QUESTION:
Are Canadian companies required to report payments to US consultants? No
Canadian taxes were withheld.
==============================
david ingram replies:
If the work was physically performed in Canada, it is common to report the
income on a T4ANR. Usually 15% tax would be withheld. A tax return then
has to be filed by the consultant who may owe more or have a refund coming
depending upon the amount of income.
If the work was performed in Canada and no slip was issued, the consultant
is still responsible to file a Canadian tax return.
If the consultant has NO permanent base in Canada and was self-employed, no
tax is payable in Canada if the consultant claims an exemption under the US
Canada Income Tax Treaty. If they do NOT file the return, tax would be
owing because they did not claim the exemption on time.
If the consultant got a phone number in Canada and rented an apartment or
office to work out of in Canada, he or she would have to pay tax to Canada.
Any tax paid to Canada would be a dollar for dollar deduction on schedule
1116 of the US 1040 or 1040NR.
==============================
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