What is the Saskatchewan small business tax rate?

In Saskatchewan, small businesses pay a combined federal and provincial rate of 10% on the first $500,000 of active business income (9% federal + 1% SK provincial). Income from $500,000 to $600,000 is taxed at 16%, and income over $600,000 is taxed at the general rate of 27%.

Should I pay myself salary or dividends in Saskatchewan?

The salary vs dividend decision depends on your specific situation. Salary provides RRSP contribution room and is tax-deductible for the corporation. Dividends have lower personal tax rates but don't create RRSP room. SK TaxGPT can calculate which option gives you more after-tax income based on your numbers.

What are the corporate tax filing deadlines in Canada?

Corporate tax returns (T2) must be filed within 6 months of your fiscal year-end. Corporate taxes owed are due either 2 months or 3 months after year-end depending on whether you qualify for the small business deduction. The tool helps you calculate your specific deadlines based on your fiscal year.

How do I calculate home office deduction in Canada?

Home office deductions are calculated based on the percentage of your home used for business. You can deduct a proportional amount of utilities, insurance, property taxes, mortgage interest, and maintenance. SK TaxGPT calculates this automatically based on your office square footage and total home size.

What are the CRA tests for employee vs contractor?

CRA uses 5 main factors: (1) Control - who directs how work is done, (2) Tools and equipment - who provides them, (3) Financial risk - can the worker profit or lose money, (4) Integration - how integral is the worker to the business, (5) Intent - what did both parties intend. No single factor is decisive.

What happens if CRA audits and finds misclassification?

If CRA deems a contractor is actually an employee, the business owes: employer CPP/EI contributions (back to start of relationship), penalties, interest, and potentially the worker's unpaid CPP/EI. This can be very costly, especially for long-term relationships.

Can I request a CRA ruling on worker status?

Yes. Use Form CPT1 - Request for a CPP/EI Ruling. It takes 3-6 months to process, but the ruling is binding on CRA. This is recommended for significant or ongoing contractor relationships to avoid future audit risk.

What red flags attract CRA attention for contractor audits?

Red flags include: single-client contractors, full-time hours (40+/week), long-term relationships with the same "contractor", using company email/branding, set work schedules, no GST registration, and daily supervision. Multiple red flags significantly increase audit risk.

Employee vs Contractor CRA: Classification Guide (2025)

The 5 CRA tests, tax implications, and how to avoid costly audits

Why This Matters

Misclassifying workers is one of the most common (and costly) tax mistakes. CRA actively audits this area. Getting it wrong can result in back taxes, penalties, interest, and CPP/EI assessments going back years.

The 5 CRA Classification Tests

CRA uses several factors to determine worker status. No single factor is decisive - it's the overall relationship that matters.

Test 1: Control

Employee Indicators

Employer sets work hours
Employer dictates how work is done
Employer provides training
Must follow company procedures
Employer approves vacation time

Contractor Indicators

Sets own hours
Decides how to complete work
Uses own methods and processes
Can hire helpers/subcontractors
Manages own schedule

Test 2: Tools and Equipment

Employee Indicators

Employer provides all tools/equipment
Employer provides workspace
Employer pays for software licenses

Contractor Indicators

Owns their own tools/equipment
Provides their own workspace
Pays for their own software

Test 3: Financial Risk

Employee Indicators

Paid regardless of job profitability
No risk of financial loss
No investment in business assets
Expenses reimbursed

Contractor Indicators

Risk of profit or loss on each job
Fixed price contracts
Fixes mistakes at own expense
Has business expenses/overhead

Test 4: Integration

Employee Indicators

Work is integral to company business
Appears to be part of organization
Uses company email/branding
Exclusive relationship

Contractor Indicators

Provides a distinct service
Works for multiple clients
Has own business identity
Advertises services to others

Test 5: Intent

Employee Indicators

Expects benefits (vacation, sick leave)
Expects job security
Identifies as employee

Contractor Indicators

Written contract stating contractor status
Invoices for services
Registered for GST/HST
Has business registration

Tax Implications Comparison

For the Worker

Factor	Employee	Contractor
Income tax	Withheld at source	Pay by installments
CPP	Split with employer	Pay both portions
EI	Contributes	Cannot contribute (usually)
Deductions	Limited (T2200 required)	All business expenses
GST/HST	N/A	Must charge/collect

For the Business Hiring

Factor	Hiring Employee	Hiring Contractor
Withholdings	Must withhold tax, CPP, EI	None
T4/T4A	Issue T4	Issue T4A (over $500)
Benefits	May be expected	Not required
Control	More control	Less control

Cost Comparison: $100,000/Year

As Employee

Salary$100,000

Employer CPP$4,430

Employer EI$2,450

WCB (varies)~$1,500

Benefits~$5,000

Total Cost~$113,380

As Contractor

Contract payment$100,000

GST paid (claimed as ITC)$0 net

Total Cost$100,000

Savings: ~$13,380/year

BUT - if CRA deems the contractor is actually an employee, you owe: employer CPP/EI, penalties, interest, AND the worker's unpaid CPP/EI.

Red Flags That Attract CRA Attention

Single client

Contractor works exclusively for you

Full-time hours

40+ hours/week for one client

Long-term relationship

Same "contractor" for years

No other clients

Can't demonstrate independent business

Company email/cards

Uses your branding

No GST number

Not registered as a business

Set schedule

Same hours every day

Daily supervision

Reports to a manager daily

Structuring a Legitimate Contractor Relationship

For the Business

-Written contract clearly stating contractor status
-Project-based work with defined deliverables
-No set hours - focus on results
-Contractor provides own tools and workspace
-Allow subcontracting in the contract
-No exclusivity - can work for others
-Invoice-based payment (not payroll)
-Verify GST registration

For the Contractor

-Incorporate or register a business
-Register for GST/HST
-Multiple clients - don't be 100% dependent
-Own equipment - laptop, software, etc.
-Business expenses - home office, insurance
-Professional liability insurance
-Written contracts with all clients
-Invoice regularly (don't accept "payroll")

Requesting a CRA Ruling (CPT1)

If you're unsure about worker status, you can request a binding ruling from CRA:

CPT1

Request for CPP/EI Ruling

3-6 mo

Processing time

Binding

Ruling binds CRA

Recommended for significant or ongoing contractor relationships.

Quick Reference Summary

Test	Leans Employee	Leans Contractor
Control	High	Low
Tools	Provided by company	Owned by worker
Financial risk	None	Yes
Integration	Part of team	Independent service
Clients	Single	Multiple
Schedule	Set hours	Flexible
Subcontracting	Not allowed	Allowed

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Related Tax Guides

Saskatchewan Tax Rates2025 personal & corporate rates Home Office ExpensesWork from home deductions Dividend Tax in CanadaGross-up and tax credits Capital Cost AllowanceDepreciate business assets

Sources

CRA RC4110 - Employee or Self-Employed?
CRA Guide T4002 - Business and Professional Income
CRA Form CPT1 - Request for a CPP/EI Ruling

Disclaimer: Worker classification is fact-specific and complex. This is general guidance only. For significant contractor relationships, consider requesting a CRA ruling (CPT1), consulting an employment lawyer, or working with a tax professional.