Staffing agencies (as well as Employment Agencies, Temporary
Labour, Placement Agencies and other similar entities –
"Agencies") play a growing role in connecting businesses
with Canadian workers, but these models can come with unexpected
tax "strings attached".
For example, did you know that in some cases, Agencies hiring
workers classified as independent contractors can still be required
to make Canada Pension Plan ("CPP") and Employment
Insurance ("EI") contributions (as if the workers were
their employees)? This tax quirk can be difficult to understand,
especially when the Canada Revenue Agency ("CRA") views
one's workers to be non-employees!
As the CRA appears to have intensified its audits of Agencies in
recent years (which we have blogged about here and here), understanding where CPP and EI premium
collection obligations lie is critical. Equally important is
knowing when Agencies can challenge these obligations!
