T4 Director’s Honorariums, Employees

Does the condominium corporation have employees?

Condominium corporations normally have contractors working for them.

In the case of contractors, the corporation normally does not need to worry about payroll tax filings.

However, the distinction between contractors and employees is often difficult.

We have seen large condominium corporations that were audited by CRA and assessed employee taxes, and the corporation had to pay both the employee and employer share.

A common area of concern is maintenance. Janitorial, snow shoveling and landscaping work may be require payroll deductions.

CRA has three tests to determine whether you have employees or contractors:

a) Control

Does the organization control how the work is done and the hours of work?

b) Tools and Equipment

Does the organization own the tools

c) Financial risk

Does the worker bear a risk of loss or chance of profit?

Perhaps some answers are yes and some are no, but CRA and the courts will look at strongest indication. Please visit CRAs website, http://www.cra-arc.gc.ca/menu-e.html for the guide RC4110(E) "Employee or Self-Employed" for more information.

Do Directors need to be issued a T4 for honorariums?

According CRA you must deduct tax at source for:

"honorariums from employment or office, a share of profit that an employer paid, incentive payments, director’s fees, management fees, fees paid to board or committee members, and executor’s, liquidator’s, or administrator’s fees earned to administer an estate (as long as the executor, liquidator, or administrator does not act in this capacity in the regular course of business);"