QUESTION: I have a question and am hoping you can answer it or put my in touch with someone that can. I am a US Citizen an own a small consulting company in XXXXXXXX, I am incorporated and have a US tax ID for my company. Currently there is a project that I have been asked to join in Toronto. To further complicate matters, the company that is requesting my services is a US based company as well. Essentially it works as follows: The customer (a Canadian Company) has engaged a US company for consulting services, the US company has contracted my company for some of that consulting services (i.e. they sub-contracted some of the work to my company). The project will last at least 12 months and the resource from my company (this is a US citizen as well)will be onsite for 12 months. My question is this, since the Canadian Customer is paying Consulting Company "A" who then is paying My Company do we still need to pay the 15% withholding tax? --------------------------------------------------------------------------- david ingram replies; Someone or something has to pay Canadian Tax if you and your company and / or another person is working in Canada just as you would usually have to pay if you were working in another state. For instance, every reporter who covered the first O J Simpson trial was required to file a California tax return. Being onsite for 12 months will constitute a fixed base under the treaty and your company must file a Canadian return and pay tax on the Canadian earnings just as it would have to pay tax to New York or California in the same circumstances. Your employee will also be taxable in Canada and you should be deducting Canadian Income Tax, CPP (Canada Pension Plan) and EI (Employemnt insurance). For instance, New York state requires a Canadian Trucking Company to file a New York State return if it makes three or more deliveries in the state in a year. Pennsylvania requires a Canadian Trucking company to file a Pennsylvania return if the Canadian company's trucks drive more than 50,000 miles through the state. (I am also aware that many US companies and employees ignore the requirement to file other state returns but it is just not worth it if you get caught). Remember, you also have to get a visa for that employee and that a computer programmer does NOT qualify for a NAFTA visa. If the employee you send to Canada is a regular employee who is being transferred to Canada for less than 5 years, you can write to the CPP board and ask for an exemption from the CPP deduction. If you do this, you must continue to pay US FICA payments for that employee. If you hire a new person for this job and it is not a transfer of an employee who was already working for you, this CPP exemption provision does not apply. Your US employee must file a Canadian and if based in Quebec, a Quebec return. He or she must also file a US return but any Federal and Provincial taxes plus CPP and EI is a foreign tax credit on the US return by filing form 1116. It would be rare for the US employee to owe more tax to the US and if they have children and their income is not TOO high, they will even qualify for the child tax benefit of up to $1,000 per child. If the 15% withholding is too little, you will owe more at the end of the year and that would be the usual situation. However, that tax paid to Canada is then a foreign tax credit on your US 1120 return and will be credited on a pro-rata basis. Hope this helps. -------------------------------------------- On November 10, 2007, David Ingram wrote: It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax help However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. For the last two weeks, I have just found out that my own email notes to myself have been spammed out and as an example, as I write this on Oct 18, 2007 since June 16th (124 days), my 'spammed out' box has 34,939 unread messages, my deleted box has 11854 I have actually looked at and deleted and I have actually answered 1078 email questions for clients and strangers without sending a bill. I have also put aside 622 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert US Canada Canadian American Mexican Income Tax help Therefore, if an email is not answered in 24 to 36 hours, it is likely lost in space. You can try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you will have to phone to make an appointment. Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321. david ingram expert US Canada Canadian American Mexican Income Tax help. 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: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income Tax help. email to taxman at centa.com www.centa.com www.david-ingram.com Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included." e bankruptcy expert US Canada Canadian American Mexican Income Tax help. David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority. Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. expert US Canada Canadian American Mexican Income Tax help. This is not intended to be definitive but in general I am quoting $900 to $2,900 for a dual country tax return. $900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year. $1,100 would be the same with one rental $1,300 would be the same with one business no rental $1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes. $1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits no move in or out $1,700 would be for two people with income from two countries $2,900 would be all of the above and you moved in and out of the country. This is just a guideline for US / Canadian returns We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250. A Business for $400 - Rental and business likely $550 to $700 And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return. Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up. TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return. 8891 forms are generally $50.00 to $100.00 each. 18 RRSPs would be $900.00 - (maybe amalgamate a couple) Capital gains *sales) are likely $50.00 for the first and $20.00 each after that. Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Just a guideline not etched in stone. This from "ask an income trusts tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate tax returns with multi jurisdictional cross and trans border expatriate problems for the United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax Immigration Wizard Antarctica Rwanda Guru Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention. 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Be ALERT, the world needs more "lerts". bankruptcy expert US Canada Canadian American Mexican Income Tax help. - expert us Canada Canadian Mexico income tax help -------------------------------------------------------------------------------- No virus found in this incoming message. Checked by AVG Free Edition. Version: 7.5.503 / Virus Database: 269.15.31/1128 - Release Date: 13/11/2007 11:09 AM -------------- next part -------------- An HTML attachment was scrubbed... URL: http://www.centa.com/CEN-TAPEDE/centapede-us/attachments/20071114/798340c1/attachment-0001.html
