Acco340Lecture 2-3 - Employment Income

Employer is liable for both employee and employer

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employer is liable for both  employee and employer   portion of statutory benefits programs   (eg QPP/CPP, EI, medicare) and interest & penalties on  these contributions, as well as interest and penalties on unpaid deductions for income taxes. - To help ensure self-employed status (ie no employer – employee relationship), the independent contractor should: Sign an independent contractor work agreement Advertise services and work for other businesses Cover own overhead, provide own equipment Periodic invoices on an irregular basis with GST Incorporate the business   INCOME INCLUSIONS –BASIC PROVISIONS Salary and wages-No ambiguity as to being taxable (ie ,included in income). Uncertainty could exist regarding fringe benefits I   T-470R provides an exhaustive list of taxable and non-taxable employee fringe benefits paid by an employer      -Please read     Fringe Benefits are generally taxable pursuant to ITA 6(1) ITA 6(1)(a)  states that  all benefits received or enjoyed  by an individual    by virtue of an        office        or employment     ,     must be included as employment  income ,   except,      for example     :   i)  Employer contributions made for the benefit of employees regarding : - Registered Pension Plans* -Group sickness or accident insurance plans (Note: taxable for Quebec income tax purposes)
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-Private health services plans (except for Quebec tax purposes) -Supplementary unemployment benefits plans / Deferred profit sharing plans                   -Deferred Profit Sharing Plans ii) Benefits under a Retirement Compensation Arrangement, some employee benefits plans and trusts iii) Some counselling services  (eg.mental & physical health, re-employment, retirement)- exception to exception *Note: - An employer’s contribution to a Registered Pension Plan, is  not a taxable benefit             - An employee’s contribution to an employer’s Registered Pension Plan,  are deductible Other  paragraphs under  ITA 6(1) state which items  are taxable,  ie,  must be included in employment income: ITA 6(1)(b)- amounts received as personal or living expenses or an allowance for any other purpose ITA 6(1)(c)- director or other fees ITA 6(1)(d)- allocations under profit sharing plans ITA 6(1)(e)- standby charge for automobiles provided by an employer   (to be discussed later in  more detail) ITA 6(1)(f)-  employment insurance benefits (eg, disability insurance benefits) ITA 6(1)(g)- employee benefit plan benefits ITA 6(1)(h)- allocations under employee trusts ITA 6(1)(i)-  salary deferral arrangements ITA 6(1)(j)-  reimbursements and awards
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