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Message-----Original Message-----
From: ]
Sent: Monday, June 02, 2003 10:56 AM
To: [email protected]
Subject: RE: Minnesota Company paying a Canadian
Thank you for your response. My only concern was that there is
no form similar to a 1099 which would be filed in the U.S. at the
end of the year so the individual must claim the income. I was
worried about jeopardizing my company if I filed nothing, but yet
could not find a form similar for contract labor in Canada. If
you find further information please forward it to me. Thank you
for you assistance.
-----------------------------------
David Ingram replies:
There "is" a Canadian form called a T4A which is "sometimes"
given to someone who is performing work under a "contract".
However, for the most part, people who are self-employed and
issue an invoice to you, do NOT get a T4A or a 1099 in either
country unless there has been legislation suggesting that the
form is mandatory
In Canada, subcontractors in the construction industry must have
a T4A (your 1099-MISC) issued for all work done because of
perceived abuses.
In the US, some actors who are sort of self employed have been
ruled Statutory Employees and are issued W2 slips and have to
deduct their expenses on a 2106 under itemized deductions. And
in Chicago, the same thing happened to the 300 "self-employed"
delivery guys who used everything from roller blades to five ton
trucks to deliver things for a delivery company.
david ingram
-----Original Message-----
From: Denise Thompson [mailto:[email protected]]
Sent: Monday, June 02, 2003 10:56 AM
To: [email protected]
Subject: RE: Minnesota Company paying a Canadian
Thank you for your response. My only concern was that there is
no form similar to a 1099 which would be filed in the U.S. at the
end of the year so the individual must claim the income. I was
worried about jeopardizing my company if I filed nothing, but yet
could not find a form similar for contract labor in Canada. If
you find further information please forward it to me. Thank you
for you assistance.
-----Original Message-----
From: David Ingram [mailto:[email protected]]
Sent: Monday, June 02, 2003 12:49 PM
To: Denise Thompson
Subject: Minnesota Company paying a Canadian
Name: Denise Thompson
the_email: [email protected]
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?
---------------------------------------------------------------
------------
David Ingram Replies:
You ended up on our email list because of this question and I
cannot find anywhere that the question was answered.
This will depend upon whether the 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, your contract person in this case is either:
writing code, or
calling on bars, hotels, etc to sell your product, or
acting as an installation technician to set the systems up
in Canada
--------------------------------
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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