As of January 1, 2013 it became mandatory for people in the construction industry to have WSIB coverage, including employers, partnerships, and corporations with employees. There is a 1 year grace period before any enforcement will occur on these changes.
There are two major exemptions to the mandatory coverage. WSIB’s website would have you believe that only if you are an Independant Operator (see below) who only performs jobs for homeowners, then you are exempt. However, after speaking to a number of agents at WSIB, it has become clear that the defining premise for exemption is the invoicing of homeowners for work done at the owner’s residence. Therefore, business classification, be it partnership, corporation, or sole proprietor, is irrelevant as long as you only invoice homeowners.
The other exemption is for corporations and partnerships that invoice businesses. One of the partners or directors may apply for exempt status if they do not perform work at the job site.
Work for Non-Homeowners
As soon as you perform a job for a business, then you must have a WSIB account and record insurable earnings. For the following 90 day period, you must report all insurable earnings (invoiced to homeowners & businesses). There is no refundable credit for the payment of premiums for any work performed for homeowners. After 3 months with no work invoiced to a business, you can simply report zero insurable earnings on your WSIB form, or cancel your account if you don’t expect to take on another business contract for awhile. It is very important to determine whether it is worthwhile to take on a business contract for this reason.
For employees, insurable earnings refers to gross income. For employers, this would be the labour portion of the invoice. If the invoice does not separate out materials, labour etc., than the entire invoice amount must be included.
You are still required to have WSIB for your employees, regardless of whether the work is for a homeowner or non-homeowner.
Before having any subcontractor work for you, you must have them present you with a clearance certificate. If they are not registered, then you become liable for their premiums. Either do not have them work for you, or report their insurable earnings to WSIB and charge them the premium.
WSIB has their own auditors. They say that they will randomly pick businesses to check invoices and determine timelines to ensure that the guidelines have been followed. Although WSIB claims the selection will be random, it will probably be a process similar to CRA auditing where late filers, past offenders, and employers that transition between mandatory and non-mandatory premiums will be audited more frequently. Interest and penalties will be applied on outstanding amounts. This will all begin January 1, 2014 when the grace period expires.
(From WSIB site)
Independent Operator in construction means,
an individual who,
does not employ any workers,
reports himself or herself as self-employed for income purposes, and
is retained as a contractor or subcontractor by more than one person during an 18 month period,
an individual who is an executive officer of a corporation that,
does not employ any workers other than the individual, and
is retained as a contractor or subcontractor by more than one person during an 18 month period.
Sean Gardhouse BBA, D.F.A.
Tax and Investment Advisor
Dale & Lessmann LLP
Seton, Job Safety
WSIB agents via toll free: 1-800-387-0750