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Employee vs. Independent Contractor

When providing services for a corporation in Canada, there are certain Canadian income tax and non tax advantages in being considered an independent contractor as opposed to an employee.

The advantages to the employer are as follows:

No obligation to deduct Employment Insurance (EI) and therefore not required to pay an employer’s portion
Canada Pension Plan (CPP) costs, including the employer’s portion, are passed on to the contractor
Employers don’t need to include contractors in company benefit programs or offer a severance package when the contractor’s services are no longer needed.

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