US Citizen getting CDN residence, working for US Company

almost.canuck · Post by **almost.canuck** » Fri Apr 17, 2009 2:33 pm

I am currently in the process of getting Canadian Permanent Residency.

I intend to move to Canada on a permanent basis and potentially apply for Canadian Citizenship in the future.

I am a US Citizen working for a US Company. My company has offered to continue to employ me after moving too Canada. I would be working from home and traveling to the US about 40% of the time. This is identical to my current position, working from home and traveling around the country, but I would simply have a residence in Vancouver, instead of Denver.

I've been reading about taxation and tax treaties and I'm concerned that a US Citizen, working for US Company, but living in Canada might not avoid double taxation under the tax treaty. Is this accurate?

I have seen some suggestion that this situation is best handled as a contractor, but I'm not sure my company would be willing to do that, or how it would even be possible, given my salary is primarily performance-based bonuses and I'm continue to receive my salary despite some long periods of self-study or inactivity.

My company currently also pays many expenses, such as my home telephone, Internet, All health insurance, some transportation (car mileage, parking, taxi), etc. and pays all expenses for travel including food and a per-diem. These are primarily not taxable at this point, being business expenses, and I provide all receipts, etc to validate that.

Much of my family is living in Canada, as well as many friends and I have been planning to move for ages, but I'm sure you can understand why I would like to keep my current job as long as possible.

Do you have any thoughts as to how this might best be handled?

Thanks!

almost.canuck · Post by **almost.canuck** » Fri Apr 17, 2009 2:55 pm

Also,

I was planning on starting a retirement account (probably Roth IRA) this year. Is this the best structure if I was to live in the US intermittently, but primarily in Canada?

I understand that the Roth can't be contributed to while in Canada, but can be "frozen" and used later as according to tax treaty as if it were a "pension", and therefore, not taxed.

Correct me if I'm wrong.

Thanks!

nelsona · Post by **nelsona** » Fri Apr 17, 2009 3:14 pm

I've been reading about taxation and tax treaties and I'm concerned that a US Citizen, working for US Company, but living in Canada might not avoid double taxation under the tax treaty. Is this accurate?

IRS and canada have sufficient rules without the treaty to avoid "doube" taxation. But, as a resident of canada and US citizen, you will be reporting all your income to both IRS and CRA. Then a number of tax credits and exclusions will reduce your overall tax to almost the toatl that it would be if you were working ad living in BC .

Had you started a Roth 10 years ago, You would be fine leaving it as is . But to start funding one now, until you move to canada, is adding complexity that is simply not worth it. Keep your savings unsheltered for now, and start funding an RRSP when you move to canada.

If your US firm is going to employ you while in Canada, they should either be setting up Cdn payroll for you, or hiring you as a contractor.