Canada

Click to download PDF: As per 1 January 2018, 2019, 2020

EXPATRIATE AND EMPLOYER TAX COMPLIANCE AND ADVISORY
Personal Income Tax Rates – Employment Income
Tax rate	Progressive tax rates: between 0% and 53.31% all depending on the provinces and territories. A taxable income below CA$13,229 is not taxable at the federal level and the basic exemption amount at the provincial level varies based on the provinces.
Tax period	Calendar year.
Tax residency / Domicile according to domestic law	Canadian tax residency is a question of facts. An individual could be a factual tax resident (significant ties in Canada, such as home, spouse and dependant children, as well as secondary ties) or a deemed tax resident (if present in Canada for more than 183 days in a calendar year).
Tax registration	Not required.
Employment income definition	Any remuneration and taxable benefits received by an employee (each benefit should be analyzed based on the employee’s circumstances).
Examples of tax exemption	Housing provided or housing allowance (if certain conditions are met).
Specific expatriate concession	Not applicable.
Income of board members	It depends on the type of amount received by the directors, i.e. director fees or salary or both and the tax residency of the director as well as the place where services are provided. Generally, income is considered as employment income and as such subject to income and social security taxes.
Tax returns	Self-assessment tax returns are filed on an individual basis (no joint filing in Canada) by April 30th of the year following the end of the tax period. Late filing and late payment penalties apply.
Tax payments	On employment income, taxes are withheld at source by the employer. Any additional taxes for a tax period are due no later than April 30th of the year following the end of tax period, upon filing the Canadian individual income tax return(s).
Tax on real estate property
TAX TREATIES
Employment income / income from board members	Determined under the “income from employment” article of the tax treaty (usually article 15) of the countries with which Canada has signed a tax treaty.
INTERNATIONAL SOCIAL SECURITY
Cross border employments	No specific rules
Exception under Art 16 of Reg. 883/2004 and Art 17 of Reg. 1408/71	Not applicable
Social Security Cost as % from gross salary and absolute amounts	Canada has a various social security system that is mainly funded through employee (deductions at source) and employer contributions. The rate depends on each social security and some have maximum annual contribution amounts.
IMMIGRATION
Work permit	All temporary residents may not work unless authorized to do so under sections R186, R200 and R201 of the Immigration and Refugee Act and Regulations (IRPA). These regulations also include the following: the authority to work without a permit [R186], open work permit holders [R200], and holders of employer-specific work permits [R201]. Persons seek to work in Canada who are not exempt from a Labour Market Opinion under regulations 204 and 205 must proceed by way of a labour market impact assessment (LMIA) first.
Visa	The following travelers need an Electronic Travel Authorization (eTA) to board their flight to Canada. However, these travellers do not need an eTA if entering by land or sea: Andorra, Australia, Austria, Bahamas, Barbados, Belgium, British citizen, British National (Overseas), British overseas citizen (re-admissible to the United Kingdom), British overseas territory citizen (with citizenship through birth, descent, naturalization or registration in one of the British overseas territories of Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Falkland Islands (Malvinas), Gibraltar, Montserrat, Pitcairn Island, Saint Helena, Turks and Caicos Islands), British Subject with a right of abode in the United Kingdom, Brunei Darussalam, Bulgaria, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong Special Administrative Region of the People’s Republic of China (must have a passport issued by Hong Kong SAR), Hungary, Iceland, Ireland, Israel (must have a national Israeli passport), Italy, Japan, Republic of Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Monaco, Netherlands, New Zealand, Norway, Papua New Guinea, Poland, Portugal, Romania, Samoa, San Marino, Singapore, Slovakia, Slovenia, Solomon Islands, Spain, Sweden, Switzerland, Taiwan (must have an ordinary passport issued by the Ministry of Foreign Affairs in Taiwan that includes the personal identification number), United Arab Emirates, lawful permanent resident of United States (must present a valid Green Card and a valid passport at check-in), Vatican City State (must have a passport or travel document issued by the Vatican). All other travelers need a visa to come to Canada by any method of travel – plane, car, bus, train, or cruise ship.
Residency permits / registration certificate	Canada has many facilitated permanent residency pathways for temporary foreign workers, particularly for skilled workers who have completed 12 months or more with a Canadian employer. The federal express entry programs include the Canadian Experience Class, the Federal Skilled Worker Class and the Federal Skilled Trades Class. Canadian provinces also administer their own provincial permanent resident programs. Quebec has its own immigration programs for skilled workers (PEQ & Expression of Interest- Arrima).
Driving license	A driver’s licence issued by the government of Canada is required to drive a car in Canada. Foreign driver’s licence can be used in Canada if an Internation Driving Permit is obtained in the home country.
STOCK OPTION PLAN	The benefit is treated as employment income. Favorable tax treatment may be available to stock option benefits if stocks of Canadian controlled private corporations and certain conditions are met. Foreign plans must be analyzed from a Canadian income tax perspective.
ARTICLE 15 OF THE OECD MODEL
183 days	The days of physical presence will be accounted per calendar year or 12 month period (depends on tax treaty).
Notion of employer	Economic and legal employer.
Existence of a permanent establishment	The definition of a permanent establishment (PE) is determined in the tax treaty. If countries with which no treaty is signed by Canada: no definition of PE except and only for interprovincial taxation.

Benoît Lestage

Senior Manager, International Tax

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