Originating/Responsible Department: Finance Department. Date of Original Policy: March Last Updated: September 2011

Transcription

1 Policy Name: Payment to Individuals and Business Entities Originating/Responsible Department: Finance Department Approval Authority: Senior Management Committee Date of Original Policy: March 2005 Last Updated: September 2011 Mandatory Revision Date: September 2016 Contact: Assistant Vice President (Finance) Policy: All payments to individuals and business entities for services rendered to the University shall be made in accordance with the Income Tax Act of Canada, and Regulations established by the Canadian Revenue Agency, and as they may be amended from time to time. Purpose: The purpose of this policy is to ensure the University conforms to all statutory regulations regarding all payments to individuals and business entities. Scope: This policy applies to the entire University community Reference is made in this policy to the Revenue Canada Publication Employee or Self Employed, Publication Number RC4110 (E), hereafter referred to as RC4110 (E)). RC4110 (E) can be found at Definitions: Refer to RC4110 (E) I. Business relationship II. Employee III. Employers IV. Employer-employee relationship V. Non-arm s length relationship VI. Self employed relationship VII. Honoraria An honorarium is a gift of an object or a small sum of money, normally less than $500 annually, in thanks for a favour done for the University.

2 VIII. Guest Lecturers A Guest Lecturer is an individual who has no ongoing responsibility to the participants or students attending the lecture. They have no grading or marking responsibility and the lecture or lecture series is of limited duration. The individual has no appointment with the University and has no facilities or support staff provided. I. Gift Either in cash or in kind from an employer to an employee is a benefit derived during or because of the individual's employment. When the value of a gift commemorating a wedding, Christmas or similar occasion does not exceed $100 and when the employer does not claim its cost as an expense in computing taxable income, the gift is not required to be reported as income of an employee. This practice will only apply to one gift to an employee in a year, except in the year an employee marries in which case it will apply to two gifts.. Bona Fide Company or Business Entity For the purposes of this policy, a bona fide company or business entity shall mean any individual or group of individuals who are of a professional nature or highly trained, who are incorporated or not and whose business relationships are not strictly with the University, and thus maintains a public profile apart from its relationship with the University. This public profile is evidenced by its multiplicity of clients, ownership of its own material and tools, and its independence from the University in the way they conduct their business. Procedure 1) It is the responsibility of the individual s or group s Manager or Department Head to make a determination prior to an initial payment as to whether an individual or group who provides services to the University is in an employer-employee relationship or a self-employed relationship. It further follows that the payment to the employee or independent contractor must be in accordance with all statutory regulations. 2) To determine whether an individual or group providing services to the University is in an employer-employee relationship or is self employed, the Manager or Department Head must refer to Appendix A (PDF) of this policy Taxation Treatment Chart. The Manager or Department Head must select the appropriate scenario from Appendix A and apply the corresponding method of payment. 3) If the services provided by an individual or group are not covered by the situations outlined in Appendix A, the Manager or Department Head must complete the four questionnaires in RC4110 (E) 4) Upon completion of the RC4110 (E) questionnaires the Manager or Department Head must make the determination as to whether the individual or group providing services to the University is in a employeremployee relationship or self employed relationship, based on the guidelines provided by the RC4110 (E) 5) Where the individual or group providing the service to the University is deemed to be an employee, then the individual or group should be paid using normal payroll procedures as outlined by the Human Resources Department, and as amended from time to time. 6) Employees of the University must be paid as employees for services rendered that are related to their employment contract, or is employment income by nature. For example, a faculty member providing teaching, research or community service to the University must be paid as an employee, even if the engagement is above and beyond the normal duties. Likewise, a staff member performing duties that would normally be considered employment duties, that are unrelated to the individual s employment contract, must still be paid as an employee. For example, a staff member from the Finance Office invigilating an exam. 7) Where the employment relationship is determined to be one of self employment, whether the determination is made by Appendix A or RC4110 (E)) it is the responsibility of the Manager or Department Head to: a) Provide in writing to the Business Office, the name(s) of the individual(s) providing the service to the University, and a brief description of the service to be provided

