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Business -> Foreign employers in Canada

Tax Deductions - Foreign Employers in Canada

Income Tax Act s. 153, Regulations s. 100 to 105
Canada Pension Plan Regulations s. 22
Employment Insurance Act s. 5

Employers resident in another country and without an establishment in Canada who have employees in Canada (either resident or non-resident in Canada) are responsible for collecting

bullet income taxes, except for certified non-resident employers when they pay amounts to non-resident employees working for them in Canada.
bullet Employment Insurance (EI) premiums, except when
bullet it appears that, because of the laws of the foreign country, a duplication of premiums or benefits would result
bullet the employment in Canada is by a foreign government or an international organization, unless the foreign employer agrees to cover its Canadian employees under Canada's EI legislation.  The employment will then be insurable if Human Resources and Social Development Canada (HRSDC) agrees.
bullet Canada Pension Plan (CPP) contributions, at the option of the employer.  If the employer chooses to contribute for their employees, they can apply by completing Form CPT13 from the Canada Revenue Agency (CRA) website, except for employees employed in the Province of Quebec.  See the form for more information.  If the employer does not choose to contribute for their employees, the employment is excepted from pensionable employment.

However, a tax treaty between Canada and the country of residence of a non-resident employee may provide for relief from Canadian tax deductions.

If the foreign firm is paying for services rendered in Canada by a self-employed contractor

bullet who is a resident of Canada, no withholding taxes are required
bullet who is a non-resident of Canada, a withholding tax of 15% is required Resources

Who pays tax in Canada, and on what income? - re residents/non-residents

Calculating payroll tax deductions and automobile taxable benefits

Are you an employee or a self-employed contractor?

Canada Revenue Agency (CRA) Resources

Residency of a corporation

Foreign employees and employers

T4001 Employers' Guide - Payroll Deductions and Remittances

From T4001: Employment in Canada by certified non-resident employers

Tax Treaties

Revised: October 26, 2023


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