CPP and Foreign Company

Tax Topics
1

My client lives in Ontario but works for a company in Ireland. She get pays in euros. She wants to contribute to CPP. What is the requirement to self-registered and pay CPP contributions.

Thanks in advance.

2

https://www.treaty-accord.gc.ca/text-texte.aspx?lang=eng&id=102203

Answer is Part II, Article VI, namely

Paragraph 1 addresses normal employment and self-employment situations. Paragraph 2 addresses individuals who are transferred from one to the other.

You have to evaluate the situation per the Treaty to determine where your client is to be paying. If Ireland, then you seek the answer there. If Canada, you must evaluate then if the work is not excluded under subsection 6(2) of the Canada Pension Plan. For reference, please see the excellent article at the CRA called Employment outside Canada, under the CPP/EI Explained, under the Canada Pension Plan (CPP) and Employment Insurance (EI) Rulings part of the CRA’s website. Given the various restrictions and issues, I would suggest that you read that page fully.

You have until June 15 of the year after the year of employment, to file the Election to Pay Canada Pension Plan Contributions, which is a paper filed election. And the form is titled exactly as I wrote it… The worker must pay the CPP premiums in this case.

Example: Jodie worked for ABC PPL, an Ireland-Based Company, until August 2019. Jodie has until June 15, 2021 to file the Election and pay the Premiums.

(Alternatively, the employer may file the Application and Undertaking for Coverage of Employment in a Country other than Canada under the Canada Pension Plan. This may be required under Paragraph 2 of the Treaty. In this case, both the employer and the employee are required to pay into the Canada Pension Plan.)

3

Tim,

Excellent!

Thank you,
Indira

4

Hello Tim,

Further to your respond. I completed Form CPT20 Election To Pay Canada Pension Plan Contribution on my client 2019 foreign employment income. CRA assessed the T1 and removed the CPP premium, hence reducing the amount of taxes owing. I don’t understand, why the CPP premium was removed as the client wants to contribute to the plan because she woks for a foreign company.

5

First, did you mail in the CPT20? Also, was this return timely filed?
Finally, what does the social security treaty say for this situation?