? about employees

[gregpet]

Is it possible to pay a salary and bonus at year end instead of hourly wages with deductions? We have been signing contracts with our employees and paying a salary and our accountant has not questioned it but we are worried about a GST or income tax audit. We have had a GST audit a while ago with inly one employee and as long as we had the contract there was no problem.

We do not lay employees of and they are employed year round with a medical and benefits package.

Just wondering what others do?

[Hopperbin]

Not sure why you don't want to take deductions. I just took on a new employee that hated his last employers salary or whatever you call it and he had to claim at the end of year his income. Pay the wages with CCP an EI deduction, like how hard is that? Actually I have been paying a by hours and bonus at year end. The Bonus deductions are averaged out for the year not a big deal. CCP and EI as a general wage period. I laugh at my accountant when he wants to do the t4s or t5s it is already done.

[gregpet]

I just want our employees to have a constant income throughout the year since the hours are significantly reduced in the winter and it makes book keeping much easier. True, they pay their own deductions at tax time but they are aware of that when we hire them.

Maybe we should start taking deductions.

[AG_guy]

It is pain in the arse to pay your own deductions. If the employer does it,it makes it easier . Just have a quaranteed work week of what ever hours you choose. So if it's 50 hours pay them that all year around no matter if they work more or less. That way they know what there checks are all year round.

OR if an employee wanted to work under contract then they could right off alot of there own expenses. I've done that, the employer paid me X amount of money every two weeks with no deductions. At the end of there year i had enough expenses i got a refund of about $500. What you provide would be a T4A slip.

And now with EI being self employed or contracted you can pay into EI yourself and get everything put an un-employment check but maturnity , diability ect still applies i beleive.

[AG_guy]

We pay our employees a fixed amount every month for simplicity. Each employee keeps track of the hours and we settle the excess with the monthly pay cheques after harvest. It provides consistent cash flow for the employee and simplifies our books as well.

I would be very concerned about paying "contract" wages, even with GST. Unless the employee is coming to your business with something to risk and provide a service(ie:Equipment) you challenge the true employer/employer arrangement. If the employee is simply driving your equipment and doing what he/she is told, its employment, not contract.

There are severe penalties for not complying to the correct rules. Down the road the employee will thank you for the CPP benefits and possibly EI as well.

[poorboy]

You can pay a salary without having the same amount of hours every month. You can also pay a bonus at any time you feel like it.

However, if you are not taking deductions off the check, I think that will come back to get you. The gov't is really cracking down on most people who are paying contract wages, because most do not fit under the rules. If the gov't deems you to have an employer/employee relationship they will come back and demand you the employer pay your share of CPP and EI and massive penalties.

The only thing you are saving as an employer is not paying your matching share of CPP and your 1.4 share of EI, you are just downloading those costs to your employee. I doubt that you could win a revenue canada case on your salary with no deductions system that you have now, unless you are a totaly hands off person and the employee makes all the decisions.

[parsley]

Deduct both CPP and EI. Make sure. You can issue payroll monthly or weekly or semiweekly, but be consistent. For years, I did all payroll on the same day for all staff. Simplifies.

Bank will also do payroll. Small fee.
I would opt for the latter.