Canadian working remotely from Canada for US company

If we travel or live abroad, we usually come back to visit right? Here's a the place to meet other "re-pats" and Canadians who have returned.
Cronos CanadaNew Member
Posts: 3
Joined: Tue Nov 22, 2016 7:47 am

Re: Canadian working remotely from Canada for US company

Post Wed Nov 23, 2016 1:19 pm

As foreign companies generally do not have a legal presence in Canada (i.e. a subsidiary, division, or incorporated company), they cannot hire you as an employee. This is because you are neither a US resident (or a resident of whatever country they are from) where they can withhold your income tax and submit it to their local tax authority such as the IRS, OR they are not a legal entity in Canada where they can withhold your income tax in Canada and submit it to CRA.

The only way they can hire you is to treat you as an independent contractor where the relationship is purely business to business which is 100% legal. The foreign company would pay your Canadian company (not to you directly) as your foreign client and you would then pay yourself from your own Canadian company to yourself personally including handling all Canadian tax requirements from business income taxes for your company, to personal income taxes for yourself from both the employer and employee perspective. It's a lot of paperwork and taxes to make this all work!

However, what's 100% legal for the foreign company to pay you in a business to business manner, may not be 100% legal for you due to CRA worker mis-classification rules. Generally speaking, CRA doesn't like to see small businesses with just 1 client as they feel that means an employer-employee relationship and not real a business to business relationship. In such cases, CRA typically goes after the business if they are in Canada for worker mis-classification and fine them with heavy penalities. Since CRA can't do that with with your foreign client as they have no legal presence in Canada, they will go after YOU as the independent contractor instead, by declaring your company a PSB (Personal Service Business). With this nasty designation, you can no longer write off business expenses or utilize the small business tax rate. Suddenly, you will likely find yourself in the highest personal income tax bracket as all the revenue from your small business would be deemed as your personal income by CRA!

This is why you should consider the services of my Canadian based company, as we act as the legal co-employer for your foreign employer in Canada so that you can be hired as a legal employee in Canada. Feel free to contact me at 604-200-4817 ext 29 for more info or email me at doug @ teamcronos. com.
Last edited by Cronos Canada on Wed Nov 23, 2016 2:25 pm, edited 2 times in total.

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