Tax Tip:  WORKING BUT NOT PAYING YOURSELF

Since the individual does not receive any personal wages, they may be motivated to apply for EI unemployment benefits. It sounds simple right? Wrong.

In a February 6, 2016 Federal Court Judicial Review, it was noted that whether one is employed or not, is a matter of work performed rather than the wages received. In this case, the individual was working, however, did not receive any personal income. Therefore, the individual was not considered unemployed and was ineligible for EI benefits. The Court went on to note that the right to receive income from a business is sufficient to establish employment, even if income is not actually received.

Action Item: In situations such as the above, the individual may be required to pay back EI benefits received in addition to interest. Watch out for these scenarios!