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Wages or trade income

Compensation for work can either be wages or trade income. The tax obligations of the payer and the recipient depend on whether the payment is considered wages or trade income.

What are wages?

Wages refer to compensation paid for work carried out in an employer-employee relationship. In these cases, the parties have signed a contract of employment. Wages also include fringe benefits provided by the employer, which may include:

  • company-car benefit
  • accommodation benefit
  • meal benefit
  • company telephone 

In addition, the following fees are considered wages even if there is no employer-employee relationship: 

  • fee for attending a meeting
  • fee for giving a lecture or speech
  • fee for membership in an administrative body of a corporation
  • managing director’s fees
  • wages drawn by a partner in a general or limited partnership
  • compensation paid to a person in a position of trust.

See what obligations you have when you pay wages.

What is trade income?

Trade income is any such compensation paid for work or service that is not considered wages. Trade income is usually income generated by the recipient’s business operations.

Trade income may also be payments made to individuals in compensation for carrying out tasks or for performing occasional work assignments, when there is no employer-employee relationship between the payer and the recipient. For example, a lawyer may prepare a deed of estate inventory for their neighbour, or an accountant may take care of their hobby club’s accounting.

See what obligations you have when you pay trade income.

Page last updated 11/25/2019