Working as a part time consultant in Canada - New US Canada Tax treaty Protocols - International non-resident cross border exper


Does an American who works part time, as a consultant in Canada, pay taxes in Canada or the U.S.,on the funds received, from the work in Canada?


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david ingram replies:

Prior to Jan 1, 2008, it depends upon the contract, the work location, the visa the consultant is working under and whether the income was earned before or after Jan 1, 2008 under the terms of the new treaty that was signewd / passed on Sept 21, 2007.

Prior to Sept 21, trhere was no doubt that if a self employed person worked in Canada and did not have a fixed base of operations in Canada  while continuing to live in the USA, that Self-Employed person did not pay tax to Canada although they had to file a tax return and claim the benefits of Article XIV of the treaty.

Article 9 of the new Protocols,  (find the whole amendment at   http://canada.usembassy.gov/content/can_usa/canadaprotocol07.pdf ) deletes Article XIV and my reading does not find it addressed specifically other than by the new terms of Article XV of the treaty which is amended by Article X of the protocols.  ( Iam wiling to be corrected here Andrew or Gary or??)

This new amendment refers to salaries, wages amnd other remuneration and seems to take into account that self-employed consultant's fees.  In this case, they will be taxable in Canada first if the amount exceeds $10,000 or the consultant is in Canada more than 183 days. 

Now thse new protocols are being introduced in a graduated manner.  Article 27 of the new protocols states that the new rules will take effect on Jan 1, 2008.  Other specific dates are being used for other articles with one going back to Sept 17, 2000 and othe parts (article 3) not taking effect until the third year.  Assuming you are earning over $10,000 in Canada, under Article XV of the Treaty you should expect to pay tax to Canada first and claim a foreign tax credit on your US return by filing US form 1116..

Hope this helps

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This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
 
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,000 would be the same with one rental
 
$1,200 would be the same with one business no rental
 
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.
 
With a Rental for $350
 
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.
 
Just a guideline not etched in stone. 
 
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