Final answer:
CRA assumes IC status by analyzing control, provision of tools, potential for profit or loss, and level of business integration. These factors differentiate an independent contractor from an employee, and the CRA considers them when determining worker classification.
Step-by-step explanation:
The Canada Revenue Agency (CRA) assumes Independent Contractor (IC) status based on several factors that distinguish an independent contractor from an employee. These factors include the level of control the worker has over their work, whether they provide their own tools, the possibility of profit or risk of loss, and their level of integration within the company's operations. To assess the Relationship Between Payer and Worker, the CRA looks at specific elements like the written contract, the nature of the work, the method of payment, and whether the worker can subcontract the work or hire assistants.
Control is a key determinant, with an independent contractor typically having more autonomy over how and when they complete their tasks, as opposed to an employee who is directed and monitored. Tools and Equipment are often supplied by independent contractors, who are also responsible for their maintenance, unlike employees whose tools are provided by the employer. The possibility of profit and risk of loss implies that an independent contractor stands to make a profit but also bears the financial risks, differing from an employee who usually receives a consistent wage. Lastly, integration into the company's operations suggests that an employee is generally considered part of the organization's core business activities, unlike an independent contractor who maintains a separate business identity.