Short version: the CRA decides by the working relationship, not by what your contract calls it, and calling it wrong is expensive.
Short answer
Whether your assistant is an employee or a contractor turns on the actual working relationship, not on the label in your agreement. The CRA looks at “whether the worker is genuinely in business for themselves, or is economically dependent on and integrated into the payer’s business,” and a full-time assistant who works exclusively for you, on your schedule, using your systems, is drifting toward employee — regardless of what the contract you both signed says.
One treadstonelaw explainer sets out four factors the CRA weighs together, with no single one deciding it: control (who directs how, when, and where the work happens), ownership of tools and equipment, chance of profit or risk of loss, and integration into the business (is the work core and ongoing, or discrete and external). An assistant who answers your phone on your hours from your CRM, with no ability to profit beyond an hourly rate or take other clients, reads as an employee under every one of those factors.
The same source is direct about the consequence: “If a worker is genuinely an employee, the payer is responsible for withholding and remitting income tax, CPP, and EI from that worker’s pay,” and calling an employee a contractor to dodge that withholding “is one of the more common issues the CRA reassesses.” That reassessment can reach back several years of pay, not just the year it’s caught.
Even a genuine contractor arrangement isn’t automatically low-risk if it’s exclusive and long-running. A companion treadstonelaw piece describes Ontario’s intermediate category — “a contractor who works substantially or exclusively for one client over a long period, and is economically dependent on it” — with exclusivity as the courts’ heaviest-weighted factor. The practical sting: such a contractor is entitled to reasonable notice of termination at common law even without employee status — a services-agreement clause promising only “thirty days’ notice” will not necessarily hold. If your assistant only ever works for you, a tidy 30-day termination clause may not protect you the way you think it does.
Related: should you use an overseas assistant · what a team agreement should say about leads
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