Author Topic: Options for Remote Employee in Canada working for US Company  (Read 2329 times)

savage_detective_stache

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Options for Remote Employee in Canada working for US Company
« on: November 08, 2019, 02:38:55 PM »
Hi,

My family will be relocating from the US to Canada in Spring as Permanent Residents (woo hoooo!).  Her employer wants to keep her on, but on a part-time basis.  So realistically $25-$40k per year.  What is the best way to do this?  I've received conflicting advice.

An employer of record service or PEO seems to be too expensive for a single PT employee at this compensation level.
An independent contractor option seems like it might make more sense, but I understand there could be a lot of added costs to her/us, as well as added complexity for filing taxes, charging sales tax (?) and the like.  Not to mention it is technically not a contractor relationship as she'd still have her work computer, work for a single employer, who would have a say over what she does, etc.

Someone else tole me they could just keep paying her US bank account as if she was still an employee here, and there wouldn't really be any problems.  This seems too good to be true, but it was someone that has experience consulting on cross-border payroll issues.  It seems like the only way this would work is if my wife didn't claim the income with the CRA, which we don't want to do anything illegal like anyway.

What is the least friction path forward (for both me and my wife and her employer) as well as the option that will keep the most money in our pockets?

Thanks for any advice

Freedomin5

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Re: Options for Remote Employee in Canada working for US Company
« Reply #1 on: November 08, 2019, 03:46:18 PM »
I could be wrong, but in the past I just had the company keep paying into the bank account. Your wife is doing US-related work for a US company. As long as sheís paid in US dollars, I donít see the problem. My mom (Canadian working for a Canadian company) used to take year-long US-based consulting projects. She was on contract with the Canadian company and billed the Canadian company for servicing their client, and she was paid in Canadian dollars. She didnít have to declare US income.

I think itís a bit like geo arbitrage. If Iím an American and I telecommute/work from home for an American company, but I spend the year living in Thailand, Iím not expected to pay Thai taxes. Iíd pay American taxes.

JLee

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Re: Options for Remote Employee in Canada working for US Company
« Reply #2 on: November 08, 2019, 03:56:12 PM »
I (US citizen) worked remotely from Canada for 3-4 months.  I was working for a US company servicing US customers and Canadian customs/border people did not care.   If I was working for a Canadian company / taking a job from a Canadian citizen, then they would have had an issue with it.

I was just visiting, though, so things may be a bit different for you?

savage_detective_stache

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Re: Options for Remote Employee in Canada working for US Company
« Reply #3 on: November 08, 2019, 04:04:05 PM »
Thanks.  I think the issue that I'm worried about is that she'd be getting paid as a full benefits employee. Like this is why PEO organizations exist.  Because supposedly if you employ someone abroad (in a non subcontractor capacity), you must follow their labor laws and withhold local taxes etc.  Like maternity benefits.  Let's say we had another kid.  There aren't really US laws for paid leave, but local laws for paid leave in Canada may exist.  Wouldn't they need to be compliant financially and from a tax and labor law perspective?  Or is that just if we were getting paid in CAD by a Canadian company?


This article sort of hints at the challenges - https://medium.com/prooftrading/hiring-a-remote-employee-in-canada-1f9dd02e91c4
« Last Edit: November 08, 2019, 04:11:12 PM by savage_detective_stache »

FLBiker

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Re: Options for Remote Employee in Canada working for US Company
« Reply #4 on: November 25, 2019, 11:37:07 AM »
Posting to follow, mostly.

We're also relocating to Canada as PRs in the Spring, and I'll be continuing to work as a remote employee.  My company has employees in a bunch of countries (UK, US, China, etc.) but I think outside of the UK and the US folks are mostly independent contractors.  That may end up being the route I go, but I'll also bring up a PEO.  I don't have a strong opinion, honestly.  If I am an independent contractor, I'll ask for the amount I currently get in benefits (~30%) as salary.  We'll see!

FIRE Artist

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Re: Options for Remote Employee in Canada working for US Company
« Reply #5 on: December 09, 2019, 02:15:17 PM »
I worked for many years as an international commuter for a US based company while living in Canada, so I have some experience but not exactly the same, I was paid by a foreign company, but the work I performed was physically done on foreign soil.  I suspect that because your wifeís work is domiciled in the US, and is not for the benefit of Canada - i.e. not working with Canadian clients, not making Canadian sales, etc, I donít think that the work would be considered Canadian domestic work just because she telecommutes.  It is likely the virtual equivalent of someone who drives across the border every day to work - those folks donít have to follow Canadian labour laws because the work is not done in Canada. 

Assuming I am correct, all you have to do is claim your foreign source income on your Canadian income tax return, you get credit for income taxes paid to the US. 

Maternity benefits are paid out through the employment insurance program in Canada, so your wife would not be eligible to collect when on mat leave because she would not be paying into that, and would not have the same amount of time off as other Canadians. 

FIRE Artist

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Re: Options for Remote Employee in Canada working for US Company
« Reply #6 on: December 09, 2019, 02:32:11 PM »
Posting to follow, mostly.

We're also relocating to Canada as PRs in the Spring, and I'll be continuing to work as a remote employee.  My company has employees in a bunch of countries (UK, US, China, etc.) but I think outside of the UK and the US folks are mostly independent contractors.  That may end up being the route I go, but I'll also bring up a PEO.  I don't have a strong opinion, honestly.  If I am an independent contractor, I'll ask for the amount I currently get in benefits (~30%) as salary.  We'll see!


One thing to consider if an independent contractor is that you may be liable to pay both the employee and employer portion of CPP and EI, so you will have tax liabilities above just provincial and federal tax.  As a Canadian employee, I have my contributions to both CPP and EI, but my employer has to contribute at least the same again. 

FLBiker

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Re: Options for Remote Employee in Canada working for US Company
« Reply #7 on: January 03, 2020, 10:21:06 AM »
Posting to follow, mostly.

We're also relocating to Canada as PRs in the Spring, and I'll be continuing to work as a remote employee.  My company has employees in a bunch of countries (UK, US, China, etc.) but I think outside of the UK and the US folks are mostly independent contractors.  That may end up being the route I go, but I'll also bring up a PEO.  I don't have a strong opinion, honestly.  If I am an independent contractor, I'll ask for the amount I currently get in benefits (~30%) as salary.  We'll see!


One thing to consider if an independent contractor is that you may be liable to pay both the employee and employer portion of CPP and EI, so you will have tax liabilities above just provincial and federal tax.  As a Canadian employee, I have my contributions to both CPP and EI, but my employer has to contribute at least the same again.

Interesting, thank you!