Canada
United States
Social Security Agreement
December 28, 1984
1. This Circular is for the information and guidance of people who are
working or will work in both Canada and the United States. It outlines the
provisions of the Agreement which eliminate dual coverage situations under
the Canada Pension Plan mid U.S. Social Security which existed in the past.
This Agreement became effective August 1, 1984.
2. The Agreement establishes a general territoriality rule which stipulates
that a person's work within the territory of one of the countries may be
compulsorily covered only by the social security system of that country.
Thus, a person working in employment who would otherwise be covered under
the laws of both countries will be covered only under the system of the
country where the work takes place and will be exempt under the system of
the other country.
3. There are exceptions to this general rule, such as when an employee is
required by an employer to work temporarily in the territory of the other
country. In these cases the employee normally remains covered by the first
country (as if the employee were doing the work in its territory) and
exempt under the laws of the other country. This would apply to persons
whose employment requires them to work across the border occasionally or
repeatedly for short periods (such as truck drivers or professional
athletes) as well as to those who are transferred by a parent company to a
subsidiary, or vice-versa, between Canada and the United States. The
five-year term of coverage may be extended if the authorities of the two
countries agree. Requests for extensions should normally be made before the
end of the current term. (See 12 below for where to send the request.)
4. The Agreement also provides special rules for government employees who
might otherwise find themselves covered under the laws of both countries.
Basically, it ensures that employees of the government of one of the
countries (including diplomatic and consular personnel) who are sent to
work in the other country are exempt under the social security laws of the
other country. Locally engaged employees who are hired in one country to
work in that country for the government of the other country are normally
covered only under the laws of the country where the work is done, if they
are otherwise liable for coverage under the laws of that country. Thus, of
the locally engaged personnel of the Canadian government in the United
States, only U.S. citizens will contribute to U.S. Social Security.
Persons of other nationalities are excluded. Whether the latter will
contribute to the Canada Pension Plan will depend on their terms of
employment. Conversely, of the locally engaged personnel of the U.S.
government in Canada, those who are U.S. citizens will be excluded from the
Canada Pension Plan; all others will generally be required or permitted to
contribute.
5. Workers who might otherwise have to contribute to the social security
plans of both countries in respect of employment as an officer or member of
the crew of a ship or aircraft will contribute only to the Canada Pension
Plan if they are residents of Canada. They will contribute only to U.S.
Social Security in any other case.
6. Similarly, self employed persons who might otherwise have to contribute
to the social security plans of both countries will contribute only to the
Canada Pension Plan if they are residents of Canada and only to U.S. Social
Security in any other case. This provision will primarily affect
self-employed U.S. citizens who reside in Canada and who, were it not for
the Agreement, would be covered under Canadian law because they reside in
Canada and would also be covered under U.S. law because they are U.S.
citizens.
7. The Agreement also deals with the situation of a person who might
otherwise have to contribute to both plans in respect of an activity that
one plan considers to be employment and the other self-employment.
Basically, when the worker is a resident of the country where the activity
is considered to be self-employment, the self- employment rule of the
Agreement applies, as described in 6 above. In any other case the
employment rules apply, principally those described in 2 and 3 above. The
following example will illustrate this:
Under the respective national laws, a U.S. citizen who works in Canada as a
minister of religion is liable for coverage as a self-employed person by
U.S. Social Security and as an employee by the Canada Pension Plan. Under
the Agreement, such an individual will retain U.S. coverage but become
exempt from contributions to the Canada Pension Plan if U.S. residency is
retained or if the individual is assigned to work in Canada, for a period
of up to 60 months, by a synod or central church organization in the United
States. In any other case, the Canada Pension Plan will prevail and such an
individual will be exempt from contributions to U.S. Social Security.
8. The Agreement includes special rules for certain exceptional cases. For
instance, if under the normal rules coverage would be provided by one of
the countries but there is some obstacle to that country providing it, the
other country may provide the coverage if its laws permit. A person who is
covered by one of the countries and, because of a similar agreement with a
third country, is also covered in respect of the same work by the other
country- or by the third country', may be exempted by the first country.
9. Each country will issue "certificates of coverage." These will
confirm that a particular worker is covered under the social security laws
of that country in respect of a particular employment. The certificate may
be used to claim an exemption from contributions under the laws of the
other country in respect of the same employment or activity. Workers should
note that Canada will not normally issue certificates of coverage under the
Canada Pension Plan to residents of Canada in respect of work done in
Canada or work done in the United States during visits there of six months
or less. See 12 below for details on how to obtain a certificate in other
circumstances.
10. In cases, where, as indicated above, a persons coverage depends on the
country of residence, problems may arise if there is uncertainty about
where the individual ordinarily resides. Where there is a difference of
opinion between the authorities of the two countries which results in dual
coverage or no coverage, or where there is a difference of opinion between
the worker and the employer or the authorities of one of the countries,
which is likely to jeopardize the worker's coverage, the worker may request
a ruling concerning the residency status. A person who requires a ruling
should apply to the authorities of the country of which the individual
claims to be a resident, as described in 12 below. Before issuing a ruling,
the authorities of the two countries consult with one another and the
ruling will therefore reflect their common position.
11. Rulings may also be obtained in the circumstances described in 7 above,
when there is uncertainty about which of the employment rules applies.
Normally, this is expected to occur only when a person moves from the
country in which the activity is considered to be self employment and
becomes a resident of the other country where it is regarded as employment.
A ruling would probably be useful only if there was uncertainty about
whether the former country's coverage would continue. The ruling should be
requested from The former country as outlined in 12 below.
12. Requests for a certificate of coverage under the Canada Pension Plan
(see 9 above) or for an extension of coverage under the Canada Pension Plan
(see 3 above) may be addressed to:
Accounting and Collections Division
Department of National Revenue, Taxation
875 Heron Road
Ottawa, Ontario
Canada K1A 0L8
The Accounting and Collections Division will also accept requests for
rulings in the circumstances described at 10 and 11 above, where a worker
claims to be a resident of Canada and/or expects to be covered by the
Canada Pension Plan.
13. Requests for certificates, extensions and rulings concerning United
States coverage should be sent to:
Social Security Administration
International Program Policy Staff
1104 West Highrise
6401 Security Boulevard
Baltimore, Maryland 21235
U.S.A.
14. Requests that are inadvertently sent to the wrong country's agency will
normally be forwarded to the appropriate agency. To avoid confusion,
workers are asked not to address both agencies about the same matter. The
following is the text of Article XXlX.4 of the United States - Canada
Income Tax Treaty 1980 with subsequent amendments:
4. With respect to taxable years not barred by the statute of limitations
ending on or before December 31 of the year before the year in which the
Social Security Agreement between Canada and the United States (signed in
Ottawa on March 11. l981) enters into force, income from personal services
not subject to tax by the United States under this Convention or the 1942
Convention shall not be, considered wages or net earnings from
self-employment for purposes of social security taxes imposed under the
Internal Revenue Code.
