Tax treatment for a Canadian contractor working in Canada for US firm

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tchains
Posts: 14
Joined: Mon May 07, 2018 4:58 pm

Tax treatment for a Canadian contractor working in Canada for US firm

Post by tchains »

Hi there, does anyone here have experience working as a Canadian contractor working in Canada for a US firm? How are taxes typically treated? Are they simply remitted as one sum when filing taxes at the end of the year?
nelsona
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Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by nelsona »

Anyone self-employed in Canada, typically has to remit taxes quarterly, or be subject to late penalties. The first year you might be able to avoid this, but anytime you owe "too much: tax at year-end, CRA will put you on remittance schedule subsequent years.
You'd be best estimating your taxes, and sending them quarterly from the get go.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
tchains
Posts: 14
Joined: Mon May 07, 2018 4:58 pm

Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by tchains »

Thanks Nelsona.
If the person is not self-employed but rather a T4 employee with a GEO such as Manpower (Canada), do you know how equity compensation is treated from a US company? Would it be more cost-effective to receive X in additional T4 salary, or receive equity (RSUs) from a US company?
tchains
Posts: 14
Joined: Mon May 07, 2018 4:58 pm

Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by tchains »

hmm can't find the edit button.
meant to say "..or receive X in equity (RSUs) from a US company?"
nelsona
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Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by nelsona »

That is for you to decide. I would think contracting would be better, particularly if you get no benefits. Contracting pays MORE than employee typically, not the other way round.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
tchains
Posts: 14
Joined: Mon May 07, 2018 4:58 pm

Re: Tax treatment for a Canadian contractor working in Canada for US firm

Post by tchains »

Ok. Did a bit more research. Tax treatment seems similar, however with equity from a US co, a Cdn resident is able to defer tax owing with W-8BEN form. All else being equal, this is preferred.
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