Staff Layoff

Tax Topics
1

*Technical question

Sole director of ccpc (me) hires wife - salary ($25k/yr) to help out with admin stuff.

Come Nov, I no longer require her services for remainder of year, so I lay her off till January.

Any issues/considerations with that?

Thanks

2

Not unless you divorce or try to claim EI benefits.

A spouse is still covered as an employee under provincial legislation in most jurisdictions, so technically is entitled to notice, pay in lieu of notice, vacation pay and/or other benefits under Employment Standards Acts. Generally, with a spouse one ignores these items. (Unless “divorce”, as above, in which case the spouse is entirely properly treated as a regualr employee.)

EI: a question of fact. If EI premiums have been paid AND b/c the spouse’s work is equivalent to that of a normal employee and conditions are similar. See: https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/relative.html

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3

Thank you kindly