Souvy

Not sure my position is quite the same as yours but, as Nosferatu pointed out earlier, I've been doing something similar for several years. Here goes, hope some of it is useful.

I came here as a permanent resident in 2000. I did SFA for 2 years, by which time I was firmly established as resident in Canada and non-resident/non-domiciled in the UK.

In 2002, I started doing contract work for a UK company (home office-based). I did engage an accountant at this stage because there were some peculiarities specific to me. I was told to just report to the Canadian taxman as a self-employed person and stick my income into my annual personal tax return. There was no point in incorporating because I'd have to register for GST (silly because my work counted as an export and didn't involve GST). I was also able to claim stuff against tax (utility costs etc) because I was working from home.

There is a slight issue here in that tax returns are not due until well into the New Year but the tax year is calendar and if you haven't paid the tax you owe by then you get penalised. I'm not too sure about this bit. Our resident accountant can probably advise.

My first accountant warned me that I would at some point be asked to pay my taxes in instalments. This is what I do now. My taxes for this year are based on my last tax return and are due quarterly.

In 2005, the UK company made a permanent salaried employee. This changed things a bit. The UK taxman is not interested in me (we checked) and there are no UK deductions or payslips. I get laid gross by electronic transfer to my Canadian account, with my employer picking up all the charges.

It would be a good idea to build-in a contractual mechanism for addressing fluctuations in the exchange rate. I didn't even think of it and I have lost a bundle as a result.

The Canadian taxman did at one point insist that my employer handle my Canadian deductions and remit the money. That idea was argued against by my accountant and never came to pass.

When I became an employee I lost many of the tax breaks. I still get some, as a remote employee required to work away from the office and pick up some costs (essentially utility bills and cellphone). There is a form to fill in (T2200 E). It doesn't have to be included with your return but you may be required to show it, if they ask for it. They've never asked me.

Last year Revenue Canada got the idea that I was running a business and asked me to register for GST. That got sorted with a quick letter from my boss. End of story.

There are a whole bunch of questions to ask.

Residency is probably the key one. If you are resident in Canada for tax purposes, you'll have to pay tax in Canada, or show that you have paid it in the UK. You're only planning on coming for a while. Maybe it would be better to stay as a UK employee get paid in a UK account and simply not tell the Canadian taxman anything at all (probably illegal but probably also do-able).

Steve_

Which says it all. Last I checked he wasn't from North America anyway.

Steve_

Two points - if your sales are over $30,000 you have to be GST/HST registered regardless of incorporation. There are serious benefits to be registered in the situation described, because exports are zero-rated, so you can claim all your ITCs back.

Second, if you have a home office, technically it can become subject to capital gains tax because it's no longer part of your home. If you rent this isn't an issue. I've had this discussion with the CRA on various occasions and I keep getting different answers, but I think that is the situation.

Which is why I invoice my overseas clients in Canadian dollars. You agree the contract in Canadian dollars first, of course.

Steve_

I agree and the subject has come up on here before and it's clear the CRA consider them resident for tax purposes.

If you are actually only going to be in Canada for a year it can make sense to try and argue you are non-resident, but really as you say there is little advantage because either way you are paying taxes on your Canadian-source income and younger people generally don't have much income from other sources anyway.

If you phone up the CRA they'll just spit out an NR-74 and you can spend all day filling that in.

It would depend on your individual circumstances really, as many tax issues do.

But being non-resident has no bearing on the OP having to do payroll or anything like that, it's just how the T1 is filled in the following year. And any UK tax paperwork.

Simon86

Thank you for the information, Souvy and Steve_

Currently my employer is investigating the possiblity of using a payroll provider, thanks to a suggestion from London Mike.

London Mike

Good luck!