Barbers and hairdressers
If these workers are your employees, you have to deduct Canada Pension Plan (CPP) contributions, employment insurance (EI) premiums, and income tax as you would for regular employees.
When the workers have an interruption in earnings, you generally have five calendar days after the end of the pay period in which an employee’s interruption of earnings occur to issue an electronic Record of Employment (ROE).
A different deadline may apply if you file the ROE on paper.
If these workers are not your employees, the following special rules apply and you have to report the gross earnings on their T4 slip. For reporting instructions, see Barbers and hairdressers.
This class of workers is restricted to barbers or hairdressers who provide their services in an establishment that offers barbering and hairdressing services.
CPP contributions and income tax
For CPP and income tax purposes, we consider individuals who are not employed under a contract of service to be self-employed. They are responsible for paying their CPP contributions and income tax when they file their income tax and benefit returns. Do not deduct CPP or income tax from these workers.
Under a special EI regulation, the owner, proprietor, or operator of the barbershop or hairdressing business is considered to be the employer of the individuals who perform services as a barber or hairdresser in connection with the establishment, even if the individuals are not employed under a contract of service.
If you own or operate the business, you have to pay both the worker’s share and your share of EI premiums. The worker’s insurable earnings are to be calculated based on the net revenue. The worker’s insurable earnings are used to determine the worker’s share of EI premiums.
There are two ways to determine the insurable earnings for a week, depending on whether you know the worker’s actual weekly earnings and expenses:
- if you know how much the worker earned in a pay period and the expenses incurred in generating revenue from the worker’s operation in the establishment, the amount of the individual’s insurable earnings is the total actual earnings (net revenue) from the individual’s employment for the pay period up to the maximum annual insurable earnings
- if you do not know how much the worker earned and/or the expenses the worker incurred in generating revenue from their operation in the establishment during a pay period, the amount of insurable earnings is the lesser of:
- the number of days worked in the week multiplied by 1/390 of the maximum of the annual insurable earnings
- 1/78 of the maximum of the annual insurable earnings
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