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Transition from "Employee" to "Contractor" for taxes purposes


VanSolicitor

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VanSolicitor
  • Lawyer

Anyone have prior experience or knowledge about how much more companies will pay when an employee transitions to an independent contractor status for tax purposes? For example, the employer would no longer be providing typical employee costs (eg. benefits, CPP, liabilities, Etc). I would imagine that the difference would be paid directly to the employee so there'd be no net difference to the employer. 

 

I was once told by a financial planner that the approximate minimum threshold salary was about $160k to incorporate as an independent contractor. That said, there's a lot of assumptions there as to personal expenses and ability to save. 

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Hitman9172
  • Lawyer
On 12/10/2021 at 12:45 AM, VanSolicitor said:

Anyone have prior experience or knowledge about how much more companies will pay when an employee transitions to an independent contractor status for tax purposes? For example, the employer would no longer be providing typical employee costs (eg. benefits, CPP, liabilities, Etc). I would imagine that the difference would be paid directly to the employee so there'd be no net difference to the employer. 

 

I was once told by a financial planner that the approximate minimum threshold salary was about $160k to incorporate as an independent contractor. That said, there's a lot of assumptions there as to personal expenses and ability to save. 

I suggest speaking to an accountant. I spoke with one recently and he basically said it really boils down to disposable income. He said to calculate your living expenses and the administrative costs of being incorporated, and then see how much money you can leave in your professional corporation to invest on a tax-deferred basis.

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BlockedQuebecois
  • Lawyer

Also speak to a lawyer, since being an employee is often incompatible with practicing through a professional corporation. 

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