3 b) Forward either Appendix A or RC4110 (E)) to the Business office 14 days prior to the date on which the individual(s) is to start providing the service. c) Complete and forward to the Business Office, the Departmental Confirmation of Information and Independent Contractor Indemnification Agreement form (PDF). d) Obtain proof of liability insurance from the self-employed individual(s). Such proof should take the form of a Certificate of Insurance indicating the type of service is covered under the contractor s liability policy. A copy of the Certificate of Insurance shall be forwarded to the Manager, Risk and Insurance, 603 Robertson Hall for appropriate record keeping. Specific limits of insurance are determined by the type of worked performed. These limits should be set in consultation with the Manager, Risk and Insurance. 8) The Business office shall review all Appendices A and RC4110 (E) submitted for the appropriateness of the determination made. All individuals or group providing services to the University shall be deemed an employee of the University, unless the required documentation outlined in this policy is submitted to the Business Office, substantiating the determination of self employment. 9) Once a determination has been made, that the individual or group is an independent contractor, payment can then be made following the University s accounts payable procedures. Contacts: Laurie Chochinov, Manager, Accounting Services Valerie Evans, Manager, Business Office Links to related Policies: Department of Finance

4 Research Non-Instructional Services Teaching Appendix A Taxation Treatment Chart Use the following chart to assist in determining whether your situation involves employees or self-employed individuals or groups. Select the appropriate category and if the determination is self-employed, highlight the situation that applies and send this form along with other documentation outlined in Section 6 of the Policy to the Business Office. If you feel your situation is an exception to the payment treatments below, please follow the procedures outlined in the policy starting at Number 3. Type of Service Provided Carleton University employee or individual performing teaching that is not part of the normal employment responsibilities, not related to day to day academic programs, not for credit, or not covered under the terms of the governing appointments documents e.g., CUASA collective agreement Example: Carleton professor teaches one day professional seminar for School of Business Employee Independent Contractor Payment Method Guest lecturer - see definition Account Payable - T4A Issued- Canadian Residents - Cheque Requisition must include Social Insurance Number and full address Non-Residents - Subject to withholding tax. Cheque Requisition must include full address and equivalent to Social Insurance Number Current employees performing work that is part of the normal course of duties under an existing employment contract. Example: Administrative Assistant edits presentation for Department Manager after normal working hours An Individual s time is at the disposal of the University for a fixed or determinate time. Factors to consider; Have set hours, works at the University, provided supplies and equipment. Example: Individual is hired on three-month contract as fill in for Administrative Assistant on maternity leave Business or individuals paid a fee to provide specified products or services, e.g., consulting services, statistical analysis. Factors to consider: work is done away from University; does business or individual pay own expenses. Example: Computer Services hires consultant to provide code to enhance existing computer application. Carleton is one of many customers of consultant. Accounts Payable - T4A Current employee engaged in research as part of responsibilities or normal course of duties under an existing employment contract. Fees are earned as part of an agreement between the University and an external agency and the University is responsible for the satisfactory completion of the project. Research project personnel engaged in research under the direction, guidance or supervision of a Carleton University principal investigator and are not students carrying out research related to degree requirements. Factors to consider: appointed for a fixed period of time, regularly engaged in research at the University, requires regular payments, provided with supplies, equipment, office space, account, etc. The employer may be the University or the Principal Researcher

5 Honorarium Employee - A gift of an object or small sum of money usually less than $500. Example: Administrative Assistant does an exceptional job organizing a conference for a Department. The Manager buys a gift for the Administrative Assistant for the good work. Payroll -T4 Issued Non-Employee - A gift of an object or small sum of money usually less than $500 Example: Retiree, who is no longer employed in any capacity with the University, volunteers to help register delegates for a 5-day conference. The volunteer helps out for 20 hours. The Department gives the individual $100 for this activity. Accounts Payable -T4A