Association of Professional Computer Consultants
2012 Pre-budget Submission July 29, 2011 About the APCC The Association of Professional Computer Consultants (www.APCConline.com) is a not- for-profit organization which provides: access to services for, and represents the interests of independent computer consultants. A national organization, the APCC was formed in 1985, with the majority of its members providing their services in the Information Technology sector. Executive Summary The contract services and staffing industry is a large but poorly understood segment of the Canadian Economy. It is a critical element of the Canadian labour market that offers;
The contribution of the Contract Services Market in Canada is poorly understood and its stability is harmed by Canada’s patchwork coverage of Federal and Provincial regulations. Further, current policies do a poor job of creating a clear and effective competitive framework while also protecting vulnerable classes of workers. In order to position Canada to benefit from an efficient contract services market, the APCC recommends
Contract Services Industry Overview The Global Economy, including Canada’s economy, consists of goods and services. Labour and the manner in which organizations engage that labour, is a critical part of the services side of that equation. Fulltime employment has always been the dominant form of engagement however over the past 40 years business and economic factors have led to a shift towards flexible contract engagements. This shift has affected all industries within the Canadian economy, from Information Technology to Accounting, Manufacturing and Retail, including government bodies at all levels. There are no official measurements of how many workers participate in the contract service market (the majority this work is fulltime, and hence lost in the statistics); however industry estimates place the number at approximately 2.6 million Canadians. Most contract engagements are arranged through a 3rd party staffing firm which assist clients in identifying qualified and available workers in a rapid fashion. Contract Services Market: Benefits to Hiring Organizations For Canadian Hiring Organizations (Private and Public Sector), the contract services market provides a source for strategic flexibility, that allows them to rapidly acquire workers in response to quickly emerging opportunities and/or gain access to critical skills on a project basis. Benefits to Hiring Organizations include,
Contract Services Market: Benefits to Workers While we freely acknowledge the value of full time employment, many workers choose to work on contract for a portion of their career to the significant benefits it can present. For most workers, these primarily manifest as fluid access to the labour market and the potential to earn superior compensation. Other benefits to workers include
Contract Services Market: Benefits to the Canadian Economy A healthy contract labour market is an important source of flexibility the Canadian Economy at large and to date has proven to be a strategy advantage in attracting Global companies to locate operations in Canada. This is particularly true in Information Technology, but also manifests in Financial Services and other sectors. Specific Benefits to the Canadian Economy include,
Challenges & Barriers to Development While the overall contract services market dynamic is positive, there are several legislative barriers that exist currently. These factors serve as an overhand on the growth of the contract services market and addressing them is a zero cost mechanism to improve and expand the industry’s contribution to Canada. These barriers are,
Recommendations Recognition of the Staffing Industry as a Market Sector For lack of a better definition, the APCC advocates that the Contract Services and Staffing sector be recognized as a distinct aspect of and valuable contributor to the Canadian economy. We request that Statistics Canada evaluate its sampling methodology to determine methods for securing information about the sector and its contribution to the Canadian Economy and Labour Market. Repeal Income Tax Act section 125 (7) & 18.1(p) - Personal Services Business (PSB) These provisions were implemented in 1981 and effectively prohibit a Services oriented business with five or fewer employees from expensing standard business costs. The world and economy have changed dramatically from that time, with today over 70% of Canadian business occurring in the services sector, much of which is conducted by Small Businesses. As it functions today Sections 125(7) & 18.1(p) are used to justify retroactive tax assessments for small services business and it frequently results in extremely punitive tax claims when typical business expense claims are rejected. These provisions are unevenly applied even across small businesses, and given that similar expenses claims would be valid for a large services organization or multinational (such as IBM), this tax provision makes little sense and requires government intervention to correct. These provisions of the Income Tax Act are patently unfair to small Canadian businesses. It drives a cloud of risk to both hiring organizations and individual consultants that hurts the overall contract services sector. Given its uneven enforcement, the tax benefit of these provisions is negligible and overall Services Businesses are a net benefit to government tax revenue when all levels of tax are considered (income tax, sales tax and corporate tax). We would be glad to provide additional information at your convenience. Protect the rights of individuals While the merits of contracting apply
strongly to knowledge base workers and professionals, such is not always The current framework requires a very nuanced assessment of whether a given engagement represents a contract of services (employment) versus a contract for services (independent). This language has largely evolved through case law and while it may be legally significant, in practice it creates a significant grey area that is exploited by unscrupulous hiring organizations. Instead, the market requires a clear cut, dollar based line, below which all worker engagements constitute temporary employees, with an unequivocal requirement all the necessary payroll contributions. Above this threshold, workers and hiring organizations would be free to structure the relationship in any way that is mutually acceptable (including but not limited to temporary employment). In order to be applicable across Canada, we are proposing that this dollar threshold be set as a multiple of provincial minimum wage (for example, 2X or 3 X minimum wages). |