Employee or self-employed? The Taxpayers’ Ombudsman calls for more information to understand decisions from the CRA
June 5, 2017 - Ottawa, Ontario - Office of the Taxpayers’ Ombudsman
In a report released today, the Taxpayers’ Ombudsman, Sherra Profit, sheds light on the difficulties that workers and payers have understanding Canada Pension Plan and Employment Insurance (CPP/EI) decisions made by the Canada Revenue Agency (CRA) and their potential impacts.
A CPP/EI ruling is an official decision made by the CRA that confirms whether a worker is considered an employee or self employed. This decision is important as it determines if the employment is insurable and pensionable, and who is responsible for withholding and remitting CPP, EI and income taxes.
The report, entitled “Rights and Rulings: Understanding the Decision”, brings out the following difficulties faced by workers and payers who receive a CPP/EI ruling letter:
• Lack of information regarding the reasons for the decision, and the potential consequences of a change in employment relationship;
• Lack of information as to their right to obtain a written copy of the Rulings Report that contains the full reasons;
• Insufficient guidance regarding the steps to be taken to pay any outstanding amounts.
In response to these findings, the Taxpayers’ Ombudsman has made five recommendations urging the CRA to make more information available in the CPP/EI rulings letters and other publications.
The Ombudsman's recommendations are based on the taxpayers’ right to be treated professionally, courteously and fairly, their right to complete, accurate, clear and timely information, and their right to expect the CRA to be accountable.
“Workers and payers need to know the reasons why someone is considered an employee or self employed, as well as the consequences of this decision. Proactively disclosing this information and making information on this topic easy to access helps ensure workers and payers meet their tax obligations, and also increases government transparency and accountability. It is important for the CRA to be offering services that are more client-focused.”
The Taxpayers’ Ombudsman is responsible for advising the Minister of National Revenue on matters relating to service provided to taxpayers by the CRA.
• The Taxpayers’ Ombudsman may initiate a systemic examination when a service issue may impact a large number of taxpayers or a segment of the population.
• In 2015-2016, the Canada Revenue Agency (CRA) completed 44,091 Canada Pension Plan (CPP) and Employment Insurance (EI) rulings requests. Each request for a ruling resulted in the creation of at least two letters (worker and payer), for a total of at least 88,182 letters being issued.
Office of the Taxpayers’ Ombudsman
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