Company policy?

[futurepop]

Hi, does any body worked as a contractor for the same company more than a year? Did you have problems extending your contract after that period? The company I do contract work for is telling me that they are not allowed to work with the same contractors for more than a year. It sounds really strange to me? Why would that be a company policy?

[philip]

This happens all the time; the company is probably trying to avoid the risk of having you reclassified by revcan as an employee. Take a look at www.payprodirect.com they are set up to work with this kind of thing, let me know if you want an introduction. I know a couple of the large finical companies down town are saying the same thing about contractors that look more like employees.

[Please no affiliate links!]

[Simon]

As far as I know, tax wise, you have to work for more than one client per fiscal year. Revenue Canada may give you a hard time if your Corporation has only one client.
They may recalculate your tax return.

[philip]

They regularly recalculate tax returns and it can end up with you and your client getting in to hot water with RevCan. To have a true contract client relationship you need to be able to prove, you have more than one client (as Simon says) as well as be in control of the service you provide, carry out work for a fee (not simply hourly paid) have the potential to loose money on the project (finical risk) be able to pass the work on to somebody else to carry out (at your discretion) and provide your own tools (be that a hammer or a computer or whatever) and the list goes on. I work with a number of clients and contractors that have been pulled up by RevCan it seems to be happening more and more since the turn of the year.

[contractor]

Last year three of my friends got a "friendly" letter from Revenue Canada. They recalculated their tax returns for the past 3 years… Not a nice surprise. All they are working on contract. I think Philip and Simon have a point!

[philip]

Last year three of my friends got a "friendly" letter from Revenue Canada. They recalculated their tax returns for the past 3 years…

RevCan are sending out more and more of these letters. Did all your friends carry out work for the same client? Did they find the methods of avoiding the same situation in the future?

[scotchandsoda]

They regularly recalculate tax returns and it can end up with you and your client getting in to hot water with RevCan.
. Two guys in my our office have just recieved letters from revcan, looks like they are in deep trouble as they are getting their tax recalculated for the last five years, i've just started this year in contracting, do you have any good advice?

[Tsveta]

This thread can give you an idea what to do to avoid your tax return recalculated.
First but not least - have more that one client and set up home office from where you can do some work.

[philip]

Two guys in my our office have just recieved letters from revcan, looks like they are in deep trouble as they are getting their tax recalculated for the last five years, i've just started this year in contracting, do you have any good advice?

Use a portable company, they take this risk away, you can get group benefits, they handle all the admin and you can arrange to draw on invoices not yet paid. They charge a fee around 5% but they guarantee you will save money. Added to that anything that helps lessen the worry of tax been recalculated has to be a good thing.

[lookingforjob]

Philip,

What exactly do you mean by "use a portable company"? Can you elaborate?



Thanks

[philip]

A portable company is for example [EDIT: No self promotion allowed] one way to explain it is – A corporation that bundles together a number of contract and permanent workers, then handles all the back office work for them. Allowing the contractor to concentrate on providing the services to their clients and build their own business. The individual still owns the relationship with the end client and agrees all the terms and methods of working. The individual can work with one or many client companies and can move from one to another whilst still under the portable company banner. This allows the corporation (portable company) to operate on economics of scale. Offering group benefits to the members and working within the government employer employee regulations. They also have the ability to save a good deal on tax as they have an in house accountant working to ensure maximum tax efficiency is passed on to each member. Obviously this kind of thing would be too expensive for single person limited companies to pursue, however portable companies such as [EDIT: No self promotion allowed] offer this service for between 2.5% and 5% and they have more benefits than I can put in this e mail, happy to send you a link to them if you want. You can start with them and leave with out incurring fees and with only a weeks notice, just like any position. When you go you of course take all your clients with you and move on.

[EDIT: Self promotion is not allowed. Please refrain from posting links to your website in your messages or you will be banned from the forum permanently. This is your last warning.]

[jason]

Hi, does any body worked as a contractor for the same company more than a year? Did you have problems extending your contract after that period? The company I do contract work for is telling me that they are not allowed to work with the same contractors for more than a year. It sounds really strange to me? Why would that be a company policy?

Would you have the same problem if you work full time, I mean with tax return reassessment?
I am a newcomer and still learning...

Thanks

[philip]

If you are working permanently and on the staff for the company, with them making deductions and making all the relevant tax payments every month. Then you shouldn’t have anything to worry about with regards to this.

[futurepop]

As far as I know, tax wise, you have to work for more than one client per fiscal year. Revenue Canada may give you a hard time if your Corporation has only one client.
They may recalculate your tax return.

I see, thanks for the tips guys! Are they doing this for every Corporation or just random?

[philip]

They are starting with target companies, based in and around Toronto, with a turnover less than $250,000 and in high risk industries (IT is one of them) they are also working client down, looking at the larger firms that employ lots of contract people and following the money that way. As they can back date 5 years once they find a fault, it’s not worth taking the risk. I have a link to an on line test ran by rev can if you want to check it out let me know.

[lana]

They are starting with target companies, based in and around Toronto, with a turnover less than $250,000 and in high risk industries (IT is one of them) they are also working client down, looking at the larger firms that employ lots of contract people and following the money that way. As they can back date 5 years once they find a fault, it’s not worth taking the risk. I have a link to an on line test ran by rev can if you want to check it out let me know.

Thanks for the info Philip. Why do they target only corporations in Ontario?
I'm curious to do the test. Can you send me a PM with the link, please?

[philip]

Hi Lana,
I will send you the link. When I say they are targeting Ontario, I am referring to the new tax inspectors that have been hired from the Toronto office. I know all the other provinces have this on the agenda but Toronto seem to be hitting more than anywhere else at the minute. I am sure it will work its way around all of Canada.

[philip]

Hi Lana
This is a site that has the test on it, I am looking for the link that goes straight to RevCan but can’t find it at the moment. Whilst this page is set up for skilled trades the same tests apply to all the corporations.
Philip
http://www.carpentersunionbc.com/Pages/revcan.html

[lana]

Thank you Philip, I'll have a look.
Maybe they are doing this starting with Toronto because it is the biggest city in Canada. I guess they hired a lot of inspectors...

[philip]

They did hire or reallocate an additional 100+, busy little tax people all with costs to cover by finding back taxes and fines to raise.

[lana]

Hi, does any body worked as a contractor for the same company more than a year? Did you have problems extending your contract after that period? The company I do contract work for is telling me that they are not allowed to work with the same contractors for more than a year. It sounds really strange to me? Why would that be a company policy?


There is some rule enforced by Rev. Canada, that you can do a contract work for the same company 12 out of 18 months. After 18 months you can go back...