Employee Versus Independent Contractor Review Case Studies
6 worked Employee Versus Independent Contractor Review case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to employee versus independent contractor review work, not a specific client's file.
Case Study 1 · Objection and relief
Desk-Review Assessment Of $15,000 Vacated — Higher-Frequency Remitter, Kelowna
Client: An employer whose remittance frequency moved up a threshold · Where: Kelowna, British Columbia · Engagement: 4 weeks, fixed fee
Assessment vacated$15,000
Supporting recordsNow on file
AccountCleared
The situation — An employer whose remittance frequency moved up a threshold, Kelowna, British Columbia
An employer whose remittance frequency moved up a threshold in Kelowna, British Columbia was carrying $15,000 of penalties and interest. The charges arose from T4s that did not agree to the payroll register or the general ledger. Much of that amount accumulated during a period the CRA itself had delayed.
What we did for An employer whose remittance frequency moved up a threshold, Kelowna, British Columbia
We reconciled the payroll register, general ledger and T4 summary to the cent, then filed the amended slips. We framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result — An employer whose remittance frequency moved up a threshold, Kelowna, British Columbia
The assessment was vacated. $15,000 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Case Study 2 · Records and systems rebuilt
Month-End Close Cut From 7 Weeks To 9 Days — Mixed-Crew Construction Firm, Brampton
Client: A construction firm with union and non-union crews · Where: Brampton, Ontario · Engagement: 11 weeks, fixed fee
Close time before7 weeks
Close time after9 days
Year-endReview, not rebuild
The situation — A construction firm with union and non-union crews, Brampton, Ontario
The accounting file at a construction firm with union and non-union crews in Brampton, Ontario had a weak foundation. It was built on an employee over-deducted for CPP and EI after being moved between two related payroll accounts mid-year. The year-end had taken 7 weeks each of the last three years.
What we did for A construction firm with union and non-union crews, Brampton, Ontario
We moved the account to the correct remitter frequency and caught up the arrears. We filed a taxpayer relief request that cancelled the bulk of the penalty. We also moved the reconciliations into the monthly cycle, so the year-end stopped being a rebuild.
The result — A construction firm with union and non-union crews, Brampton, Ontario
The file reconciles. Month-end closes in 9 days instead of 7 weeks, and the year-end is a review rather than a reconstruction.
Case Study 3 · Deadline rescue
Filed On Time From A Standing Start, $118,000 Penalty Avoided — Multi-Province Driver Fleet, Ottawa
Client: A logistics operator with drivers in three provinces · Where: Ottawa, Ontario · Engagement: 10 weeks, fixed fee
Penalty avoided$118,000
Turnaround10 weeks
FiledOn time
The situation — A logistics operator with drivers in three provinces, Ottawa, Ontario
A logistics operator with drivers in three provinces in Ottawa, Ontario came to us 10 weeks before its filing deadline. The file came with long-term contractors who met every test for employment. A late filing would have triggered a penalty of roughly $118,000 before interest.
What we did for A logistics operator with drivers in three provinces, Ottawa, Ontario
We worked backwards from the deadline. We corrected the CPP and EI withholding for the balance of the year. We set the employee up to recover the over-deduction on the personal return. We prioritised the items that actually gated the filing and deferred everything that did not.
The result — A logistics operator with drivers in three provinces, Ottawa, Ontario
The return was filed on time and complete. The $118,000 penalty never arose, and the compliance calendar we set means the next deadline is scheduled rather than discovered.
Case Study 4 · Cash and remittance control
Instalments Rebased, $104,000 Of Cash Returned To The Business — High-Turnover Restaurant, Guelph
Client: A restaurant with heavy seasonal turnover · Where: Guelph, Ontario · Engagement: 10 weeks, fixed fee
Cash returned$104,000
Instalment basisCurrent year
ReviewedQuarterly
The situation — A restaurant with heavy seasonal turnover, Guelph, Ontario
A restaurant with heavy seasonal turnover in Guelph, Ontario was paying instalments calculated on a prior year. That year no longer reflected the business. A director facing a personal assessment for unremitted source deductions was tying up $104,000 of cash.
What we did for A restaurant with heavy seasonal turnover, Guelph, Ontario
We rebased the instalments on the current-year estimate rather than the prior-year default. Alongside that, we reconstructed vehicle logbooks, calculated the standby charge and operating benefit properly, and amended the affected T4s.
The result — A restaurant with heavy seasonal turnover, Guelph, Ontario
$104,000 of cash stayed in the business, the penalty cycle ended, and the instalment position is reviewed each quarter against actual results.
Case Study 5 · Scaling without breaking
Scaled To 23 Staff With $107,000 Of Working Capital Freed — Seasonal Landscaping Employer, Regina
Client: A landscaping company with seasonal staff · Where: Regina, Saskatchewan · Engagement: 11 weeks, fixed fee
Headcount reached23
Working capital freed$107,000
Missed deadlinesZero
The situation — A landscaping company with seasonal staff, Regina, Saskatchewan
A landscaping company with seasonal staff in Regina, Saskatchewan was growing fast, with headcount reaching 23 in eighteen months. The back office had not kept up. T4 slips filed weeks after the deadline with no relief request made on the per-slip penalty was the first thing to break.
What we did for A landscaping company with seasonal staff, Regina, Saskatchewan
We wrote each pay code against its income tax, CPP and EI treatment. That way, a new benefit could not reach the payroll without a decision on how it was withheld. We built the compliance calendar for the size the business was becoming rather than the size it had been.
The result — A landscaping company with seasonal staff, Regina, Saskatchewan
The business reached 23 staff with no missed remittance and no late filing. $107,000 of working capital was freed in the process.
Case Study 6 · Planning that cut the bill
$10,500 Cut From The Annual Tax Bill — Part-Time Program Employer, Winnipeg
Client: A charity with part-time program staff · Where: Winnipeg, Manitoba · Engagement: 7 weeks, fixed fee
First-year saving$10,500
RepeatsAnnually
Filing positionUnchanged in risk
The situation — A charity with part-time program staff, Winnipeg, Manitoba
A charity with part-time program staff in Winnipeg, Manitoba was compliant but paying more than it needed to. The prior year had been filed correctly. It still left company vehicles used personally with no logbook and no taxable benefit reported on the table.
What we did for A charity with part-time program staff, Winnipeg, Manitoba
We modelled the current position against the alternatives before changing anything. Then we paid the accrued bonus inside the 180-day window and kept the deduction in the year it was accrued.
The result — A charity with part-time program staff, Winnipeg, Manitoba
The change saved $10,500 in the first year and repeats annually. Nothing about the filings became more aggressive. The position is simply the one the rules already allowed.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
