Cdn Citizen working for US Company within Canada

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.

Moderator: Mark T Serbinski CA CPA

Post Reply
jackyl_sm
Posts: 4
Joined: Fri Nov 26, 2004 1:27 pm

Cdn Citizen working for US Company within Canada

Post by jackyl_sm » Fri Nov 26, 2004 1:38 pm

[?][?][?]

<font face="Tahoma">I'm just looking for a little help and direction.

I am currently a Canadian citizen, working <i>within Canada</i>, but my employer is a U.S. based company. I presently work within <b>Canada only</b>, and have no direct work in the US, with the exception of the occasional business meeting every few months.

I'm looking for a little direction on the taxation issues that present itself in this situation. My employer isn't too sure how to handle things, and I thought I would take things into my own hand to see what I can find out. Are there laid out procedures on what a US company <i>MUST </i>do to employ within Canada, or can I take care of taxes at the employee level. Basically we have it laid out now where I am paid by them <i>(cheque)</i>, and I transfer the tax % to Rev. Canada.

This is a new situation, so I would like to make sure I correctly follow procedures to avoid problems down the road.

Any direction or help you can give on this topic would be greatly appreciated.

Cheers,
SC</font id="Tahoma">
[8D]

nelsona
Posts: 16014
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Fri Nov 26, 2004 4:22 pm

Your employer MUST set up a payroll for you as an employee, paying EI and CPP (their portion) and remitting Cdn and prov taxes withheld from you.

This is their reponsibilty as an employer of a Cdn worker. 1000's of Cdns work this way.

Their (and your) other option is for you to bcome self-employed, receiving a fee (not salary) from the firm, and then you pay all taxes etc, and claim expenses. You would not likely get any benefits from the firm under this arrangement.

<i>nelsona non grata</i>

jackyl_sm
Posts: 4
Joined: Fri Nov 26, 2004 1:27 pm

Post by jackyl_sm » Fri Nov 26, 2004 7:04 pm

<font face="Tahoma">Thanks for the quick response!

Are there any thoughts on what would be the best way to handle this from my side. If I wanted to do the self-employment thing, how would I go about setting this up within Canada? Is this my better option for tax purposes, or is it better for them to handle it directly.

I think the option will be totally up to me, and I'm just looking for a little insite.

Cheers,
SC</font id="Tahoma">

nelsona
Posts: 16014
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Sat Nov 27, 2004 12:08 am

If self-employed, you get no benefits (pension, medical, etc), so your personal situation matters here.

If you are self-employed, you should expect MUCH larger payment, as you will have expenses (deductible) and have to pay both ends of CPP.

<i>nelsona non grata</i>

jackyl_sm
Posts: 4
Joined: Fri Nov 26, 2004 1:27 pm

Post by jackyl_sm » Sat Nov 27, 2004 3:29 pm

Thanks for the help.

Just one more quick note. If everything stayed the way it is (paid by cheque), and no deductions were being made, what would happen on my tax return at the end of the year? Would I then be required to pay the porton of CPP and EI at the end of the year, or would this become a problem with Rev.Can. and be forced to change?

In the mean time, my employer is going to look into using a Canadian Payroll Service to take care of everything from hear on out.

Cheers,
SC

nelsona
Posts: 16014
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Sat Nov 27, 2004 4:16 pm

Likely CRA would come after you for BOTH halves of CPP and EI.
They would also force you to pay your taxes in installments from then on.

They would also be contacting your employer to find out why they were remiss in their obligations.


<i>nelsona non grata</i>

jackyl_sm
Posts: 4
Joined: Fri Nov 26, 2004 1:27 pm

Post by jackyl_sm » Sat Nov 27, 2004 6:52 pm

Thanks again!

We're finalizing with a payroll service this week.

Cheers,
SC

bhand11683
Posts: 11
Joined: Tue Nov 16, 2004 12:46 pm

Post by bhand11683 » Mon Nov 29, 2004 2:24 pm

what agency are you contacting for setting up the canadian payroll service ?

Thanks

Post Reply