Question re: self-employed tax in Canada after immigration to US

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adw
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Joined: Wed Feb 06, 2019 12:04 am

Question re: self-employed tax in Canada after immigration to US

Post by adw »

Hi everyone,

I tried researching my situation on the forum but I have not had any luck obtaining answers. I apologize if this is something that has been addressed previously.

My current situation is the following. I am a physician in Ontario and am self-employed in Canada, billing directly from OHIP. At the moment, I am paying quarterly instalments to CRA.

I am looking at completing the immigration process to the US and my estimated departure date is February 2020. I don't have any significant residential ties to Canada, I have no home, no dependence and my spouse lives in the US. I plan to complete the NR73 form, giving up some of my secondary residential ties such as OHIP, selling all remaining investments, etc.

However, at the time of immigrating, I may still have shift work lined up and may still consider doing some work in Canada intermittently.

If that is the case, after I emigrate from Canada, would I still be paying quarterly instalments to the CRA? In addition, I know that the CRA requires withholding on certain incomes. There is a lot of information regarding Part XIII tax, but how would I go about doing so for self-employed income? I plan to call OHIP to see if they have any suggestions, but wanted to see if anybody has had experience doing so here.

Thank you in advance
nelsona
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Re: Question re: self-employed tax in Canada after immigration to US

Post by nelsona »

yes, your income in Canada, earned in Canada will still be taxed in Canada (and then in US), so you should continue to pay quarterly taxes as you are doing. OHIP will not be aof any help. CRA will say it is taxable, which it is.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
adw
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Joined: Wed Feb 06, 2019 12:04 am

Re: Question re: self-employed tax in Canada after immigration to US

Post by adw »

nelsona wrote:
> yes, your income in Canada, earned in Canada will still be taxed in Canada
> (and then in US), so you should continue to pay quarterly taxes as you are
> doing. OHIP will not be aof any help. CRA will say it is taxable, which it
> is.

Hi Nelsona,

Thank you for your clarification.

I am being doing some online research. After departure, do you know if I would have to pay provincial tax like previous? According to this site (https://www.taxtips.ca/personaltax/whopaystax.htm).

"When a non-resident or deemed resident files a Canadian tax return, they are taxed at the current federal tax rates, plus a surtax of 48% of the federal tax, unless income was earned from a business with a permanent establishment in Canada. In this case, provincial or territorial tax is paid on that income."

As a self-employed, I am not sure whether I need to pay provincial tax or the surtax of 48%. I also can't seem to find 48% on CRA. The closest I am able to find on the CRA website is "Line 428 - provincial and territory taxes - this line applies to you only if you had income from a business (including income you received as a limited or non-active partner), and the business has a permanent establishment in a province or territory (other than Quebec) in Canada in 2018."

I want to make sure I am filing the write taxes. I know I will get federal foreign credit in the US (not state as I will be relocating to California) but I am not entirely sure what I am supposed to do with the provincial as I don't have a business established in the province of Ontario.

Thanks again for your help!
adw
Posts: 14
Joined: Wed Feb 06, 2019 12:04 am

Re: Question re: self-employed tax in Canada after immigration to US

Post by adw »

I should add that I am not sure if OHIP classifies as a business with a permanent establishment in Ontario.
nelsona
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Re: Question re: self-employed tax in Canada after immigration to US

Post by nelsona »

As you saw, this will depend on whether you have a permanent establishment (PE) that you will be working out of.
If fact, if you do not have a PE, you may be absoleved of ALL Cdn taxes for that self-employment income.

So, the question is, how will you be operating (no pun intended) as a physician in Canada. Out of a rented office, a clinic, what?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
adw
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Joined: Wed Feb 06, 2019 12:04 am

Re: Question re: self-employed tax in Canada after immigration to US

Post by adw »

nelsona wrote:
> As you saw, this will depend on whether you have a permanent establishment
> (PE) that you will be working out of.
> If fact, if you do not have a PE, you may be absoleved of ALL Cdn taxes for
> that self-employment income.
>
> So, the question is, how will you be operating (no pun intended) as a
> physician in Canada. Out of a rented office, a clinic, what?

Most of my work will be shift work at a hospital. The hospital provides a small stipend for being on-call but the majority of my self-employed income will be from billing OHIP for services rendered. The hospital does not pay for my services aside from the aforementioned stipend for covering call at the hospital.

I won't have any other permanent establishment, no office no clinic. How would you interpret this situation?

Your input is much appreciated!
adw
Posts: 14
Joined: Wed Feb 06, 2019 12:04 am

Re: Question re: self-employed tax in Canada after immigration to US

Post by adw »

Also, I should mention, it may not be at a single specific hospital. I would be locuming at various different hospital to cover shifts.
Bubba Gums
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Re: Question re: self-employed tax in Canada after immigration to US

Post by Bubba Gums »

Your situation looks like it could be addressed by looking at regulation 105 withholding as described in IC75-6R2.

https://www.canada.ca/en/revenue-agency ... P216_31172

Thus I would ask if you meet the tests in appendix A. Also look at Appendix B, as if you do have Canada tax liability, you may be eligible to deduct some expenses.

Anyone want to second this approach?
nelsona
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Re: Question re: self-employed tax in Canada after immigration to US

Post by nelsona »

the waiver (or more importantly, the exemption from tax) is what I was referring to in my earlier post. He may not meet the withholding waiver requirements by these tests, but should be able to exclude the income at tax time, based on the treaty.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Re: Question re: self-employed tax in Canada after immigration to US

Post by nelsona »

The stipend would be taxable in Canada, unless it is for less than C$10 for the entire year, in which case it too would be excludable from Cdn tax.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Re: Question re: self-employed tax in Canada after immigration to US

Post by nelsona »

C$10K, of course.
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adw
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Re: Question re: self-employed tax in Canada after immigration to US

Post by adw »

Hi Bubba Gums/nelsona,

Thank you both for replying. I read both your replies and I reviewed the link and the convention between Canada the USA.

From the convention, I found this passage:

[i]"Independent Personal Services

Income derived by an individual who is a resident of a Contracting State in respect of independent personal services may be taxed in that State. Such income may also be taxed in the other Contracting State if the individual has or had a fixed base regularly available to him in that other State but only to the extent that the income is attributable to the fixed base."[/i]

[b]Would it be correct to surmise that my self-employed income via OHIP will be taxed in the contracting state in which I will reside (ie US), and not taxed in Canada? If this is the case, would I still need to file a tax return to Canada to indicate this?

With regards to the waiver for the stipends, would it be correct to assume that I don't qualify for regulation 105 withholding waiver (appendix A), based on the fact that this is from the hospital (therefore an establishment). However, if my stipends total less than $10,000, I would qualify for regulation 102 witholding waiver to avoid tax withholding?[/b]

I am asking for clarification because these concepts and terms are foreign to me and I am not sure I am correctly interpreting the material.
I apologize in advance if I am using the terms incorrectly and thank you both for your time.
nelsona
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Re: Question re: self-employed tax in Canada after immigration to US

Post by nelsona »

The stipend is wages, so will not be exempt.

The other income will be independent services, and you will need to meet the requirements of the regs mentioned earlier. Whenter or not you are exempted from withholding on these payment, you will have to file a Cdn tax return to prove this, and to get any withholding that incorrectly held.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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