As an not-yet salaried startup Co-Founder, what should be the declared employment status?

[CanadianKannadian]

In section 11 of the Citizenship application form, we have to breakdown our employment during the eligibility status based on whether we were employed, un-employed, self-employed etc.

I am a technology startup cofounder of a 3 year old company and for the first 2 years of the 3 years, I was working on the startup but was not salaried - and therefore have no T4 returns. For the 3rd year, we got funding and since then I have a salary and therefore consider myself technically "Employed".

I am unsure how to declare the 2 years when I was not salaried and therefore have no related tax filings. Should the 2 years be declared as "Self-employed" (which I consider true as I was working - just not paid) or should I declare myself "un-employed" - since from the CRA's perspective (whom I guess CIC cross-checks with), I have no related filings? OR should I declare all three years as "employed" and let the CIC figure out that we only started paying salaries the last year?

Please note however that my startup definitely filed corporate taxes even during the first 2 years?

Would appreciate any clarity on this matter from anyone! Thank you.

 

[spyfy]

In section 11 of the Citizenship application form, we have to breakdown our employment during the eligibility status based on whether we were employed, un-employed, self-employed etc.

I am a technology startup cofounder of a 3 year old company and for the first 2 years of the 3 years, I was working on the startup but was not salaried - and therefore have no T4 returns. For the 3rd year, we got funding and since then I have a salary and therefore consider myself technically "Employed".

I am unsure how to declare the 2 years when I was not salaried and therefore have no related tax filings. Should the 2 years be declared as "Self-employed" (which I consider true as I was working - just not paid) or should I declare myself "un-employed" - since from the CRA's perspective (whom I guess CIC cross-checks with), I have no related filings? OR should I declare all three years as "employed" and let the CIC figure out that we only started paying salaries the last year?

Please note however that my startup definitely filed corporate taxes even during the first 2 years?

Would appreciate any clarity on this matter from anyone! Thank you.

I sincerely hope that although you had no income, your business was still included on your tax returns (if unincorporated) or the business filed tax returns (if incorporated). You say you did, so that's good.
Therefore the CRA knows that you were working, but not making money. You were self-employed, which doesn't require income.

To be employed, there must be a contract between the company and you personally that you work for that company.

 

[CanadianKannadian]

I sincerely hope that although you had no income, your business was still included on your tax returns (if unincorporated) or the business filed tax returns (if incorporated). You say you did, so that's good.
Therefore the CRA knows that you were working, but not making money. You were self-employed, which doesn't require income.

To be employed, there must be a contract between the company and you personally that you work for that company.

Thanks very much spyfy! That is a very helpful comment. Would it make sense for me to classify the period with no income as "Self-employed" and the salaried period as "Employed" then - or just bundle the entire period as "Self-employed" given the only contract between me and the company is the shareholder agreement (and business registration/incorporation docs) ?

 

[homecanada]

In addition.. one should file income tax return even if it is zero income so you can get benefited from GST/HST credit. I am sure you must had some expenses where you paid GST/HST. Business return and Individual return are two different things and one need to file individual return even when he/she is self employed or have a company of their own.

 

[CanadianKannadian]

In addition.. one should file income tax return even if it is zero income so you can get benefited from GST/HST credit. I am sure you must had some expenses where you paid GST/HST. Business return and Individual return are two different things and one need to file individual return even when he/she is self employed or have a company of their own.

For sure. The individual return (T1) is filed for those years but has no information regarding the business as there was no payroll from the business. The company itself filed a T2 since its an incorporated business.

Let me know if there is something amiss here.

 

[homecanada]

If Individual return was filed, you can put your status as Self Employed.
I would recommend talking to your accountant who will be able to guide you on your status from CRA perspective.

 

[spyfy]

Thanks very much spyfy! That is a very helpful comment. Would it make sense for me to classify the period with no income as "Self-employed" and the salaried period as "Employed" then - or just bundle the entire period as "Self-employed" given the only contract between me and the company is the shareholder agreement (and business registration/incorporation docs) ?

Most importantly: Don't overthing this citizenship form. There is no perfect answer. Just make sure it's understandable. These forms are read by humans.

Nevertheless, if you only have a shareholder agreemet with your company I'm not sure why you think that you are employed at all. For employment, you need an employment contract and T4-able payments.

 

[CanadianKannadian]

If Individual return was filed, you can put your status as Self Employed.
I would recommend talking to your accountant who will be able to guide you on your status from CRA perspective.

Thanks homecanada. Will do. Cheers.

 

[CanadianKannadian]

Most importantly: Don't overthing this citizenship form. There is no perfect answer. Just make sure it's understandable. These forms are read by humans.

Nevertheless, if you only have a shareholder agreemet with your company I'm not sure why you think that you are employed at all. For employment, you need an employment contract and T4-able payments.

Will try not to overthink, spyfy but as is human, you overthink what is really important to you - plus I might be a little a*** retentive by nature.

Just to clarify, the first two years (of the three years) were shareholder agreement only. I started drawing a salary in the third year once my startup got funded - so have T4s since then. Hence I was going to put two entries in the application - that I was self employed the first two years and employed the last year. Good call?

 

[spyfy]

Will try not to overthink, spyfy but as is human, you overthink what is really important to you - plus I might be a little a*** retentive by nature.

Just to clarify, the first two years (of the three years) were shareholder agreement only. I started drawing a salary in the third year once my startup got funded - so have T4s since then. Hence I was going to put two entries in the application - that I was self employed the first two years and employed the last year. Good call?

Yep