# Income declaration



## neil (Apr 3, 2009)

I've got a general question regarding income declaration.

My girlfriend has a side job that I suppose would qualify her as an independent contractor (though there is no formal agreement in place, and personally I think she should be considered an employee, but that's beside the point). She is paid by cheque by her employer.

My question is how does she declare this income on her tax return, and how is she able to write off any expenses related to the job like mileage or food expenses (believe it or not, but eating out at restaurants is part of her job).


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## FrugalTrader (Oct 13, 2008)

Your GF is now considered self employed. She can write off various expenses, but i believe that food can only be partially claimed. Best to consult with an accountant to get the correct details.


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## MoneyGal (Apr 24, 2009)

FT: whether or not someone is considered to be self-employed is subject to a series of factors. See this CRA circular. A person in the situation as described may not be self-employed - absence of a formal written agreement is not a determining factor.


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## ghostryder (Apr 5, 2009)

MoneyGal said:


> FT: whether or not someone is considered to be self-employed is subject to a series of factors. See this CRA circular. A person in the situation as described may not be self-employed - absence of a formal written agreement is not a determining factor.



And if someone is determined by CRA to be an employee, and the employer does not do the proper withholding of tax, EI & CPP the employer can be held liable for both the employer and employee portions.

If your GF isn't sure if she is self employed or an employee after reading the RC4110 guide posted by Moneygal, she can request a ruling from CRA.

If she is an employee and the employer does not provide a T4 the income should go on line 104.

If she really is self employed she will need to fill in a T2125 statement of business activities, and then her net income will go on line 135.


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## MoneyGal (Apr 24, 2009)

Ghost: do you know how long CRA takes to make a ruling?


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## FrugalTrader (Oct 13, 2008)

Thanks for the clarification guys!


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## ghostryder (Apr 5, 2009)

MoneyGal said:


> Ghost: do you know how long CRA takes to make a ruling?


No idea. It will probably depend on where you live and how busy they are. They will interview both the "employee" and the "employer"


note this though:

http://www.cra-arc.gc.ca/tx/hm/rlng-eng.html

_A worker or an employer can request a ruling before June 30 of the year following the year to which the question relates. For example, if the employment took place in 2006, the ruling request has to be made before June 30, 2007._


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## Ben (Apr 3, 2009)

My mom plays organ for 2 churches (in the same diocese), and CRA recently came after her claiming she is self-employed. I am currently working through RC4110, and as I interpret the situation, nothing could be further from the truth. She has 90 days to appeal.


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## Berubeland (Sep 6, 2009)

They didn't come after her "for being self employed" they came after her because she didn't declare the income.

It's a lot easier for CRA to get money out of your mom than the church for employment deductions. 

However..... it's a lot better in this case to be self employed because there is so much you can claim as a self employed person which will reduce her taxes owing. 

I suggest she find herself a good accountant to help her with this.


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