Corp-to-Corp contract in New York

behnamkarimi
New Member


Development Manager

Joined: 19 Aug 2008
Posts: 1

Posted: Tue Aug 19, 2008 9:47 pm

 

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Hi,

I have an offer for a corp-to-corp contract in New York city. I have the following questions:

1) How much taxes I should pay (percentage)?
2) Do I need to declare my income to Canadian Government? Or they are automatically informed?
3) How much does it cost (in average) to hire an accountant for book keeping?

Your answer is already appreciated.

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Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 1587
Location: Calgary

Posted: Wed Aug 20, 2008 9:45 am

 

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3) A lot for this kind of thing.
1) Hard to say, don't know what kind of corporation you're using, where the corporation is (hence the rate) and I don't know off-hand what the NY corporate rate is.
2) Of course you do (as with all other income), on the corporation's T2 return, the corporation also has to file an 1120-F non-resident corporation tax return in the US to report US-source income (and possibly something similar in NY State) and pay tax on that income in the US. Also must claim a tax treaty position on Form 8833 to avoid US non-resident withholding tax (this is very important to do otherwise your client can end up in a mess with the IRS for not doing the withholding).

US corporate income tax rates are far higher than the CCPC rates in Canada, but the Canadian corporation can claim a foreign tax credit up to the CCPC rate on T2 schedule 21.

Your personal income from the corporation in Canada isn't that big of a deal as it still comes from a Canadian-resident corporation so essentially it all works the same as you are also a Canadian resident.

If you own a CCPC, DO NOT move your personal tax home to the US otherwise the CCPC reverts to being a normal corporation and gets hit with normal corporate tax rates, plus you personally will get hit with departure tax. If you plan on moving to the US it's a very tricky thing to do tax-wise if you own a CCPC.
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Steve.

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