Travelling to Canada every other week during waiting period

[tinytortoise]

Hi guys,

I'm sure this has been asked before. Does anyone have experience working for a US company and travelling a lot to Canada during the PR process?

My boss and I are trying to work out a plan in which I still work for my US company during the waiting period and after I receive PR. For the first 3 months my boss wants me to come back to the US every other week to work in the office for a week, after that it will be one week out of every month. Will I have problems going back and further over the border? I know there is always a chance they will stop you but does anyone have experience with this? Basically I will be visiting my husband every other week and working remotely from Canada when I do. Is that an issue?

Also does anyone have experience of how to deal with taxes after you receive PR and work for an American company that takes out US taxes?

Trying to make this work as having steady income is better than my original plan of going out on my own

 

[computergeek]

First, if you don't have a Nexus card, get one. https://goes-app.cbp.dhs.gov/main/goes - $50, good for five years. You must be approved by both the US and Canada, but once you are, you will be issued a card and they will take an iris scan of you, so you may go through the fast access lanes at border crossings, including land and air crossings. That will lower the level of scrutiny you experience dramatically and make what you are doing much easier.

There's nothing wrong with what you are doing. Bottom line, you aren't taking a job away from a Canadian, so working remotely is fine.

Once you are actually working IN CANADA (e.g., after PR) then you should no longer be paying US taxes, you should be paying Canadian taxes. However, in the scenario you just described, you may become a Canadian tax resident before you become a PR ("deemed resident") by being in Canada for 183 days out of a given tax year.

In that case, you must compute and remit your Canadian taxes and then request a refund for your US taxes. Alternatively, you could file an amended W-2 in the US (hell hath no fury like the US W-2 for an ex-pat American, as completing it properly is pretty much equivalent to sketching out your tax return for the year) so that your employer no longer withholds the income tax part.

Then, on your Canadian return you claim credits for what you owe the US (at least FICA and Medicare tax) - note that you don't get to claim what you PAID, but only what you OWED (so if you get a big US tax refund, you don't get to claim that as being owed). On your US return, you claim credits for what you owe to Canada, which is why you shouldn't end up owing any US income tax. The downside to this is that you end up paying US FICA/Medicare (which is higher than Canadian CPP + EI) and Canadian income tax (which will be higher than US federal income taxes, although it may be lower than US federal + state taxes).

If your employer will agree to it, the best thing for you to do tax-wise (once you have PR) is simply set up a Canadian company and BILL them for your work. Then you won't be paying US FICA+Medicare. Instead, you would pay Canadian CPP+EI. Further, you can benefit from the very preferential tax treatment afforded Canadian Controlled Private Corporations (a tax rate capped at 50% of the overall corporate tax rate, for example, and the ability to leave money in the CCPC, income split it, deduct pretty much every expense imaginable, etc.)

Fair warning: finding a good accountant familiar with both US and Canadian tax law is a bit of a challenge. One good site for this is http://www.centa.com. Although David Ingram died last year, the company he founded continues on and there is quite a bit of useful information on the website (I'm not sure I'd trust the immigration stuff though - I saw one Q&A that I know was wrong.)

Good luck!

 

[AnaMaria]

According to CRA officers, you become a "resident" when you open a bank account, you stay 183 days, you buy a property (condo/house, etc.), etc. from a taxation point of view and obliged to file tax return even when you don't have income or status in Canada. So I think you might need to do it for 2012. You will have to include income from the US. But as Computergeek mentions, there is a way to avoid paying double tax.

 

[computergeek]

Deemed residency relates to the 183 day rule. Opening a bank account and owning property in Canada are not part of that rule.

Were you a deemed resident of Canada in 2011?

You were a deemed resident of Canada for tax purposes if you did not have significant residential ties in Canada, but you stayed here for 183 days or more in 2011 and, under a tax treaty, you were not considered a resident of another country.

You were also a deemed resident of Canada if you lived outside Canada during 2011, you did not have significant residential ties in Canada, and you were:

a member of the Canadian Forces at any time in 2011;
a member of the Canadian Forces overseas school staff and you choose to file a return as a deemed resident of Canada (if you left Canada during 2011, see the next section called Were you a member of the overseas Canadian Forces school staff who left Canada in 2011?);
a federal or provincial government employee and you were either a resident of Canada just before being posted abroad or you received a representation allowance for 2011;
a person working under a Canadian International Development Agency (CIDA) assistance program if you were a resident of Canada at any time during the three month period just before you began your duties abroad;
a person who, under a tax treaty, agreement, or convention between Canada and another country, is exempt from tax in that other country on 90% or more of your income from all sources because of your relationship to a resident (including a deemed resident) of Canada; or
a dependent child of one of the first four persons described earlier in this section and your net world income in 2011 was not more than the basic personal amount (see line 300) in Canadian dollars.

Note
If you lived with and were the spouse or common law partner of one of the first four persons described earlier in this section at any time during 2011, and you ceased to be a resident of Canada before February 24, 1998, you are a deemed resident of Canada unless you choose not to be. For more information contact the International Tax Services Office.

