Claiming Canadian work experience when you didn't pay Canadian Taxes

[NaomiJ22]

Hi all,

Looking for some insight here as I'm getting a lot of mixed responses from others I ask about this. My partner and I are applying for PR with him as the primary and me as the dependant. He is a US citizen and works for a US Railroad Services company and has for a number of years. He worked in Canada for a year and a half on several different projects for the Canadian branch of his same company (contracted by CN). He had several valid LMIA exempt work permits from each stint. However, how it was set up he was still paid by the American company in USD and did not receive T4s or pay Canadian taxes. I expressed this concern earlier on that we couldn't claim his Canadian work experience because of this, but was told by numerous people as long as he had valid permits we still could. Is anyone able to clarify further on this? We have submitted into the pool but I'm concerned this is going to be an issue if we get an ITA. Without Canadian work experience the points drop drastically.

 

[canuck_in_uk]

Hi all,

Looking for some insight here as I'm getting a lot of mixed responses from others I ask about this. My partner and I are applying for PR with him as the primary and me as the dependant. He is a US citizen and works for a US Railroad Services company and has for a number of years. He worked in Canada for a year and a half on several different projects for the Canadian branch of his same company (contracted by CN). He had several valid LMIA exempt work permits from each stint. However, how it was set up he was still paid by the American company in USD and did not receive T4s or pay Canadian taxes. I expressed this concern earlier on that we couldn't claim his Canadian work experience because of this, but was told by numerous people as long as he had valid permits we still could. Is anyone able to clarify further on this? We have submitted into the pool but I'm concerned this is going to be an issue if we get an ITA. Without Canadian work experience the points drop drastically.

If he lived here for a year and a half, he was likely a deemed resident required to file Canadian taxes.

 

[NaomiJ22]

If he lived here for a year and a half, he was likely a deemed resident required to file Canadian taxes.

Yes, I am aware this is how it works. As I explained above this is not the case- he has no T4s, and was considered to be working 'on the road' and was still paid by the US branch of the company in USD

 

[scylla]

Yes, I am aware this is how it works. As I explained above this is not the case- he has no T4s, and was considered to be working 'on the road' and was still paid by the US branch of the company in USD

You don't actually need a T4 to file Canadian taxes (many file without having a T4). If he spent enough time in Canada to claim one or more years of Canadian work experience - then he would have been a deemed resident and would have been required to file with CRA. T4s and/or Notice of Assessments (results of CRA return) are typically submitted as proof of Canadian work experience as part of a PR application. I don't know if it's possible to have the Canadian work experience accepted without some sort of tax proof - it's possible it may be. I'm sure someone will drop by this thread sooner or later to confirm.

 

[canuck_in_uk]

Yes, I am aware this is how it works. As I explained above this is not the case- he has no T4s, and was considered to be working 'on the road' and was still paid by the US branch of the company in USD

It was the case. As he was paid in the US, he would have declared it in his Canadian tax return as foreign income, which doesn't require a T4.

He should correct this and file Canadian taxes.

 

[NaomiJ22]

It was the case. As he was paid in the US, he would have declared it in his Canadian tax return as foreign income, which doesn't require a T4.

He should correct this and file Canadian taxes.

This is information I brought up to him at the time I was doing my own Canadian taxes last year, and he looked into it- however the company told him it wasn't necessary (very large company with legal reps handling the back and forth so I have no idea what was going on to be honest). Hence why I'm very confused. Do you suggest he try and file Canadian taxes now, and will this have a negative repercussion if we do get an ITA? I'm not sure how that works now that we are both no longer residing there.

Edit: He never obtained a SIN- he still used all his US bank accounts, phone plan etc as he went back to the US frequently. So I believe this means he can't even file? Bit of a sticky one here

 

[canuck_in_uk]

This is information I brought up to him at the time I was doing my own Canadian taxes last year, and he looked into it- however the company told him it wasn't necessary (very large company with legal reps handling the back and forth so I have no idea what was going on to be honest). Hence why I'm very confused. Do you suggest he try and file Canadian taxes now, and will this have a negative repercussion if we do get an ITA? I'm not sure how that works now that we are both no longer residing there.

I suggest he contact CRA about this. He can also submit a form to CRA to ask for a residency determination.

 

[rily]

In my opinion, your case was temp internal transfer. I don't think he had residency in Canada either right? I'm not sure if he is qualify under CEC. If I were you, I will put 1.5 year under FSW to be safe. I don't think he had to file taxes. My company uses to do the same fly people in or out between US and Canada wherever the other need help under NAFTA agreement.

 

[NaomiJ22]

In my opinion, your case was temp internal transfer. I don't think he had residency in Canada either right? I'm not sure if he is qualify under CEC. If I were you, I will put 1.5 year under FSW to be safe. I don't think he had to file taxes. My company uses to do the same fly people in or out between US and Canada wherever the other need help under NAFTA agreement.

