Working remotely for us company tax issues

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:15 pm

Please stop replying to this thread. I did not ask for your opinion in this thread. I know you would not agree.

Anyhow, I am moving back to USA end of this year. I am really sad to see Canadians like you who enjoy other fellow Canadian's problems

nelsona · Post by **nelsona** » Wed Jul 05, 2017 2:15 pm

https://www.grantthornton.ca/resources/ ... ldings.pdf

Every employer, resident in Canada or not, must maintain a Canadian payroll system and withhold prescribed federal and provincial income tax for all employees who reside in or physically work in Canada.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:19 pm

There are exceptions to it based on US Canada tax treaty.

The guy who posted "CANADA/USA Filing" was also working for more than 183 days from Canada. Should his company also run Canadian payroll?

nelsona · Post by **nelsona** » Wed Jul 05, 2017 2:29 pm

The exceptions are for employers of certain NON-resident employees; you are not a non-resident employee. And they would have to apply for this waiver before being exempted. Again, this is something your firm should be looking into in order not to violate 102.

The other poster is performing ALL his employment activities in US. he commutes HOME to Canada, but not to work. the 183 days included most of the time before he was hired, since he was hired in June. But if he was working in Canada, yes, he would have to have a portion of his wages reported on a T4, since he lives in Canada and would be performing work there. That is 102.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:34 pm

even if I have stayed less than 183 days in Canada, I would be a canadian resident as my family is here.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:38 pm

My guess would be the other poster would be partially working from home in Canada.

nelsona · Post by **nelsona** » Wed Jul 05, 2017 2:38 pm

Yes, but at least at that point some of the work you would have performed (like in 2015) would have been in US, eligible for W-2 treatment , the rest would be in Canada, requiring T4 treatment.

A W-2 or a T4 says nothing about residency. it merely confirms that work was performed in US W-2 or in Canada T4.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:40 pm

Based on your post, every employer who allows their employee to work even one day from Canada, they need to run a payroll in Canada

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:43 pm

This is why the treaty comes into the picture to avoid partial W-2 and T-4. Whovever bears the employment expenses/income has the right over employment taxes.

nelsona · Post by **nelsona** » Wed Jul 05, 2017 2:49 pm

Again, there are exceptions for NON-residents, including business trips etc. Doesn't apply to you though. You may be putting your firm at risk.

The treaty doesn't cover the ISSUING of w-2 and T4. Only the taxation of that income.

See what your firm thinks. They should be the ones who decide compliance, not you or me.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:54 pm

yes, the treaty covers employment income.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:57 pm

My trip to US is not business trip. It is for working there.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 2:57 pm

You carefully choose what you want to answer

nelsona · Post by **nelsona** » Wed Jul 05, 2017 3:17 pm

I'm referring to business trip to Canada, but it applies to US as well. Work you perform in US for this US employer is subject to W-2, of course. The Cdn-based work is subject to T4.

"This is why the treaty comes into the picture to avoid partial W-2 and T-4. Whovever bears the employment expenses/income has the right over employment taxes."

That is nowhere in the treaty, and does not meet Section 102 or Section 105, which applies even to employers from treaty countries. Location of work is the primary.

In fact Treaty XV.1 states that for Cdn residents (like you), only the employment performed IN the US is subject to US taxation. The residence of the employer has no bearing.
That is why Canada would deny foreign tax credits for the income that was earned in Canada, even if incorrectly reported on a W-2.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 3:34 pm

The USA-Canada Tax treaty says

"Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in a calendar year in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) such remuneration does not exceed ten thousand dollars ($10,000) in the currency of that other State; or

(b) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in that year and the remuneration is not borne by an employer who is a resident of that other State or by a permanent establishment or a fixed base which the employer has in that other State."

implies (replaces states with countries)

employment in usa shall be taxable only in canada if:

(a) such remuneration less than ten thousand dollars ($10,000) in the currency of usa; or

(b) the recipient is present in the usa for a period less than 183 days and the remuneration is not borne by an employer who is a resident of usa or by a permanent establishment or a fixed base which the employer has in usa.

I do not meet both the criteria. Why should i pay my employment taxes in Canada?