Chair/Room Renter - when is a Salon Permit required? 

Approved by Members at the September 22, 2019 Annual General Meeting (Application Fee $250 / Permit Fee $70.00)

If you work from your own home or own your own salon or spa, you are considered a self-employed business owner and are therefore required to obtain a salon permit from the Association.

There are cases where self-employed Chair or Room Renters are also required to obtain a salon permit. To find out if you require a salon permit, please read the following information carefully. 

Determining if you are a Self-Employed Chair/Room Renter

The Canada Revenue Agency (CRA) has specific rules on the classification of an employee versus a self-employed chair/room renter. If you file your taxes as self-employed, you must have control over the work that you do and when you do it. You typically own your own tools and carry the risk of profit or loss. 

According to CANADA REVENUE AGENCY, a chair/room renter is self-employed if:

Canada Pension Plan (CPP) for Chair/Room Renters

If you are a self-employed chair or room renter, you are responsible for paying CPP contributions to the CRA and you must pay both your portion and the employer's portion. (As an employee, you pay half that amount and the employer pays the other half.)

Employment Insurance (EI) for Chair/Room Renters

As a self-employed individual, you generally get to choose whether or not you want access to the EI program. However, self-employed chair and/or room renters get special consideration from the CRA. In this case, the salon owner must pay the employee's portion of EI premiums to the CRA. (If a landlord or salon owner pays your EI premiums, you do not require a salon permit as you are covered under the salon that you are renting space from.)

If the salon/spa owner is not aware of a renter's income, Employment Insurance is adjusted. The amount of insurable earnings is the lesser of:

• the number of days worked in the week multiplied by 1/390 of the maximum of the annual insurable earnings
• 1/78 of the maximum of the annual insurable earnings

Information taken from the Canada Revenue Agency's website.

Please visit Canada Revenue Agency's website at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/special-situations/barbers-hairdressers.html for more information and updates, or contact CRA directly at 800-959-5525.

Understanding Chair and/or Room Rental Permits

There are currently independent chair or room renters and salon or spa owners who are not conducting business under the guidelines established by CRA as described above. If you are not following the CRA guidelines described above, you may be subjected to a review and audit by CRA, resulting in possible penalties and fines. The Association is providing this information to help cosmetologists understand business tax requirements.

The information provided above will help determine when chair or room renters are required to obtain a salon permit. 

If you are a chair or room renter and the salon owner is paying EI benefits to CRA on your behalf, you ARE NOT required to obtain a salon permit. You are operating as an employee of the salon or spa.

If you are a chair or room renter and the salon owner is NOT paying EI benefits to CRA, you ARE required to obtain a salon permit. In this case, you are an independent business owner and are obligated to comply with section 31 (1) of the Cosmetology Act.