From: AlanBaggett@volcanomail.com   
      
   Is the babysitter an employee or a contractor? : CRA SOTW    
      
   By Jamie Golombek, Financial Post    
      
   If you regularly hire the same babysitter to look after your kids, week after   
   week, are you obligated to withhold and remit CPP contributions and EI   
   premiums?   
      
   This was the issue in a case before the Tax Court last month in which a Judge   
   had to decide whether Ms. Mikhaylovskaya, a part-time babysitter with no set   
   hours or availability, was an employee or a self-employed independent   
   contractor for Tatiana    
   Iarutina, a mother of two.   
      
   Both the Ms. Iarutina and Ms. Mikhaylovskaya intended from the outset and   
   throughout the relationship that Ms. Mikhaylovskaya was to be self-employed.   
   At no time did she seek to collect EI or CPP benefits. The assessment of EI   
   and CPP by the Canada    
   Revenue Agency, along with penalties, appears to have been triggered by the   
   fact that Ms. Mikhaylovskaya reported her babysitting income on her tax return   
   as "Other Employment Income" as opposed to self-employment business income.   
      
   Ms. Iarutina is an accountant with an office in the basement of her home, who   
   was also required to meet regularly with clients outside her home. In 2008,   
   she placed an ad looking for babysitter, to which Ms. Mikhaylovskaya, who was   
   67 years old at the    
   time and retired, responded.   
      
   While Ms. Mikhaylovskaya looked at several potential babysitting positions,   
   she took this job because "she was able to set her own hours to the needs she   
   had, and it provided her enough for her financial needs."   
      
   It was up to Mrs. Iarutina to either arrange for Ms. Mikhaylovskaya's next   
   work time as she left the current sitting time, or to telephone her and   
   inquire as to her availability. Both women testified that it was, in fact, Ms.   
   Mikhaylovskaya who decided    
   if she would come and that Mrs. Iarutina had to work her schedule around her   
   babysitter's availability.   
      
   While most of the time, Ms. Iarutina's children were babysat in their own   
   home, from time to time, to accommodate the babysitter, they were cared for at   
   Ms. Mikhaylovskaya's home.    
      
   The Judge reviewed the standard tests for determination of employee versus   
   independent contractor, which include both the intent of the parties and   
   control over the work performed.    
      
   As to intent, the Judge wrote: "I am satisfied that the relationship in fact   
   maintained between Ms. Iarutina and the babysitter was consistent with the   
   self employment they both intended and understood it to be."   
      
   In addition, the Judge concluded there was very little control over the   
   babysitter and how and when she cared for Ms. Iarutina's children, which tilts   
   the scale again toward an independent contractor service since the hours were   
   based on Mikhaylovskaya's    
   availability or discretion.   
      
   As a result, the Judge concluded that Ms. Mikhaylovskaya was not, in fact, Ms.   
   Iarutina's employee and that the CPP and EI assessments should be cancelled.   
      
   Jamie.Golombek@cibc.com   
   Jamie Golombek, CA, CPA, CFP, CLU, TEP is the managing director, tax & estate   
   planning, with CIBC Private Wealth Management in Toronto.   
   (c) Copyright (c) The Calgary Herald   
      
      
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