CPT56 Certificate for Permanent Residents of Canada?

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LBB
Posts: 5
Joined: Sat Mar 25, 2017 5:33 pm

CPT56 Certificate for Permanent Residents of Canada?

Post by LBB »

My children are dual US/Can citizens. They are permanent residents in Canada, having lived here all of their lives. They have been submitting yearly US tax returns, using Canadian foreign tax credits to offset US tax. They have recently become self employed (in Canada) and as a result will be completing 1040 Schedule C on their US returns. It is our understanding that, as per US/Cnd Totalization agreement, they will not have to pay the US self-employment tax ("social security") since they will be paying CPP on their Canadian self-employed income. It is also our understanding that they may have to obtain a CPT56 certificate from Revenue Canada to confirm to the IRS that they are indeed paying CPP in Canada.
The CPT56 form seems strange to me javascript:emoticon(':?'). It indicates a start and end date for the work, and seems to be geared for someone coming to Canada to work on a temporary assignment. Can someone confirm that a CPT56 certificate is really necessary for a permanent resident of Canada? How does one ascribe an end date for a new job that hopefully will last a long time ? Will a new certificate be required every time they start a new job ? I have contacted Revenue Canada but have been unable to get a response. :?
nelsona
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Post by nelsona »

The CPT form is designed for Cdn employees temporarily transferred employees outside Canada (so the opposite of what you concluded), but is still used by self-employed. Fill out as best they can, using their business start date, and (in my opinion) leave end date blank, or some date in the far future.

As long as they have this business, they should not have to do a new CPT.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rafa02
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Joined: Sat May 26, 2012 3:18 pm

Post by rafa02 »

I have recently helped a family member with this form and I was also unsure as to the end date and called the CRA help number listed in the instructions, and was told to put "indefinite" for end date. After thinking about it for a time and as the fillable form did not allow for any input other than numbers, I decided to use the five year maximun as mentioned on the CRA website. After a week or so, we received a phone call from CRA wanting more info, and after explaining it was for a dual citizen beginning self-employment, the person from CRA said it would be for three years, to see if the business was truly viable, etc. So we have a certificate good for three years.
rafa02
Posts: 95
Joined: Sat May 26, 2012 3:18 pm

Post by rafa02 »

As nelsona suggested, leaving the end date blank might also work, perhaps depending on the CRA person handling the form. Also including a note as to your reason for the certification might help.
nelsona
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Post by nelsona »

Either way. IRS may never ask for it but it is best to have in pocket.

I suspect that getting the software to accept this without manual overrde will be the harder process in all this.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
LBB
Posts: 5
Joined: Sat Mar 25, 2017 5:33 pm

Post by LBB »

Thank you both for the helpful replies !
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