Tax questions for IT consultants working as self-employed under Inc.:
Hello All,
I know there are a lot of IT professionals in CD who are self-employed as Inc. and also is the only employee in the payroll.
How does CRA view these entities? Are we viewed as employees of the company to which we provide our services, or are we viewed as an Inc. company with a separate entity? (...which allows us the tax benefits that are normally designated for an Inc. company)
My accountant says that the "Small Business Deduction" allowed to an Inc. company where the total yearly income is under $500000 along with other tax benefits have a very little chance of changing under the present regime!
Would love to have CDs thoughts/feedbacks on this subject!
Thanks
Basic principle of setting up and Inc or a Company - it is a separate entity apart from the shareholders or owners ... that is why it has liability restricted to itself and not the owners.
Your Inc will be viewed & treated as a Small Business , you will be treated as a separate individual getting either salary or dividends from the Corp.
Your Inc will be taxed as small business - you will be taxed as individual.
However push comes to shove , there have been cases where CRA has taken independent contractors to court claiming them to be employees for their clients for tax purposes.
Trudeau did appear vindictive towards small business owner during his poll campaign and even if they reduce , I don't think they would cut it to half or less than the current qualifying small business income limits.
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