Ask yourself this.
How confident are you that if you were to be audited by the CRA you wouldn’t be reclassified as a PSB (Personal Services Business)?
The Contracting Landscape is Changing – Increasing Your Risk of Reclassification
As most independent contractors are aware, being a contractor rather than an employee of a company can provide numerous financial, tax and work-life balance advantages that are tremendously appealing. However, over the past few years the Canada Revenue Agency has introduced significant changes to the business criteria and classifications that directly impact independent contractors, exposing them to tremendous financial risk upon assessment. And most recently in 2016, CRA added 700 more tax auditors (making a total of 1000) to specifically target PSBs; increasing a contractor’s chances of being audited.
Add to this that Worker’s Compensation eligibility decisions have also started to shift. First, Worksafe BC began refusing coverage to “Independent Contractors” stating they viewed them as a Personal Services Business (PSB). Shortly after Ontario, Alberta and Saskatchewan Workers’ Compensation Boards followed suit. This determination increases the visibility of these contractors as a PSB. Obviously, it’s in the contractor’s best interest to avoid a reclassification that can carry with it a tax reassessment of as much as $25,000 per year or greater.
Don’t risk losing everything by remaining status quo.
There is another option.
That option is PCSI.
Remaining Status Quo is not
Mitigating Your Risk
Unfortunately, there are several common misconceptions of how contractors believe they are mitigating their risk of being reclassified as a Personal Services Business (PSB).
Many contractors think they are mitigating their risk if they:
- Work through an intermediary/staffing agency
- Use a “Formal Contract”, even one provided by CRA
- Have multiple revenue streams
- Have a handful of clients or contracts per year
At PCSI we commonly compare these risk tactics that have become the “status quo” to wearing lucky socks, rolling the dice or even crossing your fingers. None of these tactics are an effective risk mitigation strategy. Especially for something as important as your financial stability and providing security for your family.
PCSI has created a legal business structure based on case law and our solution is CRA compliant. Our solution evolves the contractor model in Canada for the next generation of contractors.
Think of PCSI as a way of insuring your classification as an independent contractor.
Ready to learn about the PCSI Solution?