Canadian freelance telecommuting

My_question_is: Canadian-specific
Subject:        Canadian freelance telecommuting for us companies
Expert:         taxman at centa.com
Date:           Wednesday August 09, 2006
Time:           01:10 PM -0700
QUESTION:
Hi David,
I am a Canadian computer programmer who wants to start doing
freelance coding for some US companies.  All of my work will be
preformed in Canada.  One company I am speaking with is asking me
to fill out Form W-8BEN which states that 30% of my income will
be taken as US tax.  Is this the correct form that I should be
filling out?  If not, please let me know what form I should be
filling out, and what I should tell this company.
Regards,
-----------------------------------------------------
david ingram replies:
Filling out a W8-BEN is fine but there is no tax deducted.  You
will check off Box 9(a) and state that you are a resident of
Canada entitled to Treaty Benefits.
You are tax free under Article XIV of the US/Canada Income Tax
Convention (Treaty) (1980) with Amending Protocols.
Article XIV reads as follows:
Article XIV
Article XIV
Independent Personal Services
Income derived by an individual who is a resident of a
Contracting State in respect of independent personal services may
be taxed in that State. Such income may also be taxed in the
other Contracting State if the individual has or had a fixed base
regularly available to him in that other State but only to the
extent that the income is attributable to the fixed base.
To make it clearer, I have inserted Country names as follows.
Independent Personal Services
Income derived by an individual who is a resident of a
Contracting State (Canada) in respect of independent personal
services may be taxed in that State (Canada). Such income may
also be taxed in the other Contracting State (United States) "if"
the individual has or had a fixed base regularly available to him
in that other State (United States) but only to the extent that
the income is attributable to the fixed base. (Countries
underlined and inserted by David Ingram.)
It is clear that you are NOT taxable in the United States because
NONE of the income can be attributable to your working at a fixed
base in the United States.
Hope this helps.  If the US corporation has a problem with it
after you have sent this to them, tell them to call me.
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
My Home office is at:
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Cell (604) 657-8451 -
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Calls welcomed from 10 AM to 10 PM 7 days a week  Vancouver (LA)
time -  (please do not fax or phone outside of those hours as
this is a home office)
email to taxman at centa.com
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed
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