Federal government IT contracts placed through staffing agencies carry the highest personal services business risk profile in Canada: one department, long tenure, agency intermediary, client-controlled environment, and individual security clearances that 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
Most federal government IT contracts run through one client department for the duration of the engagement. Single-client revenue concentration is one of the primary PSB indicators CRA examines.
Agency intermediary
Staffing agencies manage the billing relationship, but CRA looks through the agency to examine the actual working arrangement between the contractor and the end client. The agency is not a buffer against PSB analysis.
Long tenure
Government IT contracts routinely extend for two, three, or more years at the same department. The longer the single-client relationship, the harder it becomes 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 all point toward employment rather than independent contracting.
Security clearance barrier
Federal security clearances are individual. A contractor who cannot practically substitute another worker to perform the contract loses one of the key arguments for independent contractor status.
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 examines the specific combination of facts that applies to federal government IT contracts: agency intermediary, single department, long tenure, client-controlled hours and workspace, and individual security clearances. Each factor is assessed against CRA's published indicators and documented before the next contract renewal.
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.
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.
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