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Canadian Tax and
Financial Information
Foreign Employers in Canada

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Personal Tax
Business -> Foreign employers in Canada

Tax Deductions - Foreign Employers 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

bullet income taxes
bullet Employment Insurance (EI) premiums, except when
bullet it appears that, because of the laws of the foreign country, a duplication of premiums or benefits would result
bullet 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) agrees.
bullet 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 Quebec.

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

bullet who is a resident of Canada, no withholding taxes are required
bullet who is a non-resident of Canada, a withholding tax of 15% is required

See also:

    - Who pays tax in Canada, and on what income? - re residents/non-residents

    - Calculating payroll tax deductions and automobile taxable benefits

    - Are you an employee or a self-employed contractor?

CRA Resources:

    - Residency of a corporation

    - Tax Treaties

Revised: October 27, 2017

 

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