QUESTION:
Hi. 2 questions:
1) I am trying to figure out if I have a tax liability to Canada for IT
consulting work I performed from June/2005 to August/2005. I worked for a
client in Burnaby, BC through a US placement agency on a corp-to-corp basis.
All compensation was paid in USD. I received the 1099-MISC form from the US
placement agency. I am trying to figure out if I have to submit the T4ANR
form or if the Canadian client is doing that. If my LLC has to submit the
T4ANR, how do I determine the tax I owe and the USD->CAD exchange rate for
2005? Are there any other things I need to do? I spoke with an agent at
Revenue Canada and he said that I have to register my US company in Canada.
I don't agree.
2) During my stay in Canada, I took flying lessons and received my Private
Pilot license. Do these fees qualify for any type of tax deduction similar
to tuition and education fees?
I appreciate your help.
Regards,
------------------------------------------------------------
david ingram replies:
You picked the most complicated method of working in Canada. Your LLC must
file a Canadian Tax Return and you must file a Canadian Tax return. This is
true whether you were paid in Canada, or whether you were paid in the US or
if you were paid in France. The work was performed in Canada and Canada
requires a tax return.
The Canadian Payer might have issued a T4ANR to the Placement Agency which
further complicates matters. However, if they were going to issue one,
there should have been tax deducted as well.
However, if you earned less than $10,000 Canadian for that time, it is
exempt from Canadian tax under Article XIV of the US Canada Income Tax
Convention.
It is NOT double taxation. Any tax payable to Canada becomes a foreign tax
credit on your US return, usually on a dollar for dollar basis.
And remember, that in the US, a Hockey, football or basketball player has to
file a tax return in any state they play a game in. ALL OF THE REPORTERS
who covered the O J Simpson Trial were required to file California tax
returns and if you had worked in California instead of Canada, you would
have been required to file a California return for your LLC and yourself.
The exchange rate for those months is easily obtained on the Bank of Canada
website.
We would be glad to look after this for you.
----------------------
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