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Working remotely for UK company from Canada

Working remotely for UK company from Canada

Old Jul 23rd 2019, 10:07 am
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Question Working remotely for UK company from Canada

Hi everyone,

I've searched the forums rigorously and appreciate there's some advice out there on this, but I'm really struggling to find the answer I need and time is ticking for me.

My partner and I have PR status for Canada, triggered in Jan this year. He moved to Vancouver in April and I have stayed in the UK to work whilst he gets settled. I am now looking to join him over the next few months. The company I currently work for in the UK would like to keep me working for them remotely from Canada, however the payroll department have raised some issues about how to pay me, as they do not have a Canadian payroll system set up.

I am therefore looking at what/ if there are options for me to carry on working for the UK company whilst in Vancouver. My work would be only for one UK based company (the one I work for now). The preferred option (by my employer) would be for me to move to be a contractor, and invoice them directly for the work undertaken, which I believe may negate their PAYE obligations, and I then file my taxes to the CRA?

I'm sure I cannot be the only person looking to/ doing this, however currently feeling a bit overwhelmed and lost by the situation, therefore any advice would be greatly appreciated/

Thanks in advance!
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Old Jul 23rd 2019, 10:47 am
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Default Re: Working remotely for UK company from Canada

Souvy works this work. Look for his old posts.
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Old Jul 23rd 2019, 12:03 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by lhb0705
Hi everyone,

I've searched the forums rigorously and appreciate there's some advice out there on this, but I'm really struggling to find the answer I need and time is ticking for me.

My partner and I have PR status for Canada, triggered in Jan this year. He moved to Vancouver in April and I have stayed in the UK to work whilst he gets settled. I am now looking to join him over the next few months. The company I currently work for in the UK would like to keep me working for them remotely from Canada, however the payroll department have raised some issues about how to pay me, as they do not have a Canadian payroll system set up.

I am therefore looking at what/ if there are options for me to carry on working for the UK company whilst in Vancouver. My work would be only for one UK based company (the one I work for now). The preferred option (by my employer) would be for me to move to be a contractor, and invoice them directly for the work undertaken, which I believe may negate their PAYE obligations, and I then file my taxes to the CRA?

I'm sure I cannot be the only person looking to/ doing this, however currently feeling a bit overwhelmed and lost by the situation, therefore any advice would be greatly appreciated/

Thanks in advance!
It's easy enough. When you move to Canada for good, file a P85 with HMRC to declare that you have left the UK. Then in your first tax year in Canada, file your returns with CRA PLUS send in a 'double taxation agreement' form for CRA to stamp and sign to confirm you are now taxed in Canada. They send that back to you and you forward to HMRC. HMRC should then issue you an 'NT' tax code to you and your UK employer who will then stop deducting UK tax. HMRC will refund any tax they deducted while all this went on. You then declare any income from this contact as overseas income to CRA and are taxed in Canada (including the back income that had tax withheld by HMRC once they have refunded it).

I would retain a UK bank account and have your employer pay your income into that, then use TransferWise (or another service) to move the money to your Canadian account.
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Old Jul 23rd 2019, 2:12 pm
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Default Re: Working remotely for UK company from Canada

Get a business license from the City you are living in, in Canada - be self employed, invoice the company in the UK.. they transfer the funds (sterling) to your bank account in Canada without any deductions as you are not employed by them any longer.. you are a self employed freelance contractor - in effect they are paying your invoice- not paying you a wage. (you will want to file a P85 and also apply for any tax refund you might be due in the UK).

You will pay a $17 wire transfer fee (tax deductable) for each transfer into your Canada bank account - bank charges here are a pain, but there are low cost / no cost options - look at RBC small business online account, free - (so if you can invoice them bi-monthly it works out better for you - though exchange rates can be a killer). Each year you submit your tax return in Canada as a self employed person and pay your income taxes and CPP contributions. If you earn more than $30,000 you will also need to register for GST/HST. You don't charge the UK company GST/HST unless a project you are working on is based for a company in Canada... HST/GST is 0 rated for overseas clients, but you still have to register for it.

It's easy... not complex.. and no tax liability from the UK... you also get to have tax deductables such as 'use of home office' This might help: https://smallbusinessbc.ca/resources/howtos-checklists/ and https://smallbusinessbc.ca/business-...-requirements/

I've worked for a UK agency for 6 years as a freelance contractor.. remotely.

