Remitting the source deductions must be done on a timely basis or you could face late-filing penalties and interest. T4s must be issued to your employees each year and also filed along with the T4 Summary to the CRA by the last day of February.

If you are paying employees for work performed in the farming operation, you are not required to pay them vacation pay or statutory holiday pay. However, wages paid to employees that are involved in the selling of the produce on or off the farm premises or other non-farming activities will be subject to vacation and statutory holiday pay.

Most farms pay family members that are involved in an agricultural business. When paying family members for work performed, you must be able to show they actually did the work and the wages paid are “reasonable in the circumstances” in order for the payment to be tax-deductible.

Paying wages to lower-income family members takes advantage of lower tax brackets and personal tax credits, which reduces the overall taxes paid by the family. If the family member is 18 years old or older and earns more than $3,500 annually, they will pay into the Canada Pension Plan (CPP).

If they become disabled and cannot work, they could be eligible for the CPP disability pension. Since your family members do not deal with the farming business at arm’s length, there may be no requirement to withhold employment insurance from their wages. You can request a ruling from the CRA to have it determine if the employment is insurable.

Wages paid to employees who are family members are subject to Workplace Safety and Insurance Board (WSIB) coverage. There is a requirement to register with the WSIB within 10 days of hiring your first worker and to pay WSIB premiums on the wages paid.

You must post Form 82 – 1234, In Case of Injury at Work, and ensure there is a first-aid box on the farm stocked with the required items; it must be easily accessible and your employees must know where it is located. If you have not registered with the WSIB, you can do a voluntary registration which covers the current and previous year.

You may also hire custom farm workers to provide services on your farm. These workers are individuals who carry on a business separately from your farm and have control over their own business activities.

Pay them based on the invoices they provide to you for the work they have performed. A custom operator who works alone and does not hire any other help is known as an independent operator.

WSIB requires that all workers be covered, so if there is any question as to whether the custom farm worker is an employee, WSIB will gather information from you and the worker to determine his or her status. WSIB may ask to see proof that the individual owns or leases the equipment they are using in order to provide the service to you, the individual’s HST number and a copy of the registration documents for the individual’s business.

If the WSIB determines that the worker is an independent operator then that person is responsible for his or her own coverage and you are not required to calculate and report premiums on payments.

If the WSIB determines that the individual is your employee, you will be responsible for reporting and paying the premiums on their earnings. If WSIB determines the individual is your employee, the CRA will require source deductions on any payments you make to them.

As an employer, you also have duties under the Occupational Health and Safety Act (OHSA). The Ministry of Labour has issued the Guide to the Occupational Health and Safety Act for Farming Operations, which you should review in order to ensure you are compliant with the requirements.

The act is enforced by health and safety inspectors at the Ministry of Labour; their role is to inspect the workplace to ensure compliance and investigate workplace incidents, complaints and work refusals. OHSA inspectors may visit the farm in response to complaints or reports of injuries or they may conduct random inspections.

If you hire workers on your farm, it is important to determine whether they are an employee, independent operator or from a custom farm operation to ensure that you comply with payroll, WSIB and OHSA obligations where applicable. An adviser can assist you in following the proper procedures for paying workers on your farm. 

—Excerpts from Collins Barrow Farm Alert newsletter, November 2013

• Julie Thacker
• Tax Manager
• Collins Barrow WCM LLP