What income should you report? - Report your 2011 world income. World income is income from all sources both inside and outside Canada.

Source: http://www.cra-arc.gc.ca/E/pub/tg/5013-g/5013-g-01-11e.html#deemedres

This is made more complex by the fact that the Canada-US tax treaty changes the effect of tax law in both countries. Here's a recent copy of the tax treaty (as amended by the fifth protocol): http://www.garygauvin.com/WebDocs/Canada-US%20Consolidated%20Tax%20Treaty.pdf. Note that Gary Gauvin is also a good resource for an experienced cross-border tax practitioner (he and David Ingram were partners in the past). Gauvin is located in the US.

 

[AnaMaria]

Maybe opening a bank account or buying a property is considered as "residential ties" in Canada, separate from 183 day rule? The officers repeatedly stressed these points when they were presenting "who needs to file tax return" workshop. I wish the same rule applied to immigration !

 

[tinytortoise]

Computergeek, you are amazing! Woah, what a wealth of information! Thank you, thank you, thank you.

Long road ahead, wow, lots to think about.

Thanks again.

 

[computergeek]

Maybe opening a bank account or buying a property is considered as "residential ties" in Canada, separate from 183 day rule? The officers repeatedly stressed these points when they were presenting "who needs to file tax return" workshop. I wish the same rule applied to immigration !

Rather odd, since I addressed exactly this issue with an accountant here in Vancouver - I had bank accounts and owned property back in 2008, but I didn't declare as a tax resident until October, 2009 when I started getting paid in Canada. The accountant and I even talked about the deemed resident rule (he was surprised that I knew about it and understood it, but long before I had to learn Canadian immigration I have had an interest in tax law.)

But the complicated part of tax law is that it's often subjective. Thus, usually the best thing to do is to document why you did what you did so that even if an officer disagrees with you, they won't think you were deliberately trying to break the rules. Anyone familiar with tax law - especially US tax law - knows how self-contradictory and complex it is.

 

[cveja]

Hello to all,

This is perhaps relevant to the topic at hand.
I am Canadian citizen who lived last 6years abroad, but constantly 'visiting' Canada for month or two each year. Since I have my bank account active, and repaying my student loan (amongst other factors), I have been considered to have residential ties to Canada. I do my taxes in Canada.
However, I don't know if CIC has similar 'rules' for determining who is 'exclusively' living in Canada or outside.
This is crucial for my application to sponsor my spouse, as I don't know how to proceed with it, when it comes to my 'permanent residency' status. Namely, it gets particularly complicated as I returned to Canada almost a year ago, spent 6months with my wife in Canada where we gave birth to our son, and then before her visitor visa expiration, we left Canada to apply for her status outside of the country (visit both our families). I was working while in Canada and was under contract. So I could leave the country for an extended period. The job is waiting for me in Canada, but I want to stay with my wife (still breastfeeding our Canadian son) while she gets her PR (well, first I need to apply for sponsorship
So, to cut to the chase, my question is: am I considered being 'a Canadian citizen living 'exclusively outside Canada???
The fact is that I spend 2months each year being in Canada, so literally I do live in Canada as well (especially having residental -tax- ties )? Does this matter?
OR.. the question 4 in IMM1344E (section sponsor eligibility declaration), puts me clearly into 'exclusive' outsider as I don't reside in Canada only...
I know I can be still eligible for sponsorship, as long as I provide evidence/proof of coming to Canada as soon as my wife gets her PR...


And finally, what would happen, if I decide to go back to Canada, right after the application is sent, and spend a few months there, than come back to Europe, to see my wife and son..and keep doing this until she gets her papers?! Am I 'exclusive' outsider or insider to Canada??? ))

If anyone knows more about this, any immigration principles on determining the 'residency (ties)', please let me know asap, as I need to send my application soon.

THANKS A LOT!

Kind regards to all users of this great forum

 

[scylla]

First, if you don't have a Nexus card, get one. https://goes-app.cbp.dhs.gov/main/goes - $50, good for five years. You must be approved by both the US and Canada, but once you are, you will be issued a card and they will take an iris scan of you, so you may go through the fast access lanes at border crossings, including land and air crossings. That will lower the level of scrutiny you experience dramatically and make what you are doing much easier.

Nexus cards rock. Both my husband and I have had ours for years now. In addition to bypassing talking to a human at immigration and using the iris scanning computer instead, you also often have access to expedited security lines.

The one bit of bad news is that I understand processing time are pretty long now. A colleague of mine just got his and it took 3-4 months from the time he applied to the time he received the card. I think it took me all of 2.5 weeks three years ago.

 

[computergeek]

Nexus cards rock. Both my husband and I have had ours for years now. In addition to bypassing talking to a human at immigration and using the iris scanning computer instead, you also often have access to expedited security lines.

At times, I've seen 2+ hour backups at Peace Arch and Pacific Crossing, with 10 minute or less waits at Nexus. Flying into Montreal from Europe, I was amazed that it really is totally unattended there - you get your card and go directly to the baggage hall. In Vancouver, you have to show the card to an IO before you enter the baggage hall.

