Thanks for the responses. I am a Canadian PR and a British citizen. Have been in Canada since August but will probably return to the UK for good around August or September this year.
Jclarke, in addition to the options you outline, wouldn't the following two also be possible:
- UK employer pays me into a UK bank account the gross amount, and I report the income on my Canadian tax return for 2021, and would owe tax EI, and CPP.
- UK employer pays me into a UK account and pays the usual taxes and NI contributions to the UK government. I declare world income and taxes paid abroad on my Canadian tax return for 2021.
Are the above options legal? I am not able to do the self employed option. I cannot return to the UK for the time being and don't want to. I have a job opportunity with a UK company that is happy for me to work from here but I doubt they'll be interested in signing up to a load of Canadian requirements since this is a one off for them. I just want to do this job, live here, and pay the correct taxes. Not sure if the two governments, under their treaty, have an arrangement for crediting one another depending on who deserves the money?
This is my predicament. I get the impression the system isn't set up well for this, but also can't see that it could be illegal or enforceable to prevent me working remotely for a UK company.
So, do the options I outlined work?
Worth bearing in mind that, if my residency status is based on the year, that I might only be working in this way, and residing in Canada, for around six months. I will likely take a vacation in Canada after that, and then return home, so my residency status for tax purposes may not be cut n dried. Anyway, this is a side point.
Bear in mind that I'm just a guy on the web, and I don't have professional credentials in these matters.
You need to satisfy immigration laws, labor laws, and tax laws. The option you are proposing may be tricky in satisfying all 3.
I don't think it matters whether the employer deposits yours funds into a UK or Canadian account.
Given your option #1, I don't think you should be contributing to EI or CPP. I could be wrong, but I believe those only come into play if you are working for a Canadian entity or are a freelancer.
If you go with option #1, which country will get the bulk or all of your taxes? I suspect it will be the U.K., given that you'd be working for a U.K. company and presumably they'd be taking out estimated tax payments from your paychecks. You'd then declare your U.K. income on your Canadian tax return and presumably take a tax credit for U.K. taxes paid. Or you'd try to claw back your U.K. taxes, Canada would get their taxes, and you'd take the credit on the U.K. side. Messy and unclear.
Another member on this board, OP, was considering a similar situation as yours, but it involved an option to work for a U.S. company while residing in Canada. He eventually paid a professional for their advice. Here's what he reported on another thread...
"Hi, everyone, OP weighing back in here. I bit the bullet and actually paid a tax lawyer who specializes in cross-border taxation issues.
The bottom line is this: It's at best
complicated and at worst
illegal, depending on a variety of factors. It will almost certainly be painful for the US company to employ a resource outside the US as it confuses the IRS and the CRA will want to know why the company is not routing their pay through the CRA/Revenu Quebec. (I don't know if I mentioned this originally, but the US company has
no Canadian presence, so that creates the crux of the problem.) I would be
double-taxed throughout the year as I would be paying the IRS and, at the same time, having to pay CRA quarterly on my estimated earnings of the same.
HOWEVER, at the end of the year, I could claim the US taxes back as I wasn't physically present. It still wouldn't fix the heartburn that CRA or RQ would give me and they would likely pressure the US company (however they could) to do things "the right way" and pay through Canada first.
Now, it gets a little more complex, but he said, as a
self-employed consultant, options open up considerably and the IRS doesn't nearly care as much as I wouldn't be being treated as an FTE and wouldn't be resident in the States, so the IRS tax situation gets a bit better. The most obvious problem being that what I consider
self-employed and what RQ considers
self-employed may be at odds, so it would be best to form a corporation, hire myself and use the corporation in Canada to bill the Corporation in the US.
In the end, I decided the juice wasn't worth the squeeze, so I turned the offer down. Shame in that it paid a good chunk of change, but, with citizenship pending, I just can't afford to make my tax situation any more complicated than it absolutely needed to be.
Thanks for everyone's input - it was very much appreciated to have the input.
As always, I am not a lawyer, your mileage may vary, batteries not included, yadda yadda yadda.. "
https://www.canadavisa.com/canada-i...s-company-as-an-fte-paid-into-us-bank.708547/