Information on what the Canada Revenue Agency (CRA) looks at when determining the employment status of workers engaged in fishing for a living.
It is important to determine whether a worker is an employee or is self-employed, because employment status directly affects a worker's entitlement to employment insurance (EI) benefits. Employment status can also have an impact on how that worker is treated under other legislation such as the Canada Pension Plan (CPP) and the Income Tax Act.
Workers engaged in fishing who are employees are covered under the Employment Insurance Act and the CPP in the same way as most other employees, and may be entitled to regular EI benefits if they qualify to receive them.
Workers engaged in fishing who are self-employed are covered under the Employment Insurance (Fishing) Regulations, and may be entitled to EI fishing benefits if they qualify to receive them. They are responsible for remitting CPP contributions in the same way as other self-employed individuals.
All employers are required by law to deduct CPP contributions and EI premiums from most amounts they pay to their employees. Employers must remit these amounts to the CRA along with their share of CPP contributions and EI premiums. More information on employer responsibilities and obligations can be found through our Payroll menu page.
How to determine if a person is an employee or a self-employed fisher?
To determine if a person is an employee or a self-employed worker, the CRA looks at the factual working relationship between the worker and the payer. For general information about determining whether a worker is an employee or is self-employed, see Guide RC4110 Employee or Self-employed?
Due to the nature of the fishing industry, the CRA focuses on the following elements when analyzing the working relationship between the parties:
- The level of control the payer has over the worker's activities
- The degree of financial risk taken by the worker
- Whether the worker provides his/her own equipment
- The worker's opportunity for profit in the performance of his/her tasks
Based on those elements, the CRA will consider a worker to be a self-employed fisher if:
a) he/she participates in making a catch
b) he/she is not fishing for his or her own or another person's sport and
c) he/she meets at least one of the following conditions:
- has ownership or leases the boat that is used to make the catch
- has ownership or leases specialized fishing gear (not including hand tools or clothing) used to make the catch
- is the holder of a species license issued under the authority of the Department of Fisheries and Oceans, which is necessary to make the catch, or
- has a right of ownership to all or part of the proceeds from the sale of the catch, and has a financial responsibility for all or part of the expenses incurred in making the catch.
What is financial responsibility?
To have a financial responsibility means that the worker is liable for a predetermined amount or percentage of the expenses the crew incurs in making the catch, regardless of the value of the catch.
The sharing arrangement made among the parties is an important element in determining if a worker has a financial responsibility for the expenses the crew incurs in making a catch. Arrangements that involve sharing in both the proceeds of the catch and the expenses incurred to make the catch indicate that the person is sharing in the possible success or loss on a fishing trip in a manner more closely related to a business relationship than to an employer-employee relationship.
Although sharing arrangements are often informal verbal agreements, it is beneficial to have a written agreement so that the terms are clearer for all parties. Sharing arrangements have to be made before embarking on a fishing trip.
What is considered as expenses incurred in making the catch?
In general, the most common types of expenses incurred in making the catch include, but are not limited to, such things as:
- boat fuel
- contributions for the cook or engineer
Crew members often incur expenses for basic hand tools and clothing. These expenses are not considered to be expenses incurred in making the catch, as referred to above. They include, but are not limited to, such things as:
- rubber gear
- rubber boots
For any questions relating to expenses that can be claimed by self-employed fishers for income tax purposes, please contact your local tax services office or see guide T4003, Farming and Fishing Income.
Requesting a ruling
If a worker or payer is not sure of the worker's employment status, either party can request a ruling by the CRA to have the status determined. For more information go to How to obtain a ruling for Canada Pension Plan and Employment Insurance purposes.
For more information
To get more information, call 1-800-959-5525.
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