I'm retirement age. If I'm retired, I no longer work at the company and don't get the benefit of the insurance that I've been paying into for (potentially) decades.

[killramos]

You guys are way too focused on STD/LTD when STI/LTI is the real carrot.

[suntan]

As long as you're covered.

[ThePenIsMightier]

I think I have updates to the main thread a little later. It sounds like she is making a move, but I didn't have the exact details correct in the earlier posts.

*As a small aside, I've been asked to provide temp support to a company that won't amount to more than 10 hours per month. I'm not a Contractor, but they want to pay me a full rate and not deduct any tax or CPP/EI.
The agreement states I am responsible for all that tax, CPP and EI. I think this is fine as long as I claim all of this on whatever line "Other Income" is on my taxes. Although... That just means I am going to be taxed correctly (later). How is the CPP & EI supposed to get dealt with? Who would end up paying the Employer's portion?

[killramos]

I’d personally let r buck on CPP and EI. Fill out the other income as you said and let it tell you what you owe for those. Do you have other employment because if so you are probably maxed out anyway.

[suntan]

Contractors never pay EI. Make sure she never, ever remits EI because she will never get that money back.

She pays for both CPP portions.

If the amount of money is that small she should just take the money in as dividend income is not subject to EI or CPP.

[ThePenIsMightier]

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I’d personally let r buck on CPP and EI. Fill out the other income as you said and let it tell you what you owe for those. Do you have other employment because if so you are probably maxed out anyway.

Yes, I should've mentioned that my regular employer is full time.
So, when I put in an amount on that "Other Income" line, it is not only calculating the tax I owe, but also the CPP and EI? I thought it would only be the tax, but perhaps that was silly of me.

[ercchry]

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Yes, I should've mentioned that my regular employer is full time.
So, when I put in an amount on that "Other Income" line, it is not only calculating the tax I owe, but also the CPP and EI? I thought it would only be the tax, but perhaps that was silly of me.

So for 2021 max CPP/EI earnings is $61,600/$56,300 so as long as your FT employer has already deducted $3,166.45/$889.54 for each, you have paid your maximum annual contribution… so if you paid either for this PT contract work, it would be an over contribution and the CRA would just return it back

[ThePenIsMightier]

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So for 2021 max CPP/EI earnings is $61,600/$56,300 so as long as your FT employer has already deducted $3,166.45/$889.54 for each, you have paid your maximum annual contribution… so if you paid either for this PT contract work, it would be an over contribution and the CRA would just return it back

Great. Thank you!
No, I won't be paying anything as the cheques will be ($___rate)*(___hours) with no deductions of any kind. And then it sounds like when I claim this "cash" on my tax return, they will be calculating that I don't owe anything for CPP and EI.
Sounds good to me!

[killramos]

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Yes, I should've mentioned that my regular employer is full time.
So, when I put in an amount on that "Other Income" line, it is not only calculating the tax I owe, but also the CPP and EI? I thought it would only be the tax, but perhaps that was silly of me.

Should be handled if you correctly filled out step 7 which moves from tax owed to total owed of your T1 ( a few schedules here as well ) or any tax prep software will just do that shit for you.

imo don’t overthink it and just declare the other income and follow the instructions for determining your EI and CPP contributions.

[suntan]

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I think I have updates to the main thread a little later. It sounds like she is making a move, but I didn't have the exact details correct in the earlier posts.

*As a small aside, I've been asked to provide temp support to a company that won't amount to more than 10 hours per month. I'm not a Contractor, but they want to pay me a full rate and not deduct any tax or CPP/EI.
The agreement states I am responsible for all that tax, CPP and EI. I think this is fine as long as I claim all of this on whatever line "Other Income" is on my taxes. Although... That just means I am going to be taxed correctly (later). How is the CPP & EI supposed to get dealt with? Who would end up paying the Employer's portion?

1) Are you invoicing them?
2) Are they giving you a T1 or are they handing you cheques payable to "ThePenIsMightier"?