Understanding the Updated Tax Regulations for Non-Residents Employed in Canada 

If you’re a non-resident in Canada and have taken up a temporary job assignment, it’s crucial to be aware of the Canadian tax obligations. The Canadian Federal Government has recently updated its tax rules for such individuals. 

When a non-resident is employed in Canada by a non-Canadian company, Canadian payroll taxes are mandatorily deducted from their salaries. This can be cumbersome for both the employer and the employee. One way to bypass these deductions is by filling out a Regulation 102 Waiver with the Canada Revenue Agency (CRA). However, this method is known to be time-consuming due to the slow response time of the Agency. If you don’t opt for a Waiver, the alternative is to submit a non-resident tax return to the CRA to reclaim the deducted payroll taxes. 

The Canadian government, in its 2015 Federal Budget, proposed modifications to these regulations. As per the new rules, non-resident employees working for non-Canadian employers won’t be subjected to Canadian payroll taxes if they meet the following criteria: 

• They reside in a country that shares a tax treaty with Canada (like the United States). 
• Their earnings from employment in Canada are below $10,000, in line with the applicable tax treaty. 
• Their stay in Canada doesn’t exceed 90 days. 

For employees who qualify under these conditions, their employers need to submit a specific form to the CRA. If you’re exempted from the Canadian payroll taxes under these rules, there’s no need to file a Canadian tax return. 

Pro Tip: Before you commit to a job in Canada, discuss with your accountant to determine if you qualify for an exemption from Canadian payroll taxes. For a deeper dive into payroll and withholding taxes, consider exploring the topic of non-resident withholding tax, particularly section 217.