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Immigration Forum / Canada / May 2008US Resident Working Temporarily in Canada: Owe Canadian Taxes?
Hi all: I have an offer to do an IT contract work in Toronto for roughly a year. I will be commuting weekly from New York. CAN ANYBODY PLEASE TELL ME IF I WILL BE LIABLE FOR CANADIAN TAXES? I have an opportunity in Canada and one locally in the US, so I'm trying to figure out if I will pay more in taxes (US+Canada) if I take the one in Canada. Will the rules change, if I stay in Toronto for work months at a time instead of coming back to New York every week? ------- I searched the web, but I haven't been able to digest the info fully. I and also have a tax attorney involved, but he's very slow and don't have any answer yet...while I am being hounded to make a decision quickly on which opportunity am I going with. I see info on whether I can get waiver or reduction of Canadian tax deduction, but more than such waiver, I am interested in the ultimate amount I will be liable for. What % will the Canadian tax be? How does that affect my US taxes? I believe US has rules about no double taxation, but still I know taxes are higher in Canada, so I may end up paying more if I take the Toronto work. These facts may be relevant: -I am a permanent resident of US, so I will be applying for a "temporary worker permit" -I have the option of using a LLC or my own name in the contract -The people with whom I will have the contract will pay the Canadian GST. Thanks in advance. > Hi all: > I have an offer to do an IT contract work in Toronto for roughly a [quoted text clipped - 31 lines] > > Thanks in advance. With what you will be paid, you can well afford to PAY for good advice from an accountant well versed in both U.S. and Canadian tax laws. You don't do your own dental work, why expect freebies here? > <cool.deve...@gmail.com> wrote in message > [quoted text clipped - 39 lines] > an accountant well versed in both U.S. and Canadian tax laws. You don't do > your own dental work, why expect freebies here? Agree. However, as I mentioned in the post, I have an accountant, who is taking a while to get me the answers, while I have a limited time in which to choose between the US and Canadian opportunities. So I am still in a quandary. So far, I have figured out that using my LLC is a no go, because then I will definitely pay Canadian taxes (there's an exception, but I don't want to go that route). So, now the question is, as an independent contractor, what are the criteria they use to figure out whether I need to pay Canadian taxes or not? Is it mainly the # of days I spend in Canada during the tax year? If I have to pay taxes, for Ontario, how can I have a rough estimate of the tax due...any on-line calculators or tax tables? I can already see a mess, because I will have to worry about deductions I would be allowed here in the US, that I may lose if I am paying Canadian taxes. >> <cool.deve...@gmail.com> wrote in message >> [quoted text clipped - 35 lines] >> >> > Thanks in advance. Normally, there are tax treaties between the US and other countries covering this. Again, normally, these treaties allow for one to work up to 180 days in a calendar year without paying tax in the foreign country. Over that, you pay the foreign tax. I would assume one of these exists between the US and Canada but I don't know for sure. I have worked in several countries under these treaties and never paid tax there as a result. > Normally, there are tax treaties between the US and other countries > covering this. Again, normally, these treaties allow for one to work [quoted text clipped - 3 lines] > have worked in several countries under these treaties and never paid > tax there as a result. John, can you clarify on your statement...."and never paid tax there as a result". Do you mean US is your permanent residence and while working in other countries you never had to pay taxes in those other countries? That is when your presence in the country was less than some number of days of that calendar year? Do you mean you have done this in Canada as well? >> Normally, there are tax treaties between the US and other countries >> covering this. Again, normally, these treaties allow for one to work [quoted text clipped - 11 lines] >when your presence in the country was less than some number of days of >that calendar year? Yes, that's right. >Do you mean you have done this in Canada as well? Yes though a while ago. You can read the relevant section of the treaty for yourself here. It appears to be 183 days in the case of Canada. http://www.intltaxlaw.com/treaties/canada/treaty.htm > >> <cool.deve...@gmail.com> wrote in message > [quoted text clipped - 43 lines] > have worked in several countries under these treaties and never paid > tax there as a result. Whether you worked/lived in Canada less than 183 days, you still need to pay taxes on your Canadian income. The 183 day rule is to determine if you are resident and, if so, you ALSO need to pay taxes on your non- Canadian income. > The 183 day rule is to determine if you are resident and, if > so, you ALSO need to pay taxes on your non- Canadian income. That actually incorrect (but in the other direction). 183 days is for "deemed resident", basically a harsher classification then normal resident seemingly for people try to get away from being classified as normal resident. For CRA, normal / factual resident have nothing to do with how long one's stay in Canada, but only with "residential ties" in Canada. Major residential ties are place of residence, spouse, or dependents. If you have any one of them in Canada, you will be considered Canada resident for tax purposes, regardless of imigration status and whether you spent any one day in Canada. In the other hand, you will be considered resident only when you have the ties. So you can be resident only part of the year. For instance, on July you go to Canada for a week, lease an apartment and keep the lease until the end of the year, then you will be considered resident of Canada from July until the end of the year, eventhough you only spent a week in Canada. In the other hand you won't be considered resident the whole year. As resident, one's world wide income is subjected to Canadian tax. Read more in this official document from CRA: "Determination of an Individual's Residence Status" http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/  Signature(stephan paul) Arif Sahari Wibowo _____ _____ _____ _____ /____ /____/ /____/ /____ _____/ / / / _____/ http://www.arifsaha.com/ Disclaimer: IANAL, IANALP, IANAMD, IANAMP, IANAAP my statements - if any - should be treated as such. You need a permit to work in Canada and yes you will be liable for taxes. Signature<a href="http://www.PakistanGiftsShop.com">Send Gifts to Pakistan</a> | <a href="http://www.PakistanGiftsMall.com/Cakes/Default.aspx">Send Cakes to Pakistan as Gifts</a> | <a href="http://pakistangiftsemporium.com">Send Cakes, Flowers and Other Gifts to Pakistan</a> > Hi all: > I have an offer to do an IT contract work in Toronto for roughly a [quoted text clipped - 31 lines] > > Thanks in advance. |
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