Working remotely for US company as Canadian PR

rgburress · Post by **rgburress** » Tue Aug 23, 2016 1:05 pm

Hi, so I did some looking around here and many other forums online but have not been able to find a definite answer to my situation.

I am A US citizen, my wife is from Canada and is now a dual Canadian and US citizen. She has sponsored me to be a Canadian PR and move to Canada. I have an approved PR, but I have not landed yet.

My employer that I currently work for has stated interest in letting me work remotely in Canada, I would return to the US for maybe a week a month or a week every other month for work. I think there may be an issue when it comes to my employer's HR though. I do not believe my employer has a business number established in Canada and the ability to pay me withholding Canadian taxes, nor do I think they are willing to go through the process for this and I wouldn't expect them to.

Is it legal for my company to pay me in US dollars, not withholding Canadian taxes, knowing I am actually working remotely in Canada. I could fill out US form w-4 to claim enough exemptions that they would not withhold US income tax, then I could file income tax to Canada and claim the foreign tax credit when I file my US tax returns. I would know that I would not be eligible for Canadian CPP and EI by going this route. My concern is more on the legality of it, I don't want to have my company do anything that could potentially get them in trouble, and I don't want to do anything that could potentially get me in trouble or jeopardize my Canadian PR. Is there any documented publications from either the IRS or CRA to prove this either way?

If the above scenario is legal to do, is it OK to have them pay me to either a US or Canadian address? Does the pay to address just not matter or is it critical in who is expected to receive their tax money first?

I know the recommended option is to try to become an independent contractor for my company and that would avoid all of this, but I am not sure if they are willing to go this route, and there are a lot of really good benefits I would lose on by going this route, as well as some other concerns I would have.

Thanks for any information, I plan to book a consultation soon to get the experts advice, but I just want to know which route I should be looking into.

nelsona · Post by **nelsona** » Tue Aug 23, 2016 1:24 pm

Your employer would be expected to set up a Cdn payroll for you as an employee, or make you a contractor.

paying you in US dollars means nothing (nor is what bank the funds are deposited, some think it does for some reason). The big issue is the company not paying Cdn payroll tax on your Cdn-source wages.

The CRA website talks about foreign employers.

There really aren't many US benefits that you get that are valuable in Canada. But, even if there were, they could still satisfy their Cdn obligations and keep you on payroll if they classified you as being on foreign secondment to their "Cdn firm" -- you.

rgburress · Post by **rgburress** » Tue Aug 23, 2016 2:17 pm

Thanks for the information.

That's what I thought the answer was going to be. Was just hoping not.

So if I understand right it would be illegal for them to pay me and not pay Canadian payroll tax knowing I am working in Canada? Even if I were to pay the Canadian taxes separately?

Do you happen to know any of the publications that mention this on the CRA site? I will try to dig in on some and find it. The IRS publications I have been able to find seem to mention workers abroad but doesn't mention the legality of the employer to withhold the foreign tax or if it is the employees responsibility to make sure it gets paid.

My current employer offers things like paid vacations, reimbursement for schooling and many other pretty decent benefits. So they wouldn't really be just US benefits. Plus losing an option for PTO. My biggest concern even over the benefits would be that it would make it easier for them to phase me out of a position if they wanted to because it could just take not renewing my contract.

Your last statement I find interesting.....but it would take them filing the paperwork to register as a Canadian business though right? It would involve a lot of paperwork and a separate process for Canadian payroll just for me right? Or is there a quick and easy way of doing what you say?

Thanks again!!!

nelsona · Post by **nelsona** » Tue Aug 23, 2016 4:49 pm

It is not only your income tax withholding , it is the payroll taxes that are the joint responsibility of the employer and employee. This is not the same as them sending you occasionally to Canada, whereby in most cases Cdn income tax can be waived.

I'll let you and them figure this out.

nelsona · Post by **nelsona** » Tue Aug 23, 2016 4:51 pm

Of course, as a contractor you would demand MUCH more in compensation for the very fact that they would no longer be paying for those benefits, that amount would invariably be more than what the benefits were worth to you in canada, especially healthcare.

And the payroll tax that you would pay as a contractor would be much les than self-employment tax in US.

rgburress · Post by **rgburress** » Tue Aug 23, 2016 5:06 pm

Understood, thanks for clarifying, I didn't realize there was a separate payroll tax that we would have to be worried about as well. I think it will basically come down to what my HR department decides, but I don't think they will be willing to go through the process to get things setup in Canada for payroll for me. So maybe I will have the option to be a contractor.

Thanks again for all the information. It has been very helpful.