Take a second look at Co-Employment Relationships

American companies expanding into Canada may initially believe that Co-Employment or Employee Leasing may be their best option, but there are multiple advantages to managing your employees under your own Canada Revenue Agency (CRA) payroll number.

Co-employment can blur the lines in the employer –employee relationship.  In Canada, whoever directs the day to day activities of the employee is deemed to be the employer of record.   When embarking on a Co-Employment Relationship with employees, usually you are subject to higher fees for Workers Compensation (WCB).  Your premiums will be based on the industry classification of the co-employer, that’s because all employees are pooled together.  The rates will be based on that pool of employees, which can easily result in higher WCB premiums.

This pooling of employees also affects the Employer Health Tax burden In Ontario.  When an employer of record’s payroll exceeds $450,000 in a calendar year, then you must pay the Employer Health Tax of 1.95%. The payroll for your employees may not exceed that amount, but pooling all employees together will result in you paying that burden.

Finally, there are government Scientific Research and Experimental Development (SR & ED) grants, wage subsidies, training grants and tax credits that you may be eligible to receive.  That is, if you manage your employees under your own CRA payroll number.   In some cases you must also be incorporated.  It is worthwhile weighing your options to see what relationship suits you best, a PEO Canada Business Consultant can book a Needs Assessment today to see if working under your own Canadian Revenue Agency Business Number is a good fit for you.

Mary-Jane Burchell / PEO Canada / Business Consultant

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