Canadian Corp paying US corp for work performed in US

Sujane80 · Post by **Sujane80** » Thu Jan 29, 2015 5:53 pm

This is the opposite of most questions but our Canadian Corp will be putting together a team for some IT projects in the US. A couple of the members of the team will be US individuals who have their own corporations to invoice from. They will be invoicing our corporation and we will be invoicing a US corp for the project as a whole. What are the tax implications on that? The projects are short-term and do not require a US presence for our corporation.

JGCA · Post by **JGCA** » Sat Jan 31, 2015 6:28 pm

Your a CND corp that will have idependent sub contractors in the US as long as they can not negotiate the contracts on your behalf to imply your have a presence in the US then you merely invoice your client in the US and they invoice you in Canada for the work they performed on the project. Your CND corp will show the espense and revenue form this project remember you can not take the small business tax rate in this income since it was earned outside of Canada regular corp tax rate will apply on this net amount after the US subs were paid.

Sujane80 · Post by **Sujane80** » Sat Jan 31, 2015 6:34 pm

Thank you. What if we also sell a 6 month subscription for our software product to the end client, which will be a separate invoice from a separate cdn corp. The product is a download that expires after 6 months. We'll be billing in US dollars.

JGCA · Post by **JGCA** » Sun Feb 01, 2015 11:05 am

No different from selling goods or services the income is earned in Canada for tax purposes since yur servers are probably located in Canada for the download then this will mean your income was earned in Canada for the small business tax also so on this you will qualify to claim the small business tax rate. mThe fsact that its billed in USD means nothing you will need to convert it to CND equivalent at the date of the sale for tax purposes.