Working in Canada for US employer

[clare]

Hi,

I have read through a lot of the posts on this forum and they have been very helpful, however I'd like to clarify my understanding of this situation.
I currently work in the US but will be moving to Canada. I am neither a US nor a Canadian citizen, but work permits will be arranged and immigration issues are not a concern.
My current employer would like me to telecommute after I move to Canada. It would be necessary for me to visit the US every few months for a few days for meetings.
My understanding is that I either have to be self-employed/contractor or the US employer has to put me on a Canadian payroll and withhold Canadian taxes. Is this correct? I know that the days I am in the US I would need a US work permit and would also have US non-resident tax withheld.
For this calendar year I will be in the US more than 183 days so will be considered resident until the day I leave and non-resident after that (I don't intend to be back in the US for meetings this calendar year). I will be considered tax resident in Canada the day I arrive. My US employer says they will have to continue withholding US taxes as if I was resident the whole year.

I cannot become a contractor as I am currently an employee and arguing for this change would be very difficult. My employer does not think they can withhold Canadian taxes, but would really like me to keep working for them, so has asked me to look into whether there are any alternatives. Any advice would be much appreciated!

[nelsona]

Not quite correct.

There is no reason for your company to continue US withholding after you leave: you will either br a Cdn employee subjest to Cdn withholding or a contractor not subject to any withholding. A contractor living in canda is not taxble in US, but only in Canada.
Even the few days you wiuld be in US for work would be exempt from US tax,.

The days you are in each country is not really important. You are US resident until you leave, and Cdn resident after. doen't matter if it is january or november.

[clare]

Thanks for your reply. That was my understanding too, but my employer has said that as I am a resident alien now they would continue withholding US tax for the whole year and I would have to get that tax back when I file my return.

As it is, they do not think that they have any way to withhold Canadian taxes so I'm not sure how to proceed. Is it really that difficult for a company to set up a payroll to pay an employee as a Canadian employee?

[nelsona]

They need to set up Cdn payroll. It is quite simple. Or they need to make you a contractor.

If they pay you as a US employee, you will have a LOT of trouble getting the tax back, and will not have paid CPP/EI properly in Canada.

[clare]

Thank you for replying so quickly!