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Paying an individual for service or honorarium-FR and SJ

Author: myUNB News

Posted on Dec 18, 2018

Category: News and Notices

Paying an individual/person or small supplier for services rendered or an honorarium? Here's what you need to know in order to avoid delay in payment and policy breaches.

Before committing to paying an individual/consultant from Accounts Payable Payment Requisition instead of through payroll, please ensure you take the appropriate steps to avoid delays due to lack of required information.

Under no circumstance is it ok to pay an individual from Personal Funds or Petty Cash, as this is considered by CRA as taxable income and must be a UNB issued payment (through payment requisition) directly to the person receiving the payment so that a T4A may be issued. Payment to an individual that does not follow the proper procedure will not be reimbursed to the issuer.

If you plan to hire an existing UNB employee to do work which is similar to that of the duties of their regular UNB position, this must be paid as employment income through payroll. This also includes UNB employees who may have set up a company external to the university to provide this type of service.

Canada Revenue Agency rules determine who must be paid as an employee and who can be paid as an independent contractor (there are only two options to pay someone for work performed). In addition, university policies must be complied with to support these relationships.

The facts of the relationship determine whether it is that of an employee or an independent contractor.  The key points to consider in determining the relationship are outlined in the Employee or Independent Contractor Policy Appendix 1 and Appendix 2.

The type of relationship must be determined before any work commences and the hirer must also ensure that the person meets the requirements for this type of relationship with the university, prior to hiring.

If you think the identified relationship is in fact that of an independent contractor, please contact Human Resources at hrandod@unb.caor call Lori Bigger and/or Financial Services accpay@unb.caor call Monica Keats-Gilbert or Cindy Flann, with your reasoning. The responsibility lies with HR and Financial Services, who will review the relationship based on the details of the proposed work provided, and the UNB Employee or Independent Contractor Policy and the policy on Requirements for Liability Insurance. Only then will an Independent Contractor relationship be approved and payment processed.

If approved by HR/FS and is to be paid from a research account, this approval can be taken to ORS (mwebber@unb.caso that an agreement may be prepared for the work to be done. If the payment is to be charged to an Operating account, there is a sample contract in the Employee or Independent Contractor Policy document: Agreement for Independent Contractor Services.

If the above requirements are not met, the payment must be processed through HR/Payroll.

GST/HST: If the independent contractor will be paid $30,000+ within a 12 month period (4 quarters), the incumbent must provide an active GST/HST Registration# and charge HST on their invoice.

Purchase order: If the payment request will be $2,500+, a P.O. must be issued.

If the above requirements are met, the following must be provided with payment request to Accounts Payable:

1) A Request for payment/Invoice showing GST/HST Registration # (if applicable) indicating P.O.#
2) A copy of the contract
3) Approval email from Human Resources and/or Financial Services
4) Copy of Liability Insurance
5) Direct Deposit Form

Article Contact Information

Contact: Monica Keats-Gilbert

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