Federal government IT contracts placed through staffing agencies can carry an elevated personal services business risk profile: one department, long tenure, agency intermediary, client-controlled environment, and security screening limits that may make substitution impractical. Most agencies will not raise it at contract signing.
PSB risk is not about bad intentions. It is about whether the facts of your working arrangement look more like employment than independent business activity. For federal government IT contracts in Ottawa, several of those facts stack in the same direction.
Single department
Many federal government IT contracts are performed for one client department for the duration of the engagement. Single-client revenue concentration is one of the PSB indicators CRA examines.
Agency intermediary
Staffing agencies manage the billing relationship, but CRA examines the actual working arrangement, including the facts at the end-client level. The agency layer does not, by itself, remove PSB risk.
Long tenure
Government IT contracts can extend for two, three, or more years at the same department. The longer the single-client relationship, the harder it may become to demonstrate economic independence.
Client-controlled environment
Working on-site at a federal building, using government workstations, following government hours and security requirements, and reporting to a government team lead may point toward employment rather than independent contracting.
Security screening barrier
Federal personnel screening is administered through a screened organization. A replacement worker may need the required screening, need-to-know, and contract approval before substitution is realistic.
Staffing agencies manage timesheets, invoices, and payments. They are not responsible for your PSB status, your HST remittance, your salary and dividend decisions, or your T2 filing. When your corporation receives a weekly EFT from the agency, including HST, every tax obligation beyond that point is yours to manage. The agency relationship ends at the payment. The CRA relationship begins there.
Three areas of work for incorporated IT contractors on federal government contracts in Ottawa and Gatineau. Handled directly by Alex Teplov, CPA.
The review does not guarantee a CRA outcome. It produces a written view of the risk exposure and what documentation should be in place if CRA asks questions. For contractors who have been at the same federal department for two or more years, this work is most valuable before the contract extends further, not after.
Detailed breakdowns of the PSB risk, compensation, and compliance decisions for incorporated IT contractors on federal contracts.
The federal contractor risk profile, agency layer analysis, security screening timing, and Quebec/Gatineau considerations in full detail.
→What a personal services business determination means, how CRA assesses it, and the tax and expense consequences for incorporated contractors.
→How incorporated Canadian IT contractors should compare salary and dividends for tax, CPP, RRSP room, cash flow, and corporate planning.
→The $30,000 threshold, voluntary registration, input tax credits, and retroactive liability risk for IT contractors.
→How to distinguish a review from an audit, what CRA is asking for, and what IT contractors should organize next.
→How incorporated IT contractors should think about shareholder compensation, what CRA considers reasonable, and what salary creates that dividends do not.
→Describe your contract, how long you have been at the same department, your agency, and whether you have had a PSB review before. Teplov CPA responds within one business day.
