 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
 |
| Non-resident Employees of Canada - Services in Canada As the mobility of the global workforce increases, there has been a corresponding increase in non-resident employees working on short-term assignments in Canada. Notwithstanding that many of these employees may not ultimately be liable for Canadian tax due to treaty provisions, there are reporting requirements for the employee and reporting and withholding requirements for the employer. Many short-term non-resident employees are subject to Canadian tax under domestic law, but are exempt by virtue of the employment services Article of a Tax Treaty (for example Article XV of the Canada-US Income Tax Convention). Such individuals can be exempt from Canadian tax under the de-minimus test, or the "less than 183 days" rule. However, short-term employees in Canada for less than 183 days in a given calendar year can still be taxable in Canada if their salary was charged to an employer who is a resident of Canada, or borne by a permanent establishment or fixed base which the employer has in Canada. This second test involves a number of questions of fact that should be carefully considered prior to making a conclusion that a particular employee is treaty-exempt from Canadian tax. Employers, whether Canadian or non-resident, are required to withhold and remit employee income tax to CRA and report employment income on Form T4. If an employer fails to withhold and remit the required taxes, as set out in Regulation 102 of the Income Tax Act, the employer is liable for the amount of tax that should have been withheld, plus interest and penalties. In February of 2005, the CRA updated and reissued Information Circular 75-6R (IC75-6R2). In this IC, the CRA indicates that it may grant a waiver from employment withholding under Regulation 102 to employers where payments are made to treaty-exempt individuals. Such a waiver, if granted, will waive the employer’s obligation to withhold Canadian income taxes. The CRA expects non-resident individuals performing services in Canada to file Canadian income tax returns so that a final tax liability can be determined upon assessment of the tax returns. In addition, a timely filed Canadian tax return provides the employee the protection of the statute of limitations contained within the Income Tax Act.
|
 |
 |
 |
|