Hi, I have a small business in IT, sometimes I take help of my child or spouse to help me with my work.
This is not on a regular basis, when I pay them can I pay them for hours they worked with out cpp/EI deductions or do I need to first open the payroll account with CRA ( which is extra work ) and make deductions before paying them ?
I am setup as a corporation by the way.
Thanks for your help in advance.
Non-arms length, likely no EI. For those 18- 65, CPP is mandatory as is tax if income is high enough. Those 65-70 CPP may or may not have CPP deductions but that scenario may not apply to your situation.
If any deductions are required, you will need a payroll account. Call 1-800-959-5525 to set it up.
CRA’s payroll calculator helps with deductions.
I guess you may end up on payroll as well.
Thanks for your reply, I was wondering if I can hire my spouse as contractor to do the administrative work such as scanning receipts/creating invoices etc, in that way, I dont have to worry about keeping track of tax deductions and monthly payments , presently I am working full time and I have a part time job as contractor , for contract work , I am setup as corporation and I normally take help of my spouse for my contract work .
" I am setup as corporation"
The law of the Income Tax Act is the largest piece of legislation that Canada has, and the sections that deal with Business income are complex.
In addition, Corporations are separate legal persona. (Generally governed by provincial legislation).
Businesses, particularly corporations, generally need to lean very heavily on their Professionally Qualified Accountants (CPAs) and Lawyers if they hope to ensure proper compliance with these laws.
Since free legal advice on the internet is generally worth no more than you paid for it, my opinion would be to recommend that your corporation relies on its CPA and its lawyer for such contracts and tax effects.
Further, there will likely be inter-connecting tax effects mandated between the corporation’s tax returns and your personal tax returns (T1, T2, and GST).
" in that way, I dont have to worry about keeping track of tax deductions and monthly payments ,"
Depending upon what you mean by that, that may be running afoul of ITA S230. (Contravention of which is an offence), so please (as a director) be careful about the record-keeping requirements.