The one bit of bad news is that I understand processing time are pretty long now. A colleague of mine just got his and it took 3-4 months from the time he applied to the time he received the card. I think it took me all of 2.5 weeks three years ago.

I convinced my spouse to get one last year and it took about a month; someone else I know took two months earlier this year. I definitely get the sense that the processing time varies considerably.

Other benefits include expedited security boarding for domestic flights in Canada and the US (in the US via the Pre-Check program they are still rolling out). Nexus also qualifies one to apply for the US Global Entry system (initially they didn't allow Canadians to do so but my understanding is they now do so.) This provides expedited clearance when entering the US from pretty much anywhere.

 

[tinytortoise]

I put in my NEXUS application!

Computergeek - Can I consult in Canada before PR, and if so how would taxes work then? There's an opportunity I have pretty much dismissed because I don't want to do anything that could jeopardize my immigration application. An organization asking for executive business consulting contacted my Canadian husband (he owns his own business consulting firm) and he told them about my expertise and they are interested in me working on the project too. This caused a bit of friction between hubby and I as I don't want to do anything that could hurt my application. I know there is a fine line between taking a Canadian job and being an American consulting in Canada. Because it's my husband's company he suggests that I work on the project and (1) pay US taxes as if I am a consultant or (2) my income from the work go to him, he'll pay the Canadian taxes etc. I don't think that's legal but if there's a way I can work on the project I would like to.

 

[computergeek]

I put in my NEXUS application!

Computergeek - Can I consult in Canada before PR, and if so how would taxes work then? There's an opportunity I have pretty much dismissed because I don't want to do anything that could jeopardize my immigration application. An organization asking for executive business consulting contacted my Canadian husband (he owns his own business consulting firm) and he told them about my expertise and they are interested in me working on the project too. This caused a bit of friction between hubby and I as I don't want to do anything that could hurt my application. I know there is a fine line between taking a Canadian job and being an American consulting in Canada. Because it's my husband's company he suggests that I work on the project and (1) pay US taxes as if I am a consultant or (2) my income from the work go to him, he'll pay the Canadian taxes etc. I don't think that's legal but if there's a way I can work on the project I would like to.

Permanent and temporary residency don't conflict with one another. This is known as "dual intent" - if it weren't for that I would be in trouble (I have two active temporary applications and two permanent applications in various states of evaluation at the moment!)

What you are describing sounds like a NAFTA qualifying job:

Management Consultant (See notes below for further details.) -
Baccalaureate or Licenciatura Degree; or equivalent professional experience as established by statement or professional credential attesting to five years experience as a management consultant, or five years experience in a field of specialty related to the consulting agreement.

and the notes:

A management consultant provides services which are directed toward improving the
managerial, operating, and economic performance of public and private entities by analyzing and
resolving strategic and operating problems. The management consultant does not take part in the
company’s production but seeks to improve the client’s goals, objectives, policies, strategies,
administration, organization, and operation. Generally a management consultant is hired on
contract to do project work to deal with specific issues or problems.

2. A management consultant may provide the following range of services:
• conduct a comprehensive examination of the client’s business to isolate and define problems;
• prepare a presentation and report all findings to the client;
• work with the client to design and implement in-depth working solutions.

3. Management consultants assist and advise in implementing recommendations but do not
perform functional/operational work for clients or take part in the company’s production.

4. Any training or familiarization that is provided to management and personnel on an individual
or group basis:
• must be incidental to the implementation of new systems and procedures which were
recommended in the management consulting report;
• must be performed by permanent (indeterminate) employees of the recommending American
or Mexican management consulting firm.

5. Typically, a management consultant is an independent contractor or an employee of a
consulting firm under contract to a Canadian client. A management consultant can also occupy a
permanent position on a temporary basis with a Canadian management consulting firm.

So, assuming you can meet the NAFTA job requirements, you could have your husband write you an offer letter. Put that together with your credentials, your work permit application, your $150 fee, and your two pictures and pick up a work permit at the border. Your husband (or his company if it is a separate entity) will be required to make you an offer of market wages as well as collect and remit payroll taxes.

Professionals from the US have little problem getting NAFTA work permits at the border - CBSA issues them routinely (and in about 20 minutes, compared the 74 days I'm waiting for my inland renewal!)

Again: you will need to declare that you have a PR application in process, but that shouldn't impact your ability to obtain a temporary work permit as long as you really do meet the NAFTA requirements.

 

[tinytortoise]

Very, very helpful. Thank you again ComputerGeek!

 

[tinytortoise]

I was pre-approved by NEXUS today! Interview scheduled for late November which was the earliest they had at a semi-easy for me to access place. i.e. in Ottawa but I will be in Toronto that week so a quick in and out flight is easy and better than waiting until YYZ spots open up sometime after February of 2013! Yuck.

I'm so excited ;D

 

[computergeek]

Congrats! Having a Nexus card is definitely helpful when traveling these days.