Canadian, working in Canada, for US company

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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user123
Posts: 8
Joined: Wed Dec 12, 2007 6:23 pm

Canadian, working in Canada, for US company

Post by user123 » Wed Dec 12, 2007 6:36 pm

I have had a great deal of problems trying to find answers to my situation. I have been offered full-time employment by a company located in the US.

I however, will be working 100% in Canada for them.

As far as I can figure, I am a non-resident alien and have zero US sourced income and therefore: I do not need a US SSN or a TN-Visa etc, my employer does NOT need to withhold anything for the IRS, and I just need to remit to Revenue Canada, is that correct?

If that is correct, what can I do if the HR/Payroll department of the company says that an SSN is mandatory? (shouldn't they just fill out a 1042S or something to exempt me?)
Thanks

nelsona
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Post by nelsona » Wed Dec 12, 2007 6:46 pm

The comapny needs to pay you as a Cdn employee, of pay you as a contractor.

That is their two choices.

Lots of Cdns living in canada work for American companies. This is not an unusual case, and any payroll co can handle this.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

user123
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Joined: Wed Dec 12, 2007 6:23 pm

Post by user123 » Wed Dec 12, 2007 7:49 pm

That would require them to set up a Canadian payroll system etc, so I would guess that wouldn't happen. They can no longer continue me as a contractor either.
So I suppose the situation is not feasible.
Thanks

Arteeh
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Joined: Mon Nov 19, 2007 3:35 pm

Post by Arteeh » Wed Dec 12, 2007 8:20 pm

Why not set up your own Canadian corporation. Have the U.S. pay your corp on a contractual basis for the services you provide. Then, your corporation would be responsible for Canadian payroll taxes, etc.

Is there a reason this won't work?
Arteeh

user123
Posts: 8
Joined: Wed Dec 12, 2007 6:23 pm

Post by user123 » Wed Dec 12, 2007 9:49 pm

Good idea, that's what I am right now. But because the company has a one year limit on contracts and I have been there a year, Its either full-time or look somewhere else.

user123
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Joined: Wed Dec 12, 2007 6:23 pm

Post by user123 » Wed Dec 12, 2007 9:57 pm

nelsona, so you say a lot of Canadians do this? I have not been able to find any. I have searched google, looked through these forums, and talked to recruiting agencies and haven't found anyone that knows anything about this. Most situations involve a Canadian office or working in the US. I think its pretty rare that an American company will let one of its workers work elsewhere.
Even if they did, would they be able to process a Canadian payroll?
Thanks

nelsona
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Location: Nowhere, man

Post by nelsona » Thu Dec 13, 2007 5:01 am

I knew at least 5 people doing this back in 1998 before I even thought about going to US, and a new post comes accross here about once a month.

There is a small outfit in my US town that has 10 calgary employees, that are on Cdn payroll -- working for the US company.

Yje only issue is payroll. They can either do it themselves or farm it out.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

user123
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Post by user123 » Thu Dec 13, 2007 9:42 am

Interesting, I scrolled through all 24 pages of this forum and only saw 2 posts that were remotely on this topic. One was in pgs 1 to 3 somewhere and the other was in Dec 21,2006 where Mark Serbinski suggested: "Payments made to non resident aliens for services rendered OUTSIDE of the U.S., are generally not subject to withholding. Forms 1042S et al are used to report the type of income, and the withholding tax, if applicable, or the reason for reduced or no withholding. "

Not that I don't believe you, because you are the only one that I have heard so far with a concrete "you need to do this" suggestion, however, talking to an internation service rep at CRS suggested the same as Mark above. So does the IRS website. I also saw this in a google news group as the answer.

Is there an IRS or CRS website or contact that backs up your suggestion?
Thanks

nelsona
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Post by nelsona » Thu Dec 13, 2007 11:41 am

Huh? You are asking about Cdn taxation. Your quote is for US taxation.

As an employee working in canada, you need to be withheld as a Cdn/Prov employee.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

user123
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Joined: Wed Dec 12, 2007 6:23 pm

Post by user123 » Thu Dec 13, 2007 2:06 pm

So you are saying that the US company will send the exempt withholding to the IRS and then do a Canadian payroll for me?

When people have spoken about the US company sending in a 1042 to exempt IRS withholding, I just assumed that the US company would send the full wage to me and then I would remit source deductions to revenue canada myself.

The following link ties to my comments and Marks quote:
http://answers.google.com/answers/threadview?id=779307

Scroll down to the second "Clarification of Answer" section, because the author misunderstood some of the scenario presented.
Thanks

nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona » Thu Dec 13, 2007 2:20 pm

Again, you keep getting answers to your US tax situation. This doesn't aplly to you.

You need to be on a Cdn payroll.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

user123
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Post by user123 » Thu Dec 13, 2007 2:24 pm

Ok, so bottom line I guess is that I am out of luck. It is not likely that they would go through the hassle of setting up a Canadian payroll and other associated headaches for one employee.
Thanks for your help!

nelsona
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Post by nelsona » Thu Dec 13, 2007 3:01 pm

Lots of firms do it... if it is worth their while even for 1.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
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Post by nelsona » Thu Dec 13, 2007 3:02 pm

You could just set up a diferent corp and start a new one year term I guess. Sounds pretty silly to limit contracts to one year.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Carson
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Location: Toronto

Post by Carson » Thu Dec 13, 2007 3:03 pm

[quote="user123"]Ok, so bottom line I guess is that I am out of luck. It is not likely that they would go through the hassle of setting up a Canadian payroll and other associated headaches for one employee.
Thanks for your help![/quote]

You are probably right about it being a hassle as having an employee in Canada denotes a branch operation of the US company, requiring them to also file corporate tax returns in Canada as well.

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