Last edited by Siouxie; Jul 23rd 2019 at 2:26 pm.
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Old Jul 23rd 2019, 7:51 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by Siouxie
Get a business license from the City you are living in, in Canada - be self employed, invoice the company in the UK.. they transfer the funds (sterling) to your bank account in Canada without any deductions as you are not employed by them any longer.. you are a self employed freelance contractor - in effect they are paying your invoice- not paying you a wage. (you will want to file a P85 and also apply for any tax refund you might be due in the UK).

You will pay a $17 wire transfer fee (tax deductable) for each transfer into your Canada bank account - bank charges here are a pain, but there are low cost / no cost options - look at RBC small business online account, free - (so if you can invoice them bi-monthly it works out better for you - though exchange rates can be a killer). Each year you submit your tax return in Canada as a self employed person and pay your income taxes and CPP contributions. If you earn more than $30,000 you will also need to register for GST/HST. You don't charge the UK company GST/HST unless a project you are working on is based for a company in Canada... HST/GST is 0 rated for overseas clients, but you still have to register for it.

It's easy... not complex.. and no tax liability from the UK... you also get to have tax deductables such as 'use of home office' This might help:

I've worked for a UK agency for 6 years as a freelance contractor.. remotely.
Thank you so much for the advice, really appreciate it- fills me with hope that its do-able! Would the fact that I would be contracted by just the one UK company full time likely present a problem? There would also be no agency middle man involved, but unsure if any of that makes a difference?!

Good to know there are other people out there making it work! Thanks again.
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Old Jul 23rd 2019, 11:16 pm
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Default Re: Working remotely for UK company from Canada

I do some work for a UK university. When I moved across they had me as a contractor and required that I had some sort of entity which I do (I have a local partnership). I invoiced them in GBP and money was paid to my UK bank account. I declared it to the CRA and paid tax.
Now they've put me back on payroll. I still declare to the CRA and also declare any GBP tax paid.
In my case the amounts are not that huge (it's part time) and there doesn't seem to be an issue. I've also done one off jobs for other UK universities in the past and they've just paid me in GBP and deducted the tax. I think as long as you declare to the CRA and pay tax somewhere it seems to be okay.
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Old Jul 24th 2019, 1:24 am
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Default Re: Working remotely for UK company from Canada

Originally Posted by lhb0705
Thank you so much for the advice, really appreciate it- fills me with hope that its do-able! Would the fact that I would be contracted by just the one UK company full time likely present a problem? There would also be no agency middle man involved, but unsure if any of that makes a difference?!

Good to know there are other people out there making it work! Thanks again.
You are very welcome!

Theoretically having only 1 client could raise flags with Revenue Canada but you can easily explain that you have just started out in business in Canada and are building it up... make yourself a little website (you can make a free one even initially) to advertise your business services.. or a free advert on kijiji or craigs list.. "remote office services". Don't forget that you are invoicing them for your billable hours... you can adjust them to reflect working for instance 10 hours 3.5 days a week - so full time hours but not full time work.

If you are into Social engagement or similar, it would be easy to create a small website and offer your services to others. You might even be able to get some help to start up your business as a newcomer entrepreneur - that's the route I would go down.
https://www.bdc.ca/en/i_am/newcomer-...s/default.aspx


I effectively have 1 client in the UK - the agency - even though I undertake work for multi national worldwide companies.. I invoice the agency for my billable hours.. it's definitely do-able

Last edited by Siouxie; Jul 24th 2019 at 1:32 am.
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Old Jul 24th 2019, 1:51 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by lhb0705
Thank you so much for the advice, really appreciate it- fills me with hope that its do-able! Would the fact that I would be contracted by just the one UK company full time likely present a problem? There would also be no agency middle man involved, but unsure if any of that makes a difference?!

