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My question is: Applicable to both US and Canada
QUESTION: As an employer in Minnesota we will be paying contract
labor wages
to someone in Canada. What for am I required to have on file
signed by
Canadian resident? In Minnesota we have to file a 1099 at the
end of the
year including total wages. What does Canada require?
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David Ingram Replies:
r email list because of this question and I cannot find anywhere
that the question was answered.
This will depend upon whether the CANADIAN person is self
employed:
with his or her own business card, letterhead, invoices,
etc.
Or
will appear to be an employee of your company.
If the work is computer programming by someone in Winnipeg and
they are using their house as an office, their computer, and can
work at 1 PM in the afternoon OR 1 AM in the morning, they can be
considered self employed.
ON the other hand, if the person is on line answering technical
calls from 8 AM to 4 PM in the afternoon and has specific hours
and works to your time factor, he or she may be an employee and
still may not be if they are using all their own equipment such
as phone, computer, desk, etc.
A salesman who is calling on clients is another case where they
might be a commission person, a manufacturer's agent or getting a
guaranteed salary plus an over ride commission.
---------------------------
Now, if you are just paying this person a contract price for
performing a service for a limited period of time (i.e until the
service or job is done), you do not have any withholding
requirements.
If, on the other hand this person is an employee working in a
downtown office you have provided and uses your equipment and
works to your time frame during the day, you should be registered
with the Canadian Government and making deductions for income
tax, Canada Pension Plan and Employment Insurance.
As I see it, (based upon looking at your return email website)
your contract person in this case is either:
writing code, or
calling on Canadian Businesses, etc to sell your product, or
acting as an installation technician to set the systems up in
Canada after someone else has sold the system.
At, any Rate,
--------------------------------
At NO TIME should you be deducting "any" US payroll deductions if
the person is working in Canada.
---------------------------------
Some people will be telling you that you should be deducting 15%
or 30% and issuing a US 1042S form at the end of the year. NOT
TRUE. This creates a big problem for the Canadian because he or
she owes the tax to Canada and has to wait for a full refund from
the US and has to file a US tax return as well.
If you wanted a Canadian Accountant to look after the Canadian
side, we can do that. Sonja Clark in our office is a US and
Canadian citizen and is a member of the BC Association of
Chartered Accountants, the Oregon Certified Public Accountants
and is also a graduate in law from UBC and a former licenced
lawyer in Oregon. Her specialty is cross border business returns
for small businesses operating on both sides of the US/Canada
Border.
We also have Salvador Huerte, CPA(Mexico) available to deal with
Mexican situations.
I apologize for not getting back to you sooner. I had something
like a stroke on May 17th and it threw me for a loop for a few
days.
david ingram
david ingram - [email protected] <mailto:[email protected]>
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - (604) 913-9123 www.centa.com
<http://www.centa.com>
Cell is (604) 657-8451 (10 AM to 10 PM seven days a week)
US / CANADA / MEXICO
Working Visa and Income Tax Specialists
Be ALERT, the world needs more "lerts"
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