Dance teachers: employee or self-employed? What your studio needs to know

Picture a teacher who gives six hours a week at your studio: two ballet classes on Tuesday, a jazz class on Thursday, a rehearsal on Saturday morning before the June recital. She also teaches at another studio and runs summer workshops. Is she your employee, or a self-employed worker selling you her services? The answer is not obvious, which is exactly why it is worth looking at closely at the start of the fall session rather than during an audit.

The starting point is simple: the Canada Revenue Agency (CRA) notes that workers and payers can set up their affairs as they wish, but the status they choose must reflect the actual working relationship. All of the facts, including the actual terms and conditions of work, determine the status, not just the intention.

If the teacher is an employee, the studio becomes an employer, with specific obligations. If the actual relationship is employment while the studio treated the teacher as self-employed, whatever was not done will have to be sorted out after the fact.

• Source deductions: according to the CRA employers’ guide, an employer with employees in Quebec deducts Quebec Pension Plan (QPP) contributions instead of Canada Pension Plan contributions, as well as Quebec Parental Insurance Plan (QPIP) premiums and Employment Insurance premiums if the employment is insurable, in addition to income tax.
• Two recipients: QPP, QPIP and Quebec income tax amounts go to Revenu Québec; Employment Insurance and federal tax go to the CRA.
• Employer contributions: the employer adds its own share to some of these contributions, and Revenu Québec administers other employer contributions; check directly with Revenu Québec for the list that applies to your studio.
• Vacation: according to the CNESST, full-time and part-time workers are entitled to vacation and vacation pay, generally 4% of gross wages, then 6% after three years of uninterrupted service.
• Statutory holidays: the CNESST states that the indemnity for a statutory holiday equals 1/20 of the wages earned during the four complete weeks of pay before the week of the holiday.

The CRA guide RC4110 describes a two-step approach. First, the Agency asks the worker and the payer what their intent was when they entered into the arrangement. Then it checks whether the actual working conditions match that intent, by looking at several factors.

Applied to a dance studio, these factors become very concrete questions.

• Control: who decides the class content, the music, the recital choreography, the schedule and the dress code? Who can ask for an exercise to be done differently?
• Tools and equipment: who provides the room, the sound system, the barres, the costumes? Does the teacher bring equipment they own and maintain?
• Subcontracting: can the teacher send someone else in their place and pay that person, or does the studio choose and pay the substitute?
• Financial risk: does the teacher carry unreimbursed expenses or fixed costs that continue even without a contract?
• Investment and management: have they invested in their own business, and do they make business decisions such as setting their rates or looking for other clients?
• Opportunity for profit or risk of loss: can they earn more by managing their business better, or lose money? A fixed hourly rate, regardless of the number of students, weighs differently from a package they negotiate and whose risk they carry.

For working relationships in Quebec, the RC4110 guide explains that the CRA relies on civil law. It distinguishes a contract of employment from a contract for services and looks at three elements: carrying out the work, remuneration and the relationship of subordination.

The relationship of subordination is the capacity, authority or right of the payer to exercise control over the worker. In a dance studio, it shows up in everyday details: a schedule set by management, a uniform teaching method, year-end evaluations filled out on your template, mandatory attendance at staff meetings. The more these elements pile up, the more the relationship looks like employment, whatever the contract is called.

A teacher recognized as self-employed by another government body may still be considered a worker by the CNESST under the Act respecting industrial accidents and occupational diseases. According to the CNESST, this is the case in particular for a self-employed person who has no employees and carries out an activity similar or related to that of the client, which often describes a dance teacher at a dance studio. The CNESST provides exceptions, for example services offered to several people at the same time or occasional services.

In that case, the studio reports these workers’ remuneration on line 2 of its Declaration of Wages and keeps a detailed list of the self-employed workers it retained: name, address, phone number, nature of the work, periods and remuneration. If in doubt, the CNESST invites you to call 1 844 838-0808 to determine the status. Conversely, for labour standards, the CNESST states that self-employed workers are not covered by the Act respecting labour standards: the vacation and statutory holidays described above apply to employees.

A written contract is useful, but it does not decide the status on its own. What matters is that it accurately describes how things really work, and that reality stays consistent with it from one session to the next.

• A contract that tells the truth: who sets the schedule, who chooses the substitute, who provides what, how pay is calculated.
• Invoices from the self-employed teacher, dated and detailed, rather than transfers with no supporting document.
• Sales taxes: according to the CRA, a business remains a small supplier as long as its taxable supplies do not exceed $30,000 over four consecutive calendar quarters; beyond that, it must register for the GST/HST within 29 days. The self-employed teacher should also check their QST obligations with Revenu Québec.
• Records you keep: classes taught, attendance, substitutions, amounts paid. That is what lets you answer a question from a government body calmly, even two years later.

If you are unsure, do not try to settle it alone. The CRA issues rulings on a worker’s status for Canada Pension Plan and Employment Insurance purposes. The worker or the payer can request one online through My Business Account or My Account, with form CPT1, or through an authorized representative. The request must be made by June 29 of the year following the year the question relates to.

For the Quebec side, including the QPP, QPIP and Quebec income tax, contact Revenu Québec directly, and the CNESST for workplace health and safety. An accountant familiar with dance studios can help you prepare these steps and review your agreements before the September back-to-school season.

Cadanse does not decide your teachers’ status and does not replace your accountant or government bodies. What it helps with is keeping clean data: each teacher has their rate, hourly or per class, and their monthly statement is built from the sessions where attendance was taken, substitutions included. An accounting export in CSV, compatible with QuickBooks and Excel, lets you pass these figures on to your accountant, who then handles the obligations that come with the status you settle on.