CRA Supplemental Guidance, section VII cross-border workers

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Dafney33
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CRA Supplemental Guidance, section VII cross-border workers

Post by Dafney33 »

https://www.canada.ca/en/revenue-agency ... html#h_iii


April 1st update

So CRA gave guidance on how crossborder workers should file in regards to the pandemic and problems arising out of travel restrictions and sourced income.

I'm looking to gain assurance, that based on the guidance, I can continue filing business as usual,( 1040nr, then report to canada), as my husband was a Canadian resident, who use to commute to usa on tn, but was working from Canada remotely during the pandemic due to border restrictions. If I'm not mistaken, it describes one of many scenarios, if your employer continued to withhold US taxes, then canada will for this year 2020, count the income as if sourced in the USA, and you can file as you did in previous years? Am I interpreting this correct?

If this is the case, massive relief for crossborder workers!
nelsona
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by nelsona »

Yes, for cross-border workers, CRAhas suspended the sourcing rules for work performed in canada, so this effectively means "business as usual" for those workers, including the determination of 401(k) deductibility.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
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Dafney33
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by Dafney33 »

Thank you !!!!


This just made my day:)
elgoog
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by elgoog »

Yes, this is indeed a relief. One question regarding this would be: For my case, I worked in California before the pandemic started and came back when Canada decided to shut the borders and urged for Canadians to return.

One question is: Would income sourcing rules apply for US state filing too? For my case, I would use the same income that I used for 1040NR as California sourced and include that on my California return?

Thank you.
nelsona
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by nelsona »

Be careful. You were LIVING in californai, and leaglly allowed to do so, not on vacation. You need to honerstly answer if you NEEDED to come back, or chose to come back.

If your place of employemnt was open, could you have stayed in Cali.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
elgoog
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by elgoog »

I suppose for me, it falls in a grey area. I could have stayed in Cali if my place of employment was open. Having said that, they did mention that they will be posting a FAQ regarding this soon. If it turns out I can't use this relief, I will just file using income sourcing.
elgoog
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by elgoog »

One more question regarding income sourcing rules: if I was in the US but went on vacation for a couple weeks to some third country like Mexico, would the vacation pay be sourced in USA or Canada?
nelsona
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by nelsona »

Only working days are counted in dividing source of wages. Your entire wages (including vacation, sick, bonus etc) is then divided.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
Dafney33
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by Dafney33 »

My husband will begin to work on site this month in the USA, and will be coming back to Canada daily. I'm wondering for the year 2021, my husband already worked three months out of the year in Canada. Do you have to fulfill the 183 day residency rule to have your income qualify as sourced in Canada? Assuming that Canada will not waive the source rule in 2021, I'm just preparing myself for next year on how to file.
nelsona
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by nelsona »

The 283 day rule doesn't apply to commuters, since they live in Canada and work for a US employer.

The 183 day rule applies to US residents who work in Canada for a US employer for less that 183 days, or for Cdn residents who work in US for a Cdn employer for less than 183 days. Not your case.

And it has nothing to do with residency.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
Dafney33
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by Dafney33 »

Gotcha!!

Thank you and forgive me for my ignorance:)

Thank you again!
elgoog
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by elgoog »

nelsona wrote:
> Be careful. You were LIVING in californai, and leaglly allowed to do so,
> not on vacation. You need to honerstly answer if you NEEDED to come back,
> or chose to come back.
>
> If your place of employemnt was open, could you have stayed in Cali.

I looked into this and if you look under:

I. Income tax residency > Section A, it clarifies the definition of travel restriction (this same definition is also under Update - October 15, 2020 in the footnotes)

In this regard, in determining a taxpayer’s eligibility for relief under this (or another) section of this guidance, we will generally view the Canadian government’s recommendation to Canadians to return to Canada as a travel restriction. This would include a scenario where an individual would have been permitted under the laws of their country of residence to remain in (or return to) that country.

Also, if you look under:

VII. Supplemental Guidance > Section B. Permanent Establishment

Some individuals, because of the travel restrictions, may have continued to exercise their employment duties in Canada after the initial relief period. For example, a Canadian resident who normally exercised their employment duties at the office of their United States employer may have begun working from their home in Canada during the pandemic and may continue to do so until the travel restrictions are lifted. Another example would be a Canadian citizen factually residing in the United States and working for a United States employer who followed the Canadian government’s recommendation to Canadians to return to Canada and now continues to work remotely for their United States employer from Canada.
nelsona
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by nelsona »

"their home in Canada". So, while you were living in US, you had a home in Canada?
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
nelsona
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Re: CRA Supplemental Guidance, section VII cross-border workers

Post by nelsona »

The call to "come home" was for Cdn residents.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
elgoog
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Joined: Thu Sep 19, 2019 9:40 pm

Re: CRA Supplemental Guidance, section VII cross-border workers

Post by elgoog »

Yep, I have significant residential ties in Canada and I never met the SPT to be considered a US resident. In my case, I was making weekly or biweekly trips from Canada but unable to do so any longer because of the travel restriction.
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