To qualify for the Self-Employed Class in Canada, applicants must demonstrate at least two years of relevant experience in cultural activities, athletics, or farm management (for applications submitted before March 10, 2018). This experience must fall within the five-year period prior to the application date and extend until a final decision is made on the application for permanent residency.
Eligible experience includes either two one-year periods of self-employment in cultural activities, two one-year periods of participation at a world-class level in cultural activities, or a combination of both.
Similarly, for athletics, the required experience can be met by either two one-year periods of self-employment in athletics, two one-year periods of participation at a world-class level in athletics, or a combination of both.
What is Self-Employment?
The Self-Employed Class section of the Immigration, Refugees and Citizenship Canada (“IRCC“) website does not describe what self-employment is.
However, the Canadian Experience Class section of the website provides the following:
Determining an applicant’s employment status
Applicants under the CEC must satisfy a CIC officer that they meet all program requirements [R87.1]. Any period of self-employment shall not be included in calculating the period of qualifying work experience under the CEC [R87.1(3)(b)]. As such, the CEC requires that applicants demonstrate they acquired skilled work experience in Canada through authorized employment by a third party.
As provided for in the CEC Document Checklist, principal applicants are requested to provide documentary evidence of their work experience in Canada through a combination of: a copy of their most recent work permit (unless they are work-permit exempt), copies of their most recent T4 tax information slips and Notice of Assessment (NOA) issued by the Canada Revenue Agency (CRA) or a sufficient combination of other supporting documentation, and employer letters of reference for all periods of qualifying work experience claimed in the application.
Canadian employers are responsible for deducting and remitting Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax from remuneration or other amounts they pay to their employees to the CRA. They must also provide employees with a record of their remuneration and deductions in the form of a T4 tax information slip. The T4 slip is therefore key documentary evidence for the vast majority of CEC applicants to demonstrate that they were in an employer-employee work relationship during their period of qualifying work experience in Canada.
However, there is no obligation under the regulations that CEC applicants provide a T4 tax information slip or NOA specifically with their application, and these particular documents cannot be considered conclusive evidence or the only evidence accepted for the purposes of substantiating whether an applicant has qualifying Canadian work experience. As such, in the absence of a T4 tax information slip or NOA, documents which may help substantiate the applicant’s work experience in Canada could include a record or letter of employment from the Canadian employer, work contracts and pay stubs.
In all cases, the onus is on the applicant to establish that they meet the CEC program criteria at the time of their application. All applicants are required to provide satisfactory evidence of their work experience in Canada, including the fact that they were in an employer-employee relationship during their period of qualifying work experience.
Factors to consider – employee vs. self-employed
In determining whether an applicant under the CEC was an employee or a self-employed individual during their period of qualifying work experience in Canada, CIC officers should consider factors such as :
-
- the degree of the worker’s control or autonomy in terms of how and when work is performed, and the method(s) used to do the work;
- whether the worker owns and/or provides tools and equipment to accomplish the work;
- the degree to which the worker has to perform the work personally and whether the worker has the option of subcontracting work or hiring others to help and assist with completing the work;
- the degree of financial risk assumed by the worker, including whether the worker is required to make any investment in order to complete the work or provide the service and whether the worker is free to make business decisions that affect his/her ability to realize a profit or incur a loss (as opposed to the opportunity to earn commissions or other productivity bonuses); and
- any other relevant factors, such as written contracts.
Additional details regarding each of the above factors, and indicators that can be used when determining whether an individual is an employee or self-employed, are available in the Employee or Self-employed? CRA guide.
Determination of the degree of control can be difficult when examining the employment of professionals such as engineers, physicians and information technology consultants. Given their expertise and specialized training, they may need little or no specific direction in their daily activities. When examining the factor of control, it is necessary to focus on both the payer’s control over the worker’s daily activities, and the payer’s influence over the worker. There are also certain occupations in which individuals may be either self-employed or in an employer-employee relationship depending on the specific circumstances of their employment. More information on the determination of a worker’s employment status for a number of specific employment categories is available on the CRA website.
Generally speaking, consultants/contractors are considered to be self-employed individuals in a “contract for services” business relationship. For example, independent contractors in the financial, real estate and business service industries. Similarly, individuals who hold substantial ownership and/or exercise management control of a business for which they are also employed are generally considered to be self-employed.
If a prospective applicant is not sure of their employment status, and does not have the documentation set out above, they may choose to request a ruling from the CRA to have that status determined. Such a ruling will state whether, in the view of the CRA, a worker is an employee or self-employed, and whether or not that worker’s employment is pensionable or insurable. A worker may request a ruling by sending a letter or completed Form CPT1, Request for a Ruling as to the Status of a Worker under the Canada Pension Plan and/or the Employment Insurance Act to their tax services office. This ruling may thereafter be submitted to CIC to supplement a CEC application.
Each application under the CEC is to be considered on its own merits, with a final decision based on a review of all the information available to the CIC officer at the time of decision. While a CRA ruling on an applicant’s employment status will be given due consideration by a CIC officer, such a ruling will not constitute conclusive evidence. The final decision as to the employment status of the applicant for the purposes of meeting CEC requirements rests with the CIC officer.
Jurisprudence
Pursuant to the Federal Court of Canada decision in Zhang v. Canada (Citizenship and Immigration), the lack of an employment contract does not mean that someone was self-employed. As Madam Justice Walker stated:
The Applicant argues that, because he does not have a written employment agreement with the Sports School, the Officer erred in finding that he is a salaried employee. However, the fact that an individual does not have an employment agreement with an employer but rather works on contract is not determinative of whether the individual is an employee or a self-employed contractor. Many people work on short- and long-term contracts but are nevertheless employees. It is necessary in each case to consider the structure of the relationship between the individual and the entity to which they provide services.
Statistics
