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Tax deductions to be withheld by foreign firms
paying employees or self-employed contractors working in Canada
Income Tax Act s. 153, Regulations s. 100 to 105
Canada Pension Regulations s. 22
Employment Insurance Act s. 5
Employers resident in another country who have employees in
Canada (either resident or non-resident in Canada) are responsible for collecting
Employment Insurance (EI) premiums, except when
it appears that, because of the laws of the foreign country,
a duplication of premiums or benefits would result
the employment in Canada is by a foreign government or
an international organization, unless the foreign employer agrees to cover
its Canadian employees under Canada's EI legislation. The employment
will then be insurable if Human Resources and Social Development Canada (HRSDC)
Canada Pension Plan (CPP) contributions, at the option
of the employer. This coverage is applied for by the employer,
by completing Form
CPT13 from the Canada Revenue Agency (CRA) website, except for employees
employed in the Province of Québec.
However, a tax treaty between Canada and the
country of residence of a non-resident employee may provide for relief from
Canadian tax deductions.
If the foreign firm is paying for services rendered in
Canada by a self-employed contractor
who is a resident
of Canada, no withholding taxes are required
who is a non-resident of Canada, a withholding tax of 15%