Canadian linving in US paid in Canada

[habsin america]

Need some quick advise, here is the situation:

1. Greencard holder
2. Live in NY all year, do not physically work in Canada
3. Have not given up Canadian residential status, hoping not to have too
4. Paid from Canadian company directly in American bank account
5. Will file Canadian tax return as well as American tax return (jointly with my
wife)

Obviously I will have to declare the income on my American tax return. But how do I avoid being double taxed?

[nelsona]

You are not a Cdn resident, thus you cannot legally file as a Cdn resident. You are either a non-resident, or a deemed non-resident. CRA does not allow those living in another tax treaty country to remain resident.

Why are you "hoping" to file a Cdn tax return? Sounds fishy.

[habsin america]

I am a Canadian Citizen and have lived there all my life until this time last year when I moved to NY. I work for the same company but remotely from home. I am hoping not to have to declare my non-resident status in Canada, is that possible? Otherwise obviously I will have to file papers for non-residency with Canada, which I have not done yet.

Bottom line - I have been paying taxes in Canada. My paycheck has the taxes deducted. Obviously I live in America and acknowledge that I need to pay tax here. My question is how to I go about not being double taxes?

[nelsona]

You need to file a departure return, based on the day you left Canada.

The problem then becomes, for your question, is how can someone both living and working in US, claim that his wages are Cdn-sourced (you can't).

Until you solve this problem, it is impossible to determine which country gets first shot at your taxes, and your payroll taxes (CPP/EI vs. Medicare).

You must either become a contractor, or be paid as a NY-employee.

[jordanpattern]

I have a related question:

I am a Canadian citizen but US permanent resident. I have recently contracted to work remotely for a Canadian company. I'll be continuing to live and perform all work in the US as an independent contractor.

I am hoping I can just pay quarterly self-employed-person taxes in the US as I have done in the past. Do I need to also pay in Canada? I am no longer a Canadian resident, do not own property there, and have no intention of returning to live.

Thank you for any help!

[nelsona]

You are not taxable in canada on the basis of what you said: living and working in US as a contractor for Cdn firm.
They should not be withholding any Cdn taxes from you, but if they do, you would get them aback at year-end by filing a non-res return.

[jordanpattern]

Thank you! Much appreciated!

[ashraina]

[quote="nelsona"]You are not taxable in canada on the basis of what you said: living and working in US as a contractor for Cdn firm.
They should not be withholding any Cdn taxes from you, but if they do, you would get them aback at year-end by filing a non-res return.[/quote]

I'd like to follow up on this please:

a. So even if the Canadian firm is servicing Canadian clients, generating revenue in Canada, there's no liability on part of the Canadian firm to withold taxes for the non-resident, US contractor? No Section 153, Regulation 105 applicability as long as this non-resident individual doesn't step into Canada?

b. How would you recommend that such an arrangement be recorded in case the CRA questions the payments being made to an individual outside of the US?

Thanks!

[ashraina]

Hi,

Could someone please help with my question or should I start another thread on the topic?

Thanks.

[JGCA]

Generally payments to non-residents on account of business income are generally NOT subject to witholding tax in Canada except for the next 3 exceptions:

1) the nature of teh business is subject to Part 13 tax and the non resident has no permanent establishment in Canada, such as interest, royalties and management fees.

2) The amounts are paid for services rendered in Canada thus a 15% with tax applies ( and if in QC an additional tax 9% also). This is Regulation 105 .

3) The amount paid are for property subject to witholding and clearance requirements of sec 116 ( Real Estate and rentals)


So if the contractor is performing business activities and never comes into Canada no Reg 105 15% applies, what you show teh CRA is regulation 105 which spells this out.

[nelsona]

... and if NR tax is incorrectly withheld, you simply file a non-resident return at year and and recover the withheld tax.

[JGCA]

Good point you certainly will be able to recovery any tax paid that was not suppose to be paid by filing a NR tax return.

[ashraina]

Thank you both for the help!