Tax Income Questions

Hi there,

I would like to ask if I am responsible to pay tax as freelancer to the company (country) that I am working with. In my situation, a Canadian company hired and offered me to work remotely from overseas. However, I am not Canadian. Should I pay/file tax to Canadian goverment or to my country?

If anyone has experience with similar situation please help me. Thank you!

If you are a non-resident of Canada for tax purposes then no. Being paid by a Canadian company does not make it Canadian sourced. It is sourced based on where you are actually doing the work. You will likely have to pay tax on it in the country you are working from however.

Thanks Laurie! I really appreciate your help :smiley:

I think the Canadian company should have withheld 25% as payment was made to non-resident.

Not on personal services/employment income. The non-resident withholding taxes are for things like rent, royalties, interest and dividends. I have never seen withholding taxes on employment/contract income paid to a non-resident in decades of dealing with non-residents.

I just gone through this couple months ago, A Canadian company paid for a non-resident designer to do some work, Service performed in and out of Canada is the key, but in my case, the work is stored in a Canadian portal, and the designer has access to it remotely to work on it, so I figured it will be subject to the withholding under this part.

I wouldn’t think so. Regulation 105 withholding covers work performed in Canada by a non-resident - for instance a US musician on tour in Canada or an athlete. It does not include work performed by a non-resident outside of Canada. I wouldn’t think it would matter where the work is stored - it matters where the work was done.

When I used to work for IBM’s accounting department, we had every kind of people located in different countries who were parts of the teams for Canadian business. Those off-shore employees had to pay taxes to their own countries, not Canada.

However, if I decide to enter Canada in future (as student for example), will I have obligation to pay tax in Canada. In this case, I still do the work with the company.

As a student in Canada you would be subject to tax on the income because you are now in Canada. You’d be subject to Regulation 105 withholding tax if it was a short term thing (weeks or a couple months usually) such that you were not official resident for tax purposes but still earning income in Canada.

When paying foreign individual, somehow, CRA’s take is that it’s considered a payroll issue, and payroll withholding would be required, not reg 105. I think that’s more troubling.