What do I need to do if I'm receiving US money while living in Canada?

July 8, 2021 2:36 PM

So, I'm moving to Canada from my former country. I got accepted into grad school. Before that I was working for a US company while in my home country. The possibility of still working for them part time while in grad school has come up. I checked and asked with the international center at my university. They told me this is allowed but that it needed to be 20 hours a week and that I needed to check with the CRA to see what's needed.

Anyway, right now it's very difficult for me to reach the CRA. I'm not in Canada yet, and it is apparently not possible to contact them through email.

I was wondering if anybody knew how this works?

I will eventually call the CRA but before that, I'd rather find out what's needed.

posted by Tarsonis10 to Work & Money (13 answers total)

Good news, this is not “work”, according to the Canadian government. See:What is Work?

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.

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;

So if it’s a multinational with a Canadian arm they want you to report to now, get some more legal advice, but if it’s a company that does not operate in Canada and will still be paying you from the other country, you’re good to go.
posted by tiamat at 2:47 PM on July 8, 2021

Response by poster: Not a multinational, but they do have offices in the US, and technically I'd be working for them while living in Canada, and receiving money in a Canadian bank account.

Maybe I'm being overly cautions. That money is taxed in the US, but I'm still wondering if I should report it in Canada anyway.

Also, what if I gain permanent residence? Because that's part of the plan too.
posted by Tarsonis10 at 3:04 PM on July 8, 2021

I think tiamat's comment only applies in the context of whether you need a work permit to do what you're doing. If you're a Canadian resident (I assume you have a student permit) you may still be required to remit taxes on worldwide earnings while you reside in Canada. That would be the rule for a citizen and that's why I guess they told you to call the CRA - they know whether you're required to pay taxes on those earnings given your residency status.

A PR definitely has to include income earned in the US as part of their Canadian tax filing. Living in one country and earning money isn't that complex, but it's more complex than most people have to deal with.
posted by GuyZero at 3:06 PM on July 8, 2021

Response by poster: I have a study permit, yeah. You can only work 20 hours off-campus but as far as I understand it this is for Canadian work. Still, I would rather not go over there and start breaking rules over technicalities.

This situation is unique however, and quite frankly I have a knack for falling into such things. I have a magnet for these dilemmas for one reason or another.

At any rate, if you ask me I'd rather just file taxes and pay, first because well, those are the rules and second because I feel like I would be cheating the system on the basis of what literally sounds like a loophole. I know it says that there, but still, I guess I'm too honest or whatever.
posted by Tarsonis10 at 3:26 PM on July 8, 2021

If you're a Canadian resident, you will have to declare the income in your Canadian tax filing. As a student in Canada, you may or may not be a Canadian resident -- this is a question you will want to ask the CRA. Part of this will depend on the tax treaty between Canada and your home country. This is separate from any work rules around immigration.

Additionally, you will want to make sure to manage your US tax situation. In all likelihood you won't owe any US tax and none should be withheld if you are a nonresident and aren't working in the US, but I wouldn't want to tell you for sure.

Frankly it is surprising to me that the US company is interested in this arrangement, because employing someone in a different country is at least as big of a pain in the butt for them than it is for you!
posted by goingonit at 3:39 PM on July 8, 2021

Oh and here is a page specifically on residency status for students. Here's a quote:

In general, you probably have not established significant residential ties with Canada if you:

• return to your home country on a periodic basis or for a significant amount of time in the calendar year
• move to another country when not attending university in Canada

However, many international students who study or carry on research in Canada do establish significant residential ties with Canada.

But this will depend on the tax treaty (or lack thereof), which depends on your home country!
posted by goingonit at 3:43 PM on July 8, 2021

Best answer: To be clear you would have to claim the money on your taxes, but Canada and the US have a tax treaty so if you’re paying US taxes on these funds then you’re covered here.

To be fair I’m only like 95% certain my answer applies to a student visa, but the general writeup I found here: Tax Issues with Employees Working Remotely in Canada, seems to be consistent with the previous link. Sadly it refernces CRA guidelines without naming them or quoting them exactly.
posted by tiamat at 3:50 PM on July 8, 2021

Best answer: “… but Canada and the US have a tax treaty so if you’re paying US taxes on these funds then you’re covered here.”

This is a dangerously oversimplified statement. How do I know? I’m a Canadian CPA who does tax work involving the Canada-US tax treaty.

This situation is not do-it-yourself territory. You need an accountant (other than me).
posted by bkpiano at 7:44 PM on July 8, 2021 [3 favorites]

Response by poster: I'd like to say one thing because it's coming up a lot. My home country has no bearing on any of this. I don't have to present taxes to them, if I'm not actively working there or receiving money there. It's far more likely I'll be receiving this money in Canada.

And no they don't have any tax treaties with Canada. This whole thing is likely to be handled through US-Canada stuff, but my home country is nowhere in this equation.
posted by Tarsonis10 at 8:07 PM on July 8, 2021

If your home country is really completely out of it, then that probably means you are establishing residency in Canada, which means you will have to file Canadian taxes.

The exact details of how you will be taxed will depend on a lot of things -- depending on who is employing you, I'd be worried about them breaking tax or employment regulations and you having to sort it out. For instance, they might have to withhold Canadian taxes for you and if they don't do that this could make your life difficult at the end of the year. So ideally you can have a professional (per bkpiano) make sure not only that you're doing things right but that your employer is too.
posted by goingonit at 8:24 PM on July 8, 2021

Response by poster: I'll be sure to work this out with them. Of course if things don't match up then the answer to their offer will be no.

But it's easy money and they have arrangements with people in Germany and Italy, so we'll see how it goes.
posted by Tarsonis10 at 8:50 PM on July 8, 2021

I went through a similar situation this past fall, I am a US resident that worked from Canada for about 2 months. I'd say be wary of people's speculation when reading the thread above.

Can go 3 ways in order of most desirable:

1. Your company just operates with no change. Because you are not incurring any Canadian income you do not need to file a Canada return and thus really just file your US return like normal.

2. Your company files this income as occurring in Canada with CRA thus required to withhold from your paycheck income tax, deductions etc as Canadian income and you'll get Canadian pay stubs and T4 (equivalent of W2). You only pay tax once so if they have also done the same in the US when you file both returns - you will get the Canada-side witholding back.

3.If they only file Canada and do not do it in the US then only file the Canada return and do not file on the US side.

Basically file for taxes where your company does the same.

This is besides the point of working only as prescribed by your international student visa requirements eg the 20 hours etc. Absolutely ensure you follow this. All of the tax stuff above is ultimately resolved one way or another through filing returns but any contravention of the work rules can endanger your present or future immigration status and you must be crystal clear on that.

On the tax questions I've found if you have single salary income by filing normally with the prompts - cross-country tax expertise is expensive relative to the income but ymmv.
posted by artificialard at 9:06 PM on July 8, 2021

You need to speak with a qualified tax advisor in both Canada and the US, and possibly an immigration lawyer in Canada also. Do not DIY this and do not rely on speculative advice.

Cross-border income and tax residency situations are complex, treatment of cross-border remote employment is an emerging area, and the US is notoriously aggressive about monitoring income and tax filings for people it considers to have US tax residency and/or US-domiciled assets.

(Source: I also have a complicated cross-border income and residency situation.)
posted by 4rtemis at 5:33 PM on July 10, 2021