Tax treatment for a Canadian contractor working in Canada for US firm

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tchains
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Joined: Mon May 07, 2018 4:58 pm

Tax treatment for a Canadian contractor working in Canada for US firm

Post by tchains » Mon Aug 19, 2019 10:11 am

Hi there, does anyone here have experience working as a Canadian contractor working in Canada for a US firm? How are taxes typically treated? Are they simply remitted as one sum when filing taxes at the end of the year?

nelsona
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Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by nelsona » Mon Aug 19, 2019 3:30 pm

Anyone self-employed in Canada, typically has to remit taxes quarterly, or be subject to late penalties. The first year you might be able to avoid this, but anytime you owe "too much: tax at year-end, CRA will put you on remittance schedule subsequent years.
You'd be best estimating your taxes, and sending them quarterly from the get go.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

tchains
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Joined: Mon May 07, 2018 4:58 pm

Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by tchains » Mon Aug 19, 2019 7:06 pm

Thanks Nelsona.
If the person is not self-employed but rather a T4 employee with a GEO such as Manpower (Canada), do you know how equity compensation is treated from a US company? Would it be more cost-effective to receive X in additional T4 salary, or receive equity (RSUs) from a US company?

tchains
Posts: 7
Joined: Mon May 07, 2018 4:58 pm

Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by tchains » Mon Aug 19, 2019 7:08 pm

hmm can't find the edit button.
meant to say "..or receive X in equity (RSUs) from a US company?"

nelsona
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Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by nelsona » Tue Aug 20, 2019 9:54 am

That is for you to decide. I would think contracting would be better, particularly if you get no benefits. Contracting pays MORE than employee typically, not the other way round.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

tchains
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Joined: Mon May 07, 2018 4:58 pm

Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by tchains » Tue Aug 20, 2019 10:37 am

Ok. Did a bit more research. Tax treatment seems similar, however with equity from a US co, a Cdn resident is able to defer tax owing with W-8BEN form. All else being equal, this is preferred.

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