TN extended remote work in Canada

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jixca
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TN extended remote work in Canada

Post by jixca » Thu Mar 19, 2020 3:48 pm

Single TN working in US, non resident of Canada.

Due to recent situation, I flew back to Canada and starting working remotely for the US company while keeping residency in US (as in, apartment rental and belonging) while staying with family in Canada (parent/sibling). Not planning to travel anytime soon as this can last a month to maybe 3 or 4 months if situation does not improve.

At what point do I become resident of Canada and start need to worry about tax impacts or consequences?

Ron.Henderson
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Re: TN extended remote work in Canada

Post by Ron.Henderson » Fri Mar 20, 2020 11:15 am

Do you have Canadian health care coverage? That may have an impact on residency/tax question, but may also be extremely important.

My instinct is that given there will be great chaos so don't overthink it. If you're actually able to go back after 4 months, say nothing, because nobody will check. If you're stuck for a year or more then it might be an issue.

jixca
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Re: TN extended remote work in Canada

Post by jixca » Fri Mar 20, 2020 11:30 am

No health coverage since I left in 2016, OHIP is gone after 6 months I believe. That was the personal delimma on returning to Canada as opposed to being covered in US, but I'm relatively young and need to take care of older parents in Canada just in case of prolonged lockdown so had to take that risk.

I can apply to resume OHIP and start the 6 months wait, not sure if that's going to make any difference if things return to normal in 3-4 months tho. Even if I need to use health service OHIP won't cover so I'll have to resort to my own money or see how much the US health coverage will cover in Canada.

For US immigration side, I don't think they care once I'm out of country, as long as my TN relationship is valid with employer and I94 is not expired when I return there shouldn't be any issue.

Ron.Henderson
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Re: TN extended remote work in Canada

Post by Ron.Henderson » Fri Mar 20, 2020 11:34 am

Personally I think your medical coverage is more important than any future tax bill, but that's just my view.

jixca
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Re: TN extended remote work in Canada

Post by jixca » Fri Mar 20, 2020 11:43 am

Agree, but I'm already in Canada and sheltered at home so it's moot now. Border is mostly closed and travel increases chances of getting sick for the next 2 months.

I'm mostly asking for the sake of planning what if, in the next tax season if there's something I can do now.

Ron.Henderson
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Re: TN extended remote work in Canada

Post by Ron.Henderson » Fri Mar 20, 2020 1:15 pm

Best of luck.

My advice above stands. Either say nothing about it if you manage to return this year, because nobody's going to care, or get your ass on OHIP ASAP and pay whatever tax bill that entails.

nelsona
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Re: TN extended remote work in Canada

Post by nelsona » Mon Mar 23, 2020 8:16 pm

I would agree with Ron. You have not really moved back to Canada, but if you want to, make it 100%
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jixca
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Re: TN extended remote work in Canada

Post by jixca » Mon Mar 23, 2020 9:48 pm

Yeah, I'm only arrived 2 weeks ago so it's not significant yet. I intend to stay non resident of Canada unless job situation changes, but the remote work will likely continue for 3 months until May/June, who knows what happens.

Does health coverage (OHIP) alone cause resume of residency? They've abandoned the 3 month waiting period so I can start immediately, but not sure how that works if I leave again later this year.

Ron.Henderson
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Re: TN extended remote work in Canada

Post by Ron.Henderson » Mon Mar 23, 2020 10:19 pm

I figured they would abandon the waiting period.

For now do nothing, but join OHIP the moment you begin coughing.

jixca
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Re: TN extended remote work in Canada

Post by jixca » Fri Jun 19, 2020 11:56 am

So I've got about 120 days of physical presence in Canada for 2020 but did not resume significant residency ties (working locally, health coverage, join clubs...etc) and still kept US apartment and job.

