It is possible to receive social assistance while being considered self-employed. First of all, for the Ministère du Travail, de l’Emploi et de la Solidarité sociale (MTESS), it is necessary to differentiate between an incorporated company and an individual company.
Please note that our firm can always help you challenge social assistance decisions to see the subtleties that can assert your rights. Our services are free of charge with a legal aid mandate.
The incorporated company
The incorporated company is considered by the Department to be a separate entity that has an obligation to pay you wages in return for the work you do. As a result, if the company was loss-making, social assistance will then invite you to borrow from the bank so that the company can pay you a salary.
In short, if you want to receive social assistance while also being self-employed, it is more advantageous not to incorporate.
The unincorporated or individual company
Unlike an incorporated company, the unincorporated company is not a separate entity from you. So it cannot be said that you have to pay yourself at least the minimum wage.
Depending on your family situation, you are entitled to earn an amount of $200 to $300 per month declared that will not affect your social assistance benefits.
The benefits of being recognized as self-employed
A claimant who is recognized as self-employed by the Department will be entitled to expenses. However, it should be noted that the MTESS does not recognize the same expenses as Revenu Québec. The Department does not recognize expenditures for durable goods.
Let’s take the example of a painter who buys a brush. If he buys it and keeps it, social assistance will not recognize it as an expense. However, if he throws it away after its use, the brush will be recognized as an expense.
Generally speaking, an expense is only eligible for a deduction if the following conditions are met:
- The taxpayer hired her to earn income from a business or property;
- It is reasonable in the circumstances;
- It does not constitute personal or living expenses.
Expenditures recognized by the Department
Expenses may vary depending on the occupation, but may include:
- Travel expenses (airfare, car rental);
- Accommodation and meal expenses;
- Clothing;
- Advertising costs;
- Lawyers’ fees;
- Work permit fees;
- Part of the telephone and Internet costs.
Our firm can help you challenge the percentage of expenses allowed by social assistance and have those refused recognized by the Ministry.
Acquired rights for the self-employed?
It is wrong to believe that you have a vested right if you have already been recognized as self-employed by the Department. Indeed, we are seeing more and more cases in our office where self-employed workers are transformed into employees and therefore penalized by social assistance.
Our clients are being asked for sums of money in work income in addition to no longer being eligible for expenses, having lost their self-employed status. It’s important to challenge every welfare decision that causes you harm.
Criteria for being recognized as self-employed
The status of self-employed worker is demonstrated by certain very specific criteria:
- Subordination;
- Risk of loss or gain;
- Ownership of tools;
- Integration of the work carried out;
- The particular result of the work;
- The attitude of the parties to their business relationship.
Here is an example from a
real case
argued by Mr. Lambert regarding self-employed status. The Ministry had decided to modify the recognized status of self-employed worker to an extra in order to requalify him as an employee, by reassessing the 6 criteria previously mentioned. We challenged this decision before the Administrative Tribunal of Quebec and the judge ruled in our favour, concluding that despite the fact that our client had no risk of loss, she herself had to look for her clients and pay agencies. In terms of tool ownership, our client had to buy clothes herself for each type of scene she had to perform. Our client did not control her schedule and could not be replaced, but there were other factors that led to her being recognized as self-employed.
In another case, Mr. Lambert succeeded in having a claim for more than $11,000 cancelled and an organist recognized as self-employed. In this case, it was necessary to resort to an accounting expertise to support the client’s claims.
As you can see, welfare cases are not always black and white and there is room for interpretation. It is therefore important to fight to have your situation as a self-employed worker recognized as well as all the expenses to which you are entitled.
Our firm can assist you in asserting these rights. Contact us now.
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