Contract job=No tax deduction?!

[kurtzfan]

My friend got a fundraising job. He will be working through an agency. The company receives different non profit company request.   He will get paid during the hours on the street. However, he won't get paid when he trains at the office. If he get a donor, he will receive bonus. 

His manager told him that since this is a contract job, there won't be any deductions. 

There are four types of position in the company. The first one is entry level. He can advance to the manager position within 6-9 months once he meets the target. 

 Why wouldn't be any tax deductions even it is a contract job? Is this a spam?

(any information from the Employment Standards in BC on the website?) 

[Lillooet_Hillbilly]

usually independent contractors do their own tax deductions and file them quarterly...........that kind of job I have no clue on its inner workings 

[inane]

Entry level to manager in six months? Seems legit.

[Xbox]

obvious scam is obvious

 

 

[NucksCelts]

Google Pyramid scam.

[nucklehead]

Pyramids discovered on Pluto

[bigbadcanucks]

My friend got a fundraising job. He will be working through an agency. The company receives different non profit company request.   He will get paid during the hours on the street. However, he won't get paid when he trains at the office. If he get a donor, he will receive bonus. 

His manager told him that since this is a contract job, there won't be any deductions. 

There are four types of position in the company. The first one is entry level. He can advance to the manager position within 6-9 months once he meets the target. 

 Why wouldn't be any tax deductions even it is a contract job? Is this a spam?

(any information from the Employment Standards in BC on the website?) 

Gonna try and be helpful. 

Sounds like your buddy is working with a finder's fee agreement.  This means that he'll get an agreed upon percentage of whatever money he raises.  For public market companies and non-exempt dealers for private companies, finders get anywhere from 2.5% to 10% of gross total of money raised. 

Company will typically have written in the finder's fee agreement that the finder (i.e., contractor) is responsible and liable for remitting all taxes and that company will not withhold any taxes or remit any taxes to CRA on the finders' behalf.  

This type of arrangement happens all the time -- in fact this is the way money changes hands when you hire an investment bank to raise you money for your company (though investment banks will typically charge you a retainer fee).   

[Apple Juice]

Is the organization called Grassroots Fundraising?

[Lost_Viking]

Contract position means your friend is running a business and has certain obligations therein, rather than being an employee. The main obligations are remitting taxes and CPP, paying for WCB, charging/remitting sales taxes, billing the client and collecting owed amounts. They also have the ability to claim expenses in order to reduce their income for tax purposes.

Generally contractors are required to send their clients a bill in order to receive payment, but it sounds like this organization will handle that side on their own. Payment to the contractor will occur based on the terms outlined in the contract. If the contract states a bill must be remitted, then failure to do so would result in no obligation to pay (though I doubt that will be in the contract, it is good to check). If no contract is signed, then the organization would have no obligation to pay. If amounts owing are not paid on time, the contractor must collect these amounts themselves, employment standards cannot intervene. This may include having to pay for a lawyer to pursue matters in court.

It is sometimes possible to have employment standards investigate whether the relationship is truly on a contract basis (sounds like employment to me, but organizations generally research these matters themselves and have taken steps to prevent this). If they find an employment relationship, then the organization must honour all obligations laid out in the employment standards act for the previous six months of employment.

This position would likely result in being classified as a small supplier. Anyone making under $30,000 (or charity services making under $50,000) over the past four quarters will not be required to charge/remit GST, this is recalculated each quarter. This means they do not need to add a GST charge to their bill, should not expect to receive GST on top of their agreed upon fees, and do not have to pass along this GST to the gov't. This also means they cannot claim any GST paid on expenses against their taxes. You can voluntarily register to pay GST, gaining the ability to claim GST paid on expenses. If you are not a small supplier you must register for a business number and GST number and charge/remit GST quarterly.

Generally, it is not required to charge PST on these types of services.

If your client does not cover you for WCB, you must pay for this yourself in order to work. It is worth asking whether they cover you, if they ask you to submit a WCB number, they want you to provide coverage yourself.

Income must be reported annually and taxes paid annually. This can be done on your T1 (personal tax return)no T2 (business tax return) is required. Generally this is done using the accrual method. Your income earned during the year must be added up (regardless of whether the earned amounts were actually paid), and the expenses you paid can be deducted. Income tax is payable on the net amount (income minus expenses), as well as double the normal CPP rate. You are not required to pay EI.

Common expenses that are claimed on taxes are office rental, vehicle expenses (set rate per km, or total vehicle costs prorated based on kms used for business purposes), accounting and legal fees, accommodations while traveling, 50% of meals/entertainment while traveling.

CRA Small businesses/self-employment guide