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Is your company hiring gig economy workers? Then read this

How you pay, tax and log these temporary workers could have financial implications

Courier on bicycle delivering food In cityGig economy workers clock hours on their own terms, from wherever, as Uber drivers, Foodora deliverers and Airbnb hosts, or specialists in fields as writers, developers, designers and consultants (Shutterstock/Daisy Daisy)

Freelancers, contractors, entrepreneurs, side hustlers—whatever you coin them, these workers are on the rise, riding the tide of a gig economy that’s impacting labour markets around the world.   

This shift sees fewer and fewer of us working full-time from nine to five out of a cubicle and more of us taking the flex route, clocking hours on our own terms, from wherever, as Uber drivers, Foodora deliverers and Airbnb hosts, or specialists in our fields as writers, developers, designers and consultants. [See 3 handy tax-filing tips for gig economy workers]

Employers are certainly catching on. According to a recent study, Workforce 2025: The future of the world of work, by Randstad Canada, non-traditional workers make up upwards of 30 per cent of Canada’s workforce, with one in four employees being freelance. Businesses also report that roughly one quarter of their staff work remotely, says the study. 

“Clearly the rise of technology is shifting the way companies behave,” says Dominic Levesque, president, professionals and innovation lab at Randstad Canada. “More and more, it’s going to be project-based because companies need to manage a temporary workforce in order to stay competitive.”

It begs the question: how prepared are we for this new way of working from a financial planning and taxation standpoint? It’s an opportunity for CPAs, as trusted advisers, to lend their expertise, assess risks and make sure their clients are properly tracking payroll or income earned. [See Lessons from the Gig Economy]

“[CPAs are] right in the thick of it because they are dealing with companies and they are dealing with individuals,” says economist, futurist and speaker Linda Nazareth, author of Work Is Not a Place: Our Lives and Our Organizations in the Post-Jobs Economy. “CPAs are dealing directly with how the economy evolves, what this does to economic activity, what this does to the industrial landscape.”


As a business, there are several reasons why tapping into a temporary workforce makes sense. It reduces fixed and overhead costs eliminating the need for salaries, benefits packages, internal resources, and other financial obligations that come with having full-time staff. It also allows organizations to seek top talent, on a project basis, as on-demand skills are needed. 

But it comes with some risks, shares Bruce Ball, vice-president of taxation at CPA Canada. Companies must be clear about the relationship between who they’ve hired and the business itself—is the hire a part-time employee, or a self-employed contractor? For example, employment income earned that is more than $500 is required to be reported on a T4 slip and in addition, there are requirements to withhold tax deductions CPP, and EI. If you treat the individual as self-employed but the CRA later determines that they are employees, then penalties can apply to the employer, stresses Ball.

“One key point that is often overlooked—even if a short-term assignment—is that if the factors indicate ‘employment’, then the person will likely be considered employed by the CRA,” says Ball. “This could be working full-time for a month or working part-time all year.”

When working with companies who are outsourcing expertise, CPAs should advise them to consider temporary hires as employees, unless it is explicitly clear that the individual is as acting as a self-employed service provider, says Ball. Look out for anything unusual and ask the right questions while working with clients, he adds. For example, inquire about recurring service expenses, clarifying what the service was and who was paid. Note that if the service provider is a corporation, the onus moves to the corporation. They will have to determine if the income is from an active business or from a personal services business.

“If it looks as though individuals providing services could be employees based on the relationship, then dig deeper and advise the client of the potential risk,” Ball suggests.


Opinions vary on how the gig economy will impact global labour markets. Even U.S. economists Lawrence Katz and the late Alan Kreuger—who once called it a “booming” trend (their initial findings suggesting that 15.8 per cent of the U.S. workforce was engaged in alternative work in 2016, up from 10.8 per cent in 2005)—said they overestimated the impact gig work would have on the traditional work environment. 

“Larry Katz and I now conclude that there was a modest rise in the share of the workforce in non-traditional jobs over the last decade—probably on the order of one to two percentage points, instead of the five percentage point rise we originally reported,” Kreuger told the Wall Street Journal earlier this year. 

For Nazareth, the gig economy is an inevitability requiring a shift in thinking. The way forward, she believes, includes acceptance that this is the worker’s new way, finding better ways measure its impact and adjusting existing systems and policies to accommodate a diversified workforce. 


Find out what CPA Canada’s chief economist, Francis Fong, had to say about precarious employment in Canada during the IRPP Policy Options event: A snapshot of precarious work in Canada today.