If you’re a Canadian or U.S. citizen living abroad, working abroad, or with investments or real estate in a country other than your own, our team of specialized tax accountants can answer your questions about your expatriate, cross-border or non-resident income tax filing obligations.
Citizen Abroad Tax Advisors has been providing expert guidance and advice to American expatriates for more than 40 years. In that time we’ve come to know the most common cross-border and non-resident income tax questions U.S. citizens have when they’re working or living in Canada or overseas.
Find your tax question among the categories below:
Frequently Asked Tax Questions for Expatriate Assignment Tax Programs
Short answer, yes. At the bare minimum, the US entity would be required to report the salary of the employees to Canada Revenue Agency and remit payroll withholdings unless a withholding waiver is obtained either on a blanket level (covering all employees) or on an individual level.
However, if a waiver is not obtained, remitting payroll tax withholding for the employee does not necessarily mean this is a final tax obligation. An individual Canadian tax return would need to be filed by the employee and either a refund obtained as the employee could be exempt from final Canadian taxation under the Canada-US tax treaty or a refund or additional tax liability could be calculated on the filing of the return if the employee is taxable in Canada.
By the way, a similar process is required for Canadian employees temporarily working in the US regardless of their final tax liability.
It depends. As figuring out the complexities of multi-country and cross-border taxation are often overwhelming, many employers choose to cover or provide, at a minimum, foreign country (in this case Canada) tax return services to employees. Many companies also decide to provide home country (in this case the US) tax return services to ensure that the employee is not subject to double taxation.
Other companies, understanding that a US employee working in Canada may be subject to higher income tax rates in Canada on the income earned while working there, may choose to ‘equalize’ the employee on the difference between the US tax and the Canadian tax on the same income (essentially reimburse the employee for the additional Canadian tax paid due to working in Canada). This typically involves providing the employee with tax return services and ensuring that payroll on both sides of the border is aware of the steps required to make this possible.