Employee on US Payroll: Canadian Tax Obligations?

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Employee on US Payroll: Canadian Tax Obligations?

Post by mayple »


Looks like this question has been asked a few times in the last few weeks, but I'll ask again since I haven't seen clear responses on the earlier threads. Hopefully, someone can provide some insights.

What are the tax obligations/things to consider for the following scenario?
1. A worker employed by US company (US payroll) who typically works from within the US (whether daily commuter or resides in the US) but works from Canada either:
1a. Temporarily due to Covid for months (3, 6, 9 or even up to 12 months or more), or
1b. Permanent basis i.e. stays and works from home office regularly (only occasionally traveling to the US as needed)

To summarize the question:
1. Does the person working temporarily from Canada (up until Covid clears and office return happens -which may be anywhere between 3-12 months) need to ensure Canadian taxes are withheld by the US employer?
2. What is the US employer does not withhold Canadian taxes and has no issues the employee working remotely from Canada, since everyone is remote anyway during Covid?
3. What if the employee wishes to continue to working from Canada more permanently even after Covid restrictions on working from the office are lifted? Will the employer then need to change the payroll deductions to include Canadian withholding?

I've read about PEOs and/or contracting, but I'm not sure where/why they'd come into play IF:
1. the US employer withholds US taxes
2. employee files both US and Canadian taxes, and uses the treaty based provisions to appropriately pay taxes in both jurisdictions.

1. If the employee is working remotely from Canada temporarily - what are the tax obligations?
2. if the employee is working remotely BUT expects to continue working remotely beyond Covid era ,does that change the answer to Q1 above?
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Re: Employee on US Payroll: Canadian Tax Obligations?

Post by nelsona »

Please read the COVID information on CRA website, it explains both cases. And the obligations of the employer and employee in both cases.

https://www.canada.ca/en/revenue-agency ... ssues.html
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Re: Employee on US Payroll: Canadian Tax Obligations?

Post by ND »

Contact Marc Pavlopoulos marc@syndesus.com for your PEO questions,
Syndesus is an Employer of Record (also known as a PEO – Professional Employer Service) in Canada who legally employs Canadians in Canada to work for US companies.

Syndesus collects and remits all Canadian employer and employee taxes to the CRA. You would get an offer letter from Syndesus which exactly mirrors what you have in the US. Which means you get a T4, and that you are eligible for provincial healthcare (because you are now a Canadian taxpayer). The US employer pays the monthly fee for its service. There is no cost to the Canadian worker.
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