Readers’ Forum
address the issue, the guide does include some of the basic criteria CRA use. The rules regarding who has PSB income have not changed in many years. However, very few people in the past have admitted that they are a PSB, because it would have meant paying a 25 per cent (now 38 per cent) rate instead of the small business rate. Their reasons were many. Their contract had the right wording. They worked through a third party such as a job recruiter. They supplied their own tools, set their own work hours, invoiced rather than filled out timesheets — the list goes on. Because the tax rate has gone up, it is a fair assumption that the CRA is going to more aggressively seek contractors to audit. There are, however, some strategies that may work for individual contractors working for one client — other than continuing to the take the risk of being assessed a PSB after an audit. You could, for example, create partnerships, which have the added benefit of opening up opportunities for human resources services, insurance and health benefits. The partnership solution may not suit everyone, but if you are at risk, you do need to start the conversation with your accountant. I am convinced that doing nothing about your situation is not a good approach. In fact, it may prove very costly. RON MCPHAIL, CMA Calgary
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