New Policy on Payments to Individuals

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January 10, 2007

The University has introduced a University-wide Policy and Procedures on Payments to Individuals (Independent Contractors versus Employees) to ensure consistency and compliance with the Canada Revenue Agency (CRA) rules when engaging the services of an independent contractor – sometimes referred to as a consultant. All new arrangements being made to engage independent contractors are required to comply with the new policy effective immediately.

Transition to the new policy is provided for current contractual arrangements already in place as follows:

  • Current independent contractor arrangements, where there is no signed contract in place, are required to be assessed relative to the policy and all documentation, including the Independent Contractor Questionnaire and contract, if required, must be in place by December 31, 2007. (Note, this date is new – it was July 1, 2007)
  • Current independent contractor arrangements, where signed contracts containing contract end dates are in place, are required to be reviewed and documented relative to the policy prior to the next contract renewal.

    An education session is planned for Thursday, Jan. 18 in the Council Chambers of Gilmour Hall at 1:30 p.m. The first part of the session will be a general presentation, and in the second hour we will break into small groups to deal with specific questions.

    For the most part, the policy codifies existing practices. To ensure compliance with CRA, however, certain payments have changed. Among the payments and processes affected by the policy are Faculty Supervision associated with research funding, Honoraria and Consulting outside of normal duties. Your attention is drawn to the following changes:

    1. Faculty Supervision associated with research funding and Honoraria:

  • Now treated as a Faculty salary recovery;
  • The use of the saving realized are at the discretion of the Faculty and options available for use are as follows:

    a) The Faculty directs the savings for its own use

    b) Payment to the faculty researcher(s) as T4 income and

    c) Awarding of an internal research grant

    Options (b) and (c) are subject to submission of a formal request to the relevant Faculty Dean for consideration and approval. For option (c), a template is under development to facilitate the process and will be made available early in 2007.

    2. Consulting payments from McMaster University paid to McMaster faculty should be a rare occurrence, and require a signed supplemental contract (Appendix F) to be in place prior to payment.

    More details and specifics about what documentation is required can be found in the policy and its appendices here.

    If you have questions, please contact one of the following individuals:

  • Nancy Gray (graynan@mcmaster.ca) for general information,
  • Jody Boxall (boxall@mcmaster.ca) for Faculty of Health Science situations
  • Linda Coslovi (coslovi@mcmaster.ca) for Research situations.
  • Lisa Kirby (kribyl@mcmaster.ca) in Human Resources for specific contractual questions