Considering Consulting in Canada

[dual99]

I am currently a green card holder in the (over 30 years). I am also in the process of becoming a US citizen (completed biometrics step and interview is scheduled in November). I was born in Canada and I am a Canadian citizen by birth. I have a social security number for the US and have been paying taxes only in the US since I left Canada before I started working. I still have a social insurance number for Canada although I have never filed a tax return in the country and have not been a resident since 1979.

I have a potential opportunity to do consulting work in Canada. I have not formalized the relationship with the company yet. I am trying to understand the tax implications and how I should set myself up to be paid. I am wondering if I can just use my social insurance number and obtain payment as an independent contractor in canadian funds or should I setup a US entity (LLC, Sole Proprietor) and ask the company to pay the company. Perhaps there are other options as well.
Finally, I don't think it matters if I am a US citizen or green card holder for tax purposes. i will retain my Canadian citizenship after I obtain US citizenship but my primary residence will be in the USA.

Thank you very much for any assistance you can offer. If the opportunity moves to the next step I plan on setting up a consultation appointment to get more specific guidance.

[nelsona]

You are correct that whether you have US citizenship or Green card (or, even a tremporary work visa for US), has no impact on this. You are a US resident and a Cdn non-resident for tax purposes.

As such, as long as CRA does not consider you an employee of the Cdn firm, and you do not spend more than 183 days in any 365-day period in Canada (any period not just calendar year), you will not have to report any income to Canada or pay tax there.

So you would set up a US based company (the structure doesn't really matter) and have Cdn firm pay you thru it.

[dual99]

Thank you very much. I will find out in a few weeks the status. In the meantime, I will be setting up a company for consulting services.

[dual99]

I spent time in Toronto last week and the possibility does exist for a consulting arrangement with a company in town. They will not contract with me directly so they have asked me to bill a third party who acts as a prime vendor with the company. The third party has told me I need a Canadian corporation to bill them directly. I have completed some preliminary research and it seems quite unwieldy since I would need create the Canadian company, register in Ontario, rent a mailbox for the corporate address, file annual returns and pay GST and PST for my services. As an alternative, I have asked the third party if they can pay me directly using my Canadian social insurance number. In this case, I believe the will have to withhold taxes and I will need to file a non-resident return to get the money refunded.

Any comments? Does it sound like I am going down the right path?