Should I Hire an Employee or a Sub-Contractor?

1. Employees (BC)

Employment relationships in BC are governed by the Employment Standards Act (and related rules). Employers typically must withhold income tax, CPP, and EI (where applicable), remit on schedule, and provide vacation pay, termination notice or pay, and other standards-compliant benefits. Verify current BC Employment Standards and WorkSafeBC requirements for your industry.

2. Sub-contractors

There is no single “sub-contractor statute”; treatment follows facts and contract law, plus tax rules. Common checkpoints:

• WorkSafeBC: You may owe premiums on payments to contractors who are not independent businesses—confirm registration and exemptions.
• CRA reporting: Payments to contractors may require T4A or T5018 reporting above thresholds, depending on the relationship and type of payment.
• GST: If the contractor is a GST registrant, you may pay GST on taxable services; retain invoices for ITCs if you are registered.

3. Employee vs self-employed for tax

CRA uses a two-step (employee vs self-employed) analysis: intent and facts (control, tools, substitution, chance of profit, integration). Written contracts alone do not determine status.

This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation. Please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.