Cross-border telecommuting

[fizzlefunk]

Hey folks!

I'm a US citizen currently employed by a US company, and being in IT, my job can be done remotely. I'd like to work for my company remotely from Canada, though the company's legal team is understandably cautious and concerned about possible tax liability and implications.

I understand the US-Canada tax treaty eliminates double taxation, and there are social security provisos to transfer credits between the two nations. My company has no presence in Canada, and I would be paid in US funds to a US bank.

Questions:
-Is this legal? (links to relevant passages/documents would be greatly appreciated)
-What visas, if any, would be required?
-Does the company need to do any special legwork -- file forms, interact with the CRA, etc?
-Does my working remotely from Canada establish a "business presence" by the company in Canada, exposing them to tax liability as a non-resident corporation?

 

[fizzlefunk]

Just to follow up on my own post, I found this in the CIC document FW1 "Temporary Foreign Worker Guidelines":

What kind of activities are not considered to be “work”?
• An activity which does not really ‘take away’ from opportunities for Canadians or permanent residents to gain employment or experience in the workplace is not “work” for the purposes of the definition.

This is followed up by

Examples of activities for which a person would not normally be remunerated or which would not compete directly with Canadian citizens or Permanent Residents in the Canadian labour market and which would normally be part-time or incidental to the reason that the person is in Canada include, but are not limited to:

• long distance (by telephone or internet) work done by a temporary resident whose employer is outside Canada and who is remunerated from outside Canada;

Cool, that answers the "what visa" question -- none!

The tax implications I'm curious about. I would assume that it works out, in the end, that my US company does business per usual though I may want to tweak my withholdings; come tax time, I would file with both the US and Canada, and then remit payment (or request refund) from the country in which I was a "tax resident" (>183 days, significant ties), and pay the difference (if any) to the other contracting state. Obviously it'd be wise of me to hire an accountant specializing in this sort of arrangement, but the onus of taxes falls on me -- not my company... correct?

Sorry for all the questions, it's just a lot to wrap one's head around (especially if you don't speak a lick of legalese)! Just trying to make sure I've got all my i's dotted and t's crossed for when I present my case to my company.

 

[plg]

Did you end up finding answers to your other questions? (ie telecommuting establishing a "business presence" etc..)

I'm in a very similar situation and trying to find out answers to the same questions.

thanks

 

[Jonboy]

With the greatest of respect to you both, is this something you should be researching on your employers behalf? If they need tax advice shouldn't they be going to their advisers and paying for it?

It is a subject that is far too complex to deal with in a few lines here.

 

[thrashertm]

Did you end up finding answers to your other questions? (ie telecommuting establishing a "business presence" etc..)

I'm in a very similar situation and trying to find out answers to the same questions.

thanks

I'm in the same position. I'd love to hear a definitive answer from someone that has successfully made the move. It seems like it's possible for a US citizen to live in Canada for 6 month stints, travel back to the US, then re-enter Canada.

 

[cec_guelph]

I would also like some clarification on this. Does the firm have to have no Canadian operations at all, or can we telework with a U.S. companies American division on their American payroll?

It would be a great opportunity for those of stuck on implied status etc. to be able to work legally while visiting Canada.