So, you may not know this, but ‘casual labour’ isn’t actually a thing.
In an effort to protect the rights of workers in Canada and to close the loopholes for tax evasion, CRA now has two ways you can pay people: as employees or as subcontractors.
"Oh yeah. Well, they’re uh, subcontractors. I pay them cash."
Sure. No problem. As long as the cash payment is logged, the subcontractor gives you a receipt, they actually qualify as a subcontractor in the first place, they give you their full name, address and social insurance number, and you issue them a T4A at the end of the year, or a T5018 if you’re in the construction industry.
(Blink. Blink.) "Um, okay. It’s under the table."
Great. So you have an illegal business relationship with these people. Plus you don’t get to deduct the payment for tax purposes, which increases the cost of that ‘casual labour’ by as much as 40%.
Yup, you read that right. Up to 40%. It’s easy enough to legitimize subcontractors. Start by making sure they qualify as subcontractors and aren’t legally considered employees. (Which isn’t that big a deal; drop us a line if you need payroll help.)
Have a look at the CRA page for Employed or Self-Employed to see what’s what.
If someone is a subcontractor and they don’t want to give you their information, that’s a serious red flag. If they
don’t have a business number,
aren’t issuing a proper invoice,
are asking for cash and
won’t give you their SIN
...they are likely not planning to claim the income on their taxes. Which isn’t just shady, it’s flat out illegal. Don’t be complicit and don’t give up that nice tax deduction. You have held up your end of the bargain by paying them for the work they did. Make sure they come through on their end.
Remember, it doesn’t take that much work to set up a payroll number with the CRA. A bookkeeping firm like Cheques & Balances or any payroll company can help you easily process payroll and stay on top of your remittances and filings. And it doesn’t cost a heck of a lot.
Go legit! It’s what all the kids are doing these days. 😊