Good to know there are other people out there making it work! Thanks again.
As mentioned, there is a theoretical exposure to the CRA deeming you to be a de facto employee of the UK company. I don’t see this as a major risk because:
  • It’s very common for people to have this arrangement, I know of lots of people who have worked that way for 20 years and a few who have for 30
  • There are no longer significant tax advantages to the arrangement. When there were lots of deductions for being “self employed” then there was reason for the CRA to audit individuals working this way, now there aren’t so the auditors have bigger fish to fry
I would pay for an accountant’s opinion on CPP/EHT/any other non-tax financial issues though I don’t think there are any.
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Old Jul 24th 2019, 2:39 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by dbd33
As mentioned, there is a theoretical exposure to the CRA deeming you to be a de facto employee of the UK company. I don’t see this as a major risk because:
  • It’s very common for people to have this arrangement, I know of lots of people who have worked that way for 20 years and a few who have for 30
  • There are no longer significant tax advantages to the arrangement. When there were lots of deductions for being “self employed” then there was reason for the CRA to audit individuals working this way, now there aren’t so the auditors have bigger fish to fry
I would pay for an accountant’s opinion on CPP/EHT/any other non-tax financial issues though I don’t think there are any.
CPP you 'pay' 10.5% of earnings and get a tax credit for 5.25% - effectively you are paying the 'employer' part as well as the 'employee' part - but get a tax credit for the employer part.

EHT/GST/HST (goods and services tax) you must register when you reach an income of $30,000 but if invoicing for services supplied to overseas companies or individuals it's rated at "0" -.
https://www.canada.ca/en/revenue-age...s-exports.html
and https://www.canada.ca/en/revenue-age...-commerce.html
Section 7 of Part V of Schedule VI to the Act is the general zero-rating provision for exported services. Pursuant to this section, a supply of a service made to a non-resident person is zero-rated

Last edited by Siouxie; Jul 24th 2019 at 2:43 pm.
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Old Jul 24th 2019, 3:21 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by Siouxie

EHT/GST/HST (goods and services tax) you must register when you reach an income of $30,000
It's not strictly relevant to the thread but I've never understood how this is intended to work. Suppose I sell things, not myself but actual things, lower flange sprocket gaskets. Doe I sell $29,999 worth without collecting and remitting HST and then charge 13% HST on the next one sold or do I charge 13% from day one and put the first thirty grand's worth of HST in my pocket? Neither seems right.
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Old Jul 24th 2019, 3:37 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by dbd33
It's not strictly relevant to the thread but I've never understood how this is intended to work. Suppose I sell things, not myself but actual things, lower flange sprocket gaskets. Doe I sell $29,999 worth without collecting and remitting HST and then charge 13% HST on the next one sold or do I charge 13% from day one and put the first thirty grand's worth of HST in my pocket? Neither seems right.
If you charge it, you must remit it. You can elect to charge it if you bill less than $30,000 but, if you bill more than $30,000, you must charge it on all you billed.

It is always worth charging it simply to obtain the credit for all the GST/HST you have to pay.
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Old Jul 24th 2019, 3:49 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by Almost Canadian
If you charge it, you must remit it. You can elect to charge it if you bill less than $30,000 but, if you bill more than $30,000, you must charge it on all you billed.
Thanks.

So, if I didn't register and I've sold $29,999 worth of things, not knowing if I'll sell more and not charging HST, I can't sell another unit because I'll then be liable for the HST for the first $29,999. On the other hand, I could register at the outset but, if I don't know how many I'm going to sell, registering and remitting is a hassle I don't need.

Services are easier; simple method, collect 13% remit 8.8% (in Ontario). No problem.
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Old Jul 24th 2019, 4:20 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by dbd33
Thanks.

So, if I didn't register and I've sold $29,999 worth of things, not knowing if I'll sell more and not charging HST, I can't sell another unit because I'll then be liable for the HST for the first $29,999. On the other hand, I could register at the outset but, if I don't know how many I'm going to sell, registering and remitting is a hassle I don't need.

Services are easier; simple method, collect 13% remit 8.8% (in Ontario). No problem.
I only charge for services, so I was referring to services but it was my understanding that it applies to both in the same way. I collect 5% and remit 5% minus any GST I have paid out for expenses.
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Old Jul 24th 2019, 4:35 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by Almost Canadian
I only charge for services, so I was referring to services but it was my understanding that it applies to both in the same way. I collect 5% and remit 5% minus any GST I have paid out for expenses.
Fair enough, I didn't consider that someone providing services might have expenses - in our business they're negligible.
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Old Jul 24th 2019, 7:00 pm
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Default Re: Working remotely for UK company from Canada

Originally Posted by dbd33
Fair enough, I didn't consider that someone providing services might have expenses - in our business they're negligible.
Rent of office, secretary, secretary's office, law society fees, liability insurance, stationery, etc.
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