While I will return to US, I don't think it will be a long visit (at most 2 more months total for 2020) with 4 more months of presence in Canada to stay with parents. This means that I will be exceeding the 183 day rule of deemed non resident (as per https://www.canada.ca/en/revenue-agency ... #rsdncstts) although it's not clear if all criteria must be met or just one

Question, is it still possible to keep non residency status of Canada for 2020 to minimize the reporting hassle? If not, I'll probably need to plan for tax reporting for both IRS/CRA next year and claiming resident for both. Should I contact CRA to find out or let them contact me if they decide I'm deemed resident?

nelsona
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Re: TN extended remote work in Canada

Post by nelsona » Fri Jun 19, 2020 12:43 pm

The fact that you are "home" in canada, means that you will have to rely on the treaty definition of residency, since you obviously have a home in both countries. What is your living arrangements in Canada?

As long as MOST of your family, financial and social ties are in US, you will remain a US tax resident and Cdn non-resdent (assuming you had already established this previously.

However, days in Canada can be used to decide that your wages are taxable. You don't have to worry about "Deemed residency" if you meet the treaty definition of US resident (as I described above), you will continue to be treated as a non-resident. HOWEVER, if you are in canada for more than 183 days in any period, your US wages earned while in canada become taxable in Canada (the same would be if your company had sent you to Canada on a long assignment, so if you can avoid being in Canada 183 days that would be best, but plan, as you say, to at least report and pay tax your wages for the time in Canada on a non-resident return (which will be for the province you find yourself in).

I would not bother contacting CRA, as (a) their telephlunkies are notoriously wrong and ambiguous in their responses, and (B) they will almost always err to the side of being resident.
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nelsona
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Re: TN extended remote work in Canada

Post by nelsona » Fri Jun 19, 2020 12:50 pm

...183 days in any 365-day period, nit just calendar year...
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jixca
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Re: TN extended remote work in Canada

Post by jixca » Fri Jun 19, 2020 1:42 pm

I'm single and don't have family of my own. My living arrangement in Canada is living under my parents, I've removed ties to Canada as much as I can when moving to US and declared departure from Canada in 2016 and has been non-resident since.

I wasn't aware the 183 days rule applies to a rolling 365 day period, I thought it was tax year based (https://www.canada.ca/en/revenue-agency ... anada.html) but nevertheless it maybe adds 20 days more to my current count, so I still have time to plan either way.

However per CRA (https://www.canada.ca/en/revenue-agency ... dents.html) below, do I possibly qualify even with 183 day rule being exceeded?

"""If you are a deemed resident of Canada, and also establish residential ties in a country with which Canada has a tax treaty and you are considered to be a resident of that country for the purposes of that tax treaty, you may be considered a deemed non-resident of Canada for tax purposes.

You become a deemed non-resident of Canada when your ties with the other country become such that, under the tax treaty with which Canada has with the other country, you would be considered a resident of that other country and not Canada.

As a deemed non-resident of Canada, the same rules apply to you as a non-resident of Canada."""

Based on this, if I continue to maintain my living arrangement for 2020 (remote work to US employer in ON/Canada) I can still maintain non-residency based on treaty but will need to file 2020 tax as non-resident to CRA for the period I remained in Canada? If so what income do I need to account for in reporting? I don't have Canadian source income other than bank interest.

nelsona
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Re: TN extended remote work in Canada

Post by nelsona » Sat Jun 20, 2020 1:15 pm

As I said, you do not have to worry about deemed residency, what I was talking about was havinbg to report the wages you earn while in canada while a non-resident, but spending more than 183 days in any 365-day period. That is a treaty matter. You wouldfile as a non-resident but have to report the wages you earned while in canada.
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nelsona
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Re: TN extended remote work in Canada

Post by nelsona » Sat Jun 20, 2020 1:21 pm

It is article XV.2(b0, you exceed the 183 days, so even if the wages are paid by US firm, and you are still resident of US, you are taxed in Canada for those wages, by exceeeding the 183 days in any rolling period.

Credit will be given on your US return using form 1116, for any cdn tax you pay.
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