Help - tax and setting up self employed in Canada
 

Moving out June 08, need advice re hubbie's job. Presently he works with UK company, all work done via internet, they have agreed for him to continue working with them, even though he will reside in Canada, work will continue via internet. At present, he is employed, but will have to become self-employed when we move. But all clients etc will still be from UK.

Hope this makes sense.
Has anyone else worked like this? Todays technology making it all possible, but my worries are, the self-employed status and who would we be liable to pay Tax to?

Re: Help - tax and setting up self employed in Canada
 

Resident in Canada, pay tax in Canada. Self employed do not need to register a business unless they choose to do so, however may need a business license with the city in which they do business. Sales taxes are usually not charged to clients overseas.

CRA Business website

Re: Help - tax and setting up self employed in Canada
 

The Canadian Government.

Re: Help - tax and setting up self employed in Canada
 

Two questions.

1) Is the move permanent (ie will you become non-resident, non-domiciled in the UK)?
2) Is the company expecting him to resign and then become a contractor?

Re: Help - tax and setting up self employed in Canada
 

thanks for the reply's.

1. Move is permanant, we will be canadian residents.

2. No, he won't resign, just transfer from employee to self-employed basis with company.

Re: Help - tax and setting up self employed in Canada
 

Definition of self-employed:

Dictionary.com -- earning one's living directly from one's own profession or business, as a freelance writer or artist, rather than as an employee earning salary or commission from another

TheFreeDictionary.com -- Earning one's livelihood directly from one's own trade or business rather than as an employee of another

xxx

Re: Help - tax and setting up self employed in Canada
 

If he is currently an employee of the firm, he will need to resign to cease being an employee and become self employed.

Also, if he only has one client, he would need to check with CRA as to whether they will consider him a self employed contractor.

Re: Help - tax and setting up self employed in Canada
 

What Judy said is strictly true but there is wiggle-room.

If you are not resident in the UK, the Inland Revenue (or whatever it's called now) doesn't give a flying **** about you. He can remain as an employee, complete with vacation allowance etc. There are no taxes or NI contributions to be paid by either the employee or the employer. There are no pay slips, either. Pay is transferred gross (with them picking up the charges). This makes the employee cheaper to run, by the way, so a re-negotiation of package may be in order.

In Canada, you will pay tax on your income, regardless of where it comes from. Again, there is no PAYE or anything like that. In fact, there is so little that makes you look like an employee (according to the CCRA's own rules) that my accountant decided I was technically self employed.

I'm in almost the same situation as he is, by the way; I just got into it when I was already in Canada.

You'll see I mentioned having an accountant. Get one.

Because I count as self-employed and work from home, certain deductions from my tax hit are available. My little office takes up X% of my house. That X% can be applied to all sorts of costs (mortgage interest, insurance, utilities etc etc). It comes off your tax bill. Keep all receipts/bills; in fact, keep a running tally in a spreadsheet.

Be careful of insurance, if you work from home. Your insurance company might not like it if they find out you've got a business going on in a home. What I do, and what he will do, probably have little threat insurance-wise but it's a great way for the insurer to cop out of paying if your house burns down. Be up-front with them.

I think you said you'll be getting here mid-year. Don't worry about tax for the first few months. Just make sure you set aside about a third of any income received.

You will do your first tax return about next March (end March is the typical deadline). At that point, the accountant will work out what you owe and you will pay it. If the income wasn't huge, the taxman will probably leave you alone and you can continue to just put money aside for next time.

Eventually the taxman will cotton-on and you will be required to pay in instalments, generally quarterly. These tend to based on what the last tax return said.

I have not done my 2007 tax return yet. I'll do it next month. I have already received a demand from both the CCRA and Revenu Quebec for my March instalments, for this year's tax. It's due on the 15th. Once I have submitted my return, they'll see what I made last year and adjust my June, September and December instalments accordingly.

