Controlling Interest
According to CCRA (Revenue Canada), there are two scenarios where an owner-operator is free from the normal obligations of an employer:
1. A carrier or O/O contracts with a separate company, at arms’ length, to be provided with the services of a qualified driver. The driver is paid by this company, which deducts the necessary taxes and provides the required employee benefits. The driver cannot own the separate company, nor may his family.
2. A driver makes his services available to cover a vacation, holiday, or illness period not exceeding two weeks. The O/O hiring this driver may not be deemed to employ the driver given the short employment period and the absence of a long-term employer/ employee relationship. Note the expression “may not be deemed to employ.” Even if you hire someone for one working day, you are the employer and are subject to making the proper source deductions for payroll remittances.
It’s only by convention that Revenue Canada may recognize a short-term hiring situation and thereby dismiss the employer’s obligations as long as the contract driver reports the income.
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