I have read through many pages on the CRA website about the Overseas Employment Tax Credit. But I still need some clarification.
My residance is Nova Scotia, I work in the USA that provides services to a natural gas drilling company. I am a supervisor, salesman and do employee training. We have a CDN company and a registered USA company. I have been working there since Jan 2010 on an L1 work visa. I am on salary and paid from the CDN company. I do make peridioc trips back to Canada for vacation time. But about 80-90% of my time is spent in USA.
From this does it seem like I would qualify for the tax excemption?
Also I bought a vehicle I use to travel from Canada to USA. I pay my own travel expenses. Can I deduct this as well
thanks in advance
Overseas Employment Tax Credit question (T626)
Moderator: Mark T Serbinski CA CPA
You are a Cdn resident, but will have to file a 1040NR to report your wages earned while in US income because you have spent more than 183 days in US in 2010. You may also have to file state taxes where you worked.
Yes, you are eligible for OETC. You also have the option of simply claiming your US tax as a credit instead.
Some of your mileage expenses may be deductible, traveling between assignments, probably not day-to-day, but I'll let someone else answer this, as this is not a cross-border issue.
Is there a particular reason why you do not consider yourself Non-resisnt of canada? You left canada in jan 2010.
Yes, you are eligible for OETC. You also have the option of simply claiming your US tax as a credit instead.
Some of your mileage expenses may be deductible, traveling between assignments, probably not day-to-day, but I'll let someone else answer this, as this is not a cross-border issue.
Is there a particular reason why you do not consider yourself Non-resisnt of canada? You left canada in jan 2010.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
thanks for the quick reply.
The reason I still consider myself a resident of Canada is, my home, vehicle's, family, credit cards bank accounts etc, are all in Canada.
I live in NS, my home office is based in Alberta, with a USA office where I currently work. I work in the usa for 4-6 weeks at a time and tak 10 days off for vacation at home in Canada.
I do not beleive in any way i qualify as a non resident of Canada.
Now you bring me to another question, what are my responsibilities in paying tax in the USA. I was told this is only for people who consult and are not employed and payed by a CDN firm.
The reason I still consider myself a resident of Canada is, my home, vehicle's, family, credit cards bank accounts etc, are all in Canada.
I live in NS, my home office is based in Alberta, with a USA office where I currently work. I work in the usa for 4-6 weeks at a time and tak 10 days off for vacation at home in Canada.
I do not beleive in any way i qualify as a non resident of Canada.
Now you bring me to another question, what are my responsibilities in paying tax in the USA. I was told this is only for people who consult and are not employed and payed by a CDN firm.
No the OSETC is not based on the tax you paid it is merely a credit that allows you to deduct from you employment income an amount to be credited to you on line 426 from form T626. The essence of this credit is simply based on the fact that you were employed outside of Canada on a qualifying work site so since you were a non resident at that point of time this amount should not be taxed in Canada so this is a releiving mechanism to allow this. As an accountant I can tell you that it is a simple manouvre once you have the dult=y completed form attached to your T1 to allow this credit against tax payable in the year.
JG
Just to clarify JGCA's comment, OETC does NOT imply any period of non-residency, but rather "non-presence" in canada.
If one were truly non-resident, then OETC wouldn't apply, one simply wouldn't be taxable in canada on that income.
That is why I asked about the residency status of our poster.
You are taxable in US on your US-sourced income because you have been in US tooo long, and you have a fixed based. Your being on L1 would seem to indicate a US firm employs you, thus your income is taxable there on a 1040NR.
I can buy that you remain Cdn resident, but you do have a choice.
If one were truly non-resident, then OETC wouldn't apply, one simply wouldn't be taxable in canada on that income.
That is why I asked about the residency status of our poster.
You are taxable in US on your US-sourced income because you have been in US tooo long, and you have a fixed based. Your being on L1 would seem to indicate a US firm employs you, thus your income is taxable there on a 1040NR.
I can buy that you remain Cdn resident, but you do have a choice.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best