I'm not entirely sure that you have to pay instalments on the dates indicated. A lady at the CCRA told me you don't, provided you're not owing at the end of fiscal (penalties and interest come into play then). I think you can also negotiate on how often instalments are made.

Re: Help - tax and setting up self employed in Canada
 

Tax deadline is April 30 for individuals and June 15 for self employed, if you owe tax this should be paid by April 30 or interest is charged. It can be paid on account and the return filed by June 15, any balance will be either refunded or charged plus interest.
Very unlikely unless your income is very high. In all the years I have been self employed my tax returns have been filed annually and taxes paid annually. Sales taxes however are treated differently and filed monthly, quarterly or annually, depending on tax amount collected. You can also opt for more frequent filing.

This is a Quebec thing.

Re: Help - tax and setting up self employed in Canada
 

Thanks to all who replyed, complicated, scarey buisness Tax,

Souvineir,

thanks for your detailed reply, i'm now reassured that it can be done. Will absolutely get an accountant as you advice.

although perfect solution, aviods worry re - gaining new employment in canada for hubby, when company suggested it, i worried how it was all going to work. Thought i read somewhere on here, that someone did something similar.

What do you do? OH in finance/mortgage consultant, all internet based, so long as we're set up with technology, can do same job in our new home on PEI, as if he were sitting in his London office.

Was worried we would end paying Tax in both UK and Canada. Would you mind if i send you PM's if we have any more questions?

Sharon

Re: Help - tax and setting up self employed in Canada
 

I wasn't too sure of the cut-off dates, but whatever.

It's not very unlikely. It just depends on who processes you tax return. Get someone who's having a bad day and it will start to happen. Same with audits.

Sales tax is not an issue for me. It's all export sales.

Yes. it's a Quebec thing.

Re: Help - tax and setting up self employed in Canada
 

I don't work in finance, or anything like it (industrial consulting, actually, mainly extractive industries). It makes no difference. I'm still in the information business and that's something I could do from anywhere with an internet connection, a phone, and airport and somewhere to buy beer.

Feel free to PM me but don't expect immediate replies. I have my brother coming over on Monday for a week and then I'm off to TO for a convention. I may be a little distracted.

Re: Help - tax and setting up self employed in Canada
 

no problem, thankyou. Have a good week with your brother.

Re: Help - tax and setting up self employed in Canada
 

Hi- I have been looking for this kind of information for some time. I also have a role which could be done remotely.

Up until now I have been considering applying as a skilled worker, potentially through the PNP route. However, I have already had word from one recruitment agency saying that it is quite difficult to get a 'job offer' when you are not physically in Canada (talking Nova Scotia here).

Therefore, I am wondering if it is worth putting to my employer to 'keep me on' from a remote location which could be of benefit to them (no office space cost/Employer NI contributions to make etc) and to me- in that I would have an income immediately in place and also a benefit for the Canadian govenment by paying taxes in their country.

So is this approach 'doable' and would this be a TWP I would need? And how would this process follow if I am proving my employment 'source' or 'job offer' is overseas? (Apologies if this is somewhere really obvious on the site or a stupid question).

I have read the CIC immigration website but to apply as self-employed the work appears to have to be in sports, farming or cultural which isn't the case for me!

My husband will be seeking his own full-time employment so really my idea was driven out of being a secondary income that could also allow flexibility with child-care etc.

Any thoughts advice would be appreciated!

Re: Help - tax and setting up self employed in Canada
 

No. What you have in mind is not permitted.

Souvenir got permanent residence status through a spousal sponsorship. Once he was a permanent resident, he could accept any job he liked. He works for a British company, but works remotely, from his home in Canada.

If your husband got a temporary work permit, and if his occupation belonged to Skill Level A, B or O on the National Occupational Classification, you would be entitled to a spousal open work permit (SOWP). An SOWP allows you to accept any job, with any employer, anywhere in Canada. I haven't heard of anyone using an SOWP to work for a foreign company, but intuition suggests it would be possible.

You could investigate the Nova Scotia Community Identified Stream.

xxx