Expert: Shirley McAllister, CPP, PHR - 9/22/2009

Question
QUESTION: Hello,

 I am an employer working out of our corporate office in the US however we have set up a permanent establishment in Ontario and pay all our payroll and taxes out of Ontario.  We currently have a payroll service that pays our taxes on our behalf as far as CPP, EI, EHT, Provincial, Ftax.  My question is I currently have a Canadian employee that is a Canadian citizen however, he currently gets a reduction of income tax per the CRA for 2008 and 2009.  His deduction is $33,300 per year.  Now this employee has earned wages in both the US and Canada through out the year of 2009.  Since this income tax deduction is strictly for ftax only is the employer still liable to withhold provincial taxes from the income worked in Canada only or from all the income earned in both Canada and the US.  Keep in mind that he solely gets his whole paycheck paid out of Canada regardless of what country he is physically working in.  Please HELP it would be greatly appreciated if you could guide me to a source that states this as well???

Thank you again,
Monique Rivera
CIBER payroll


ANSWER: Canadian residents
A person who is a resident of Canada is subject to Canadian income tax on their world wide income. This would be all income U.S. and Canadian.

The information on the CRA web page Individuals - International and Non-Resident Taxes as well as their guide T4058 Non-Residents and Income Tax would be helpful to you.

you also need to review the tax treaty between the U.S. and Canada as it did have a change in 2008.

Shirley

Monique,

Here is a nice newsletter which I get that has information for U.S. Employers with employees in Canada. You might wish to take a look at it.
http://employmentlawpost.com/northernexposure/?HLR

Just subscribe to the ezime and you will receive it , I think I get it about once a month.

Shirley


---------- FOLLOW-UP ----------

QUESTION: Thank you so much.  I will take a look at subscribing to this newsletter.  Anything that will help please let me know.  Thank you again.

Monique

Answer
I forgot to say the newsletter is free.

Also I will try and remember , but I get between 20 and 60 questions a day so to find them again is a little hard to do.

If you do have more questions please ask me and I will do my best to answer them.

Shirley