COLUMN BUSINESS TALK Are you ready? A How to prepare for a potential CRA audit BY ANTHONY LOMBARDI and scraping tools. Profit/Loss: Basically, an employee has a set rate they make (usually per hour). An IC can make more or less, depending on how many patients they see. Also, regardless of how many patients they see, their expenses are constant (insurance, car, association fees, etc.). Theoretically, they can lose money if they don’t see enough pa-tients. In addition, the minimum fee the independent contractor must pay to the clinic, and the penalty for breaking the contract early are key factors demonstrating this category. while back I had an infor-mal conversation with a Canada Revenue Agency auditor. During that con-versation the auditor told me that in the last 10 years the number of chiropractors in arrears on their taxes has risen dramatically. I thought it would be appropriate to produce a piece in this issue to help chiropractors stay prepared for any assessments, exams or audits the CRA may have in store for them in the fu-ture. I have outlined some of the areas that chiropractors may need the most help with as business practice owners. employees make only $20 that year, they still would need to pay 38 cents of employment insurance (EI). Independent contractors First and foremost, all independent contractors (IC) need a signed con-tract/agreement between you (as the practice owner) and them. The con-tract must outline the role of the IC so that it does not coincide with the role of an employee. For instance the CRA does a four-point test that covers the topics of control, use of tools, ability to make profit or incur loss, and ability to work elsewhere. Employees The definition of an employee and type of employee is critical especially when CRA examines your payroll. For our purposes there are two types of employees: those essential to our busi-ness, and those non-essential to our business. Non-essential workers refer to casual labourers who work jobs that are not essential to generating reve-nue. For example, someone who cleans the office is considered non-es-sential. A receptionist, however, would be considered essential. This is be-cause the receptionist answers phone calls, arranges appointments and collects payment – which are all essen-tial elements in running and maintain-ing a business. For CRA purposes, this means that all essential employees – no matter how little they work – must be on payroll. In addition, they all need a T4 generated for them at the end of the year. For instance, even if these The definition of an employee and type of employee is critical especially when CRA examines your payroll. Control: Basically an IC must set their own hours, their own time off, direct how they assess, manage and plan future patient treatments. They must do their work unsupervised and must be allowed to subcontract the work out if they cannot do it. Tools: An IC must use their own tools. For manual therapists, this in-cludes their hands – which is the main tool. All RMTs at my clinic use their own linens, oils and other soft tissue tools. The physiotherapists and chiro-practors use their own modality units Able to work elsewhere: ICs are free to work elsewhere while under contract with you. The physiothera-pists and chiropractors at my office, for example, work at one or two other places, and most RMTs work at home or in other clinics as well. Invoicing: Remember that in the IC arrangement, the patient pays you (the clinic) for the service, and the IC bills you to provide the service at the rate you agreed to. The IC must provide you with an invoice each time you give them pay-ment. Do not give payment without the invoice. Their invoice must outline the amount you owe them, their name, registration number, address, the dates over which ser vices were www.canadianchiropractor.ca DR. ANTHONY LOMBARDI is consultant to athletes in the NFL, CFL and NHL, and founder of the Hamilton Back Clinic in Hamilton, Ont. He teaches his fundamental EXSTORE Assessment System and conducts practice-building workshops to health professionals. Visit exstore.ca for information. 18 Canadian Chiropractor May 2017
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