Hmm. Thank you for this insight- I feel as though you may be right. It's tricky territory because he physically lived and worked at a Canadian location for a year and a half, so naturally we felt this would have to count. I may need to seek legal advice for this. Without the Canadian work experience, our points would be well under even the realm of possibility for receiving an ITA.

 

[zardoz]

Hmm. Thank you for this insight- I feel as though you may be right. It's tricky territory because he physically lived and worked at a Canadian location for a year and a half, so naturally we felt this would have to count. I may need to seek legal advice for this. Without the Canadian work experience, our points would be well under even the realm of possibility for receiving an ITA.

Without either a SIN or a Work Permit, I can't see any possible way that this can be considered as "Canadian experience". At best, it wasn't Canadian employment and at worst it was illegal work.

https://www.cic.gc.ca/english/helpcentre/answer.asp?qnum=730&top=29

Your scenario fails on at least one of two counts.

What kind of work experience do I need to apply for permanent residence under the Canadian Experience Class?
To apply for permanent residence under the Canadian Experience Class, your skilled work experience must:

• be in a job classified as skill type 0, or skill level A or B according to the 2016 National Occupational Classification,
• amount to at least one year of full-time (or an equal amount in part-time) in the previous three years,
• have been with an employer in Canada (self-employment does not count),
• be gained with the proper legal authorization (for example, as a documented worker with a valid work permit), and
• not be gained while you were studying on a student permit.

 

[NaomiJ22]

Without either a SIN or a Work Permit, I can't see any possible way that this can be considered as "Canadian experience". At best, it wasn't Canadian employment and at worst it was illegal work.

https://www.cic.gc.ca/english/helpcentre/answer.asp?qnum=730&top=29

Your scenario fails on at least one of two counts.

What kind of work experience do I need to apply for permanent residence under the Canadian Experience Class?
To apply for permanent residence under the Canadian Experience Class, your skilled work experience must:

• be in a job classified as skill type 0, or skill level A or B according to the 2016 National Occupational Classification,
• amount to at least one year of full-time (or an equal amount in part-time) in the previous three years,
• have been with an employer in Canada (self-employment does not count),
• be gained with the proper legal authorization (for example, as a documented worker with a valid work permit), and
• not be gained while you were studying on a student permit.

It was not illegal work. He had three separate LMIA exempt closed work permits from his time there, and was assessed for eligibility each time. Though I don't fully understand the agreement, it was a very large company contracted by CN (a Canadian company) and backed up by immigration lawyers. Obviously I need to seek legal advice to clarify a lot of what has been discussed here.

 

[Copingwithlife]

What’s confusing is that they went thru the procedure to get him multiple exempt LMIA’S, but then never put him on the Canadian companies payroll account to make him an employee of that Canadian company, nor did he apply to get a temporary SIN from ESDC
He in affect was never hired by the Canadian company he was doing the work for, sounds like a sub contractor situation, wasn’t on the companies books at all. Were they aware you were going to go the CEC route to apply for PR with this work ?
The “have been with an employer in Canada“ sounds like one has to be employed by an employer in Canada , and he never was since all his remuneration came from the company aka his employer in the USA

 

[zardoz]

It was not illegal work. He had three separate LMIA exempt closed work permits from his time there, and was assessed for eligibility each time. Though I don't fully understand the agreement, it was a very large company contracted by CN (a Canadian company) and backed up by immigration lawyers. Obviously I need to seek legal advice to clarify a lot of what has been discussed here.

https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/operational-bulletins-manuals/permanent-residence/economic-classes/experience/qualifying-work-experience.html

 

[zardoz]

What’s confusing is that they went thru the procedure to get him multiple exempt LMIA’S, but then never put him on the Canadian companies payroll account to make him an employee of that Canadian company, nor did he apply to get a temporary SIN from ESDC
He in affect was never hired by the Canadian company he was doing the work for, sounds like a sub contractor situation, wasn’t on the companies books at all. Were they aware you were going to go the CEC route to apply for PR with this work ?
The “have been with an employer in Canada“ sounds like one has to be employed by an employer in Canada , and he never was since all his remuneration came from the company aka his employer in the USA

Exactly. There was never an employee-employer relationship with the Canadian company. The relationship was with the US company. The fact that the US company was contracted to supply services to a Canadian company doesn't meet the published criteria.

 

[Copingwithlife]

What the O/P could do, but could open a can of worms with the Canadian company visa vie payroll taxes . Is file a CPT1 with the CRA and ask for a ruling if the person was in affect an employee with the Canadian company. Was there an employee employer relationship in effect. If the ruling is a yes, then the company in question owes payroll taxes as if they were an employee of the Canadian company. This would involve CPP, EI taxes , and of course penalties, interest
And the person would have to file taxes with the CRA
The O/P could then tell the IRCC, yes the person was an employee with a Canadian company in the eyes of the CRA
I believe the deadline for filing these is June 30 of the year after the period in question