Working remotely for us company tax issues

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 3:38 pm

https://www.fin.gc.ca/treaties-conventi ... is-eng.asp

look at article XV

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 3:39 pm

You are looking at para 1. look at para 2

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 3:44 pm

https://www.treasury.gov/resource-cente ... nada08.pdf

I found the below on US government website (above)

"Assume, for example, that Mr. X, an individual resident in Canada, is an
employee of the Canadian permanent establishment of USCo, a U.S. company. Mr. X is
sent to the United States to perform services and is present in the United States for less than 183 days. Mr. X receives more than $10,000 (U.S.) in the calendar year(s) in
question. The remuneration paid to Mr. X for such services is not exempt from U.S. tax
under paragraph 1, because his employer, USCo, is a resident of the United States and
pays his remuneration. If instead Mr. X received less than $10,000 (U.S.), such earnings would be exempt from tax in the United States, because in all cases where an employee earns less than $10,000 in the currency of the source State, such earnings are exempt from tax in the source State. "

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 3:55 pm

you only choose what you want to see. you looked at para 1 but not para 2 which overrides para 1. I believe you are afraid that you will loose your good credit on this forum

nelsona · Post by **nelsona** » Wed Jul 05, 2017 4:03 pm

This is talking about exemptions from US taxation for Cdn residents, and exemptions from US taxation for US residents.. Cdn taxation of Cdn residents isn't discussed here. It is in paragraph 1.
I think we have hit on where you are missing the point.

the technical explanation you refer to also is only talking about US taxation. of a Cdn resident. the cdn taxation of a Cdn resident is entirely up to Canada, and their rules state work performed in Canada by a Cdn resident must be fully taxed in Canada.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 4:05 pm

I will be taxed on US income by us and claim the taxes I paid to us as foreign tax credit on my canadian returns.

nelsona · Post by **nelsona** » Wed Jul 05, 2017 4:05 pm

So, I think you are now getting the point. As I said, make sure your firm is aware of the requirements Section 102 and Section 105. Good discussion. Hope I was able to help, but I'm going to have to stop on thsio now. Like you, I have other work to do.

let your firm figure this out. But my advice is to go contractor. The fringe benefits of employment for US firm when you live in Canada are simply not worth it. you will make much more, (and not have to file in US at all), if you go contractor.

That, or move to US in more permanent fashion.

canadian81 · Post by **canadian81** » Wed Jul 05, 2017 4:13 pm

I am moving to the US permanently.

All my US employment is US income. i pay all payroll taxes to US and deduct them on my Canadian returns

nelsona · Post by **nelsona** » Wed Jul 05, 2017 4:39 pm

That is best. You could even, if you are strict about having your family vist you rather than the other way around, declre yourself US resident. This can cause RRSP/TFSA problems, etc. But with family in Canada, you will have no problem remaining Cdn resident for tax purposes (ie no risk of being DEEMED non-resident of Canada, which subjects you to departure tax).

MSS1976 · Post by **MSS1976** » Tue Jul 11, 2017 11:26 pm

This was a very interesting thread with interesting links. Thank you.

The teleworking issue perplexes me a bit. I understand that non-resident employers must withhold payroll taxes for the Canadian resident and non-resident (if they are performing work in Canada) employees. Non-resident employers may request an exemption for their qualified non-resident employees, but they must do so in advance.

Does this mean that every time a foreign visitor checks their work-related email, takes a business call from back home, proofreads a business document, the person's non-resident employer is at legal risk? I realize that this is a theoretical question and that, as a practical matter, enforcement is impossible/impractical. But still.

Can I assume that when an employer has no reasonable belief that their employer is working from Canada, they are in the clear? I wonder if canadian81 is using a US address for his/her pay stubs and W2 (in which case the payroll department would have no reasonable belief that he is working in Canada).

nelsona · Post by **nelsona** » Wed Jul 12, 2017 9:36 am

Obviously there are degrees of compliance. And they are not as strict for those who are non-residents. The situation you bring up, the non-resident isn't even in Canada on business, so why would the employer care what they are doing? but if they were sent to Canada on business, consideration would have to be given to 103 and 105.

There would be no tax involved if the employer were not in Canada for long stretches exceeding 6-months in aggregate, but there may still be withholding required.

From an IRS point of view this is considered Foreign-sourced work (and eligible foreign tax credit would be allowed on 1040). It is one of the legitimate ways to use up unused foreign tax credits (say, from RRSP withdrawals).

The situation for this entire thread, however, had nothing to do with a US resident working in Canada. It was a Cdn resident working in Canada.