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When is a member an employee? Tips on getting along with Canada Customs and Rev

by Halina Kuras, CGA, COHO Management Services Society

Some co-ops hire members for casual or part-time work. They often assume that these members are not employees and that the co-op does not have to make any payroll deductions on behalf of Canada Customs and Revenue Agency (CCRA). This is not always correct.

How can a co-op tell when a member is a co-op employee? The member is an employee if:

1. S/he is paid for the work

2. S/he does not have his or her own business

3. The co-op controls when and how the work is done

4. The co-op supplies the equipment and tools needed for the job and covers any costs related to their use

If you cannot decide whether a member doing work for the co-op is an employee based on this description, you should seek advice from your auditor or CCRA.

If a co-op has members who are also co-op employees, it must:

1. Register with CCRA and receive a Business Number

2. Withhold income tax

3. Make Employment Insurance (EI) deductions and contributions

4. Make Canada Pension Plan (CPP) deductions and contributions

5. Pay Workers Compensation Board premiums

6. Issue T4 slips to each employee by the end of February of the following calendar year

If CCRA conducts an audit of the co-op's operations and determines that its rules have not been followed, the co-op will be responsible for all outstanding payroll contributions, and may also be responsible for the employee's outstanding CPP and EI deductions. The co-op will also be responsible for all penalties levied by CCRA.

Your co-op co-ordinator or auditor can help you with the paperwork, but the board of directors is ultimately responsible for making sure that CCRA's rules are followed.

Posted on: Jan 1, 2005

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