Foreign Employers in Canada

Employers resident in another country who have employees in Canada (either resident or non-resident in Canada) are responsible for collecting;

  • income taxes
  • Employment Insurance (EI) premiums, except when
    – it appears that, because of the laws of the foreign country, a duplication of premiums or benefits would result
    – 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
  • Canada Pension Plan (CPP) contributions, at the option of the employer.  This coverage is applied for by the employer, by completing Form CPT13 from the Canada Revenue Agency (CRA) website, except for employees employed in the Province of Québec.

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

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

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