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Aug 19, 2019 · Before commencing operations in Canada, American employers should be aware of several key differences in the countries’ legal landscapes. Structure of laws. In the United States, jurisdiction over employment matters is shared between local, state and federal governments.
- Fiona Brown
Advising People.ai on its expansion into Canada and...
- Michael F. Horvat
Represented Allied Properties Real Estate Investment Trust,...
- Fiona Brown
- Canadian Income Tax – Employer
- Permanent Establishment
- Goods and Services Tax and Harmonized Sales Tax
- Canadian Payroll Tax
- Canadian Income Tax – Employee
U.S. employers with employees working remotely in Canada will be subject to Canadian income tax only if they have a permanent establishment in Canada as defined by the U.S.-Canada Income Tax Convention (the “Treaty”). Where U.S. employees work remotely in Canada or where other business activities are conducted in Canada, the U.S. employer will have...
A permanent establishment arises where there is a fixed place of business, which may include a home office, or where contracts are regularly concluded in Canada by employees present there, even if only temporarily. A “services permanent establishment” may arise under the Treaty where employees of services businesses are present in Canada for more t...
Goods and Services Tax (“GST”) is a 5% Canadian federal value-added tax on sale or exchange of most goods and services. GST applies to all applicable business activities and sales completed in Canada regardless of whether there is a permanent establishment in Canada. The seller is obligated to register with CRA and collect and remit the tax to them...
U.S. employers with employees working remotely in Canada are required to collect and remit payroll taxes to CRA unless they qualify to not withhold under a Regulation 102 waiver (CRA Form R102-R, Regulation 102 Waiver Application). Employees who are not residents of Canada and are subject to Canadian withholding tax must obtain an Individual Tax Nu...
U.S. employees working remotely in Canada will not be taxable on their compensation earned from employment services rendered in Canada where they continue to be tax residents of the U.S. and they meet one of the following two exemptions under the Treaty: 1. The employment income earned from services rendered in Canada is less than C$10,000, or 2. T...
- At-will employment: In the United States, most employment relationships are considered “at-will,” which means that either the employer or employee can terminate the relationship at any time, for any reason.
- Severance pay: In Canada, employees who are terminated without cause are entitled to receive severance pay, which is typically calculated based on the employee’s length of service.
- Minimum wage: The minimum wage in Canada varies by province, but is generally higher than the federal minimum wage in the United States.
- Vacation time: In Canada, employees are entitled to a minimum of two weeks of vacation time per year. In the United States, there is no federal law requiring employers to provide vacation time.
- Canadian Employment Law Is Largely a Provincial Matter, not a Federal Government Matter. In Canada, approximately 90% of the workforce is regulated by provincial governments.
- No At-Will Employment. In the United States, an employer may be able to terminate its employee "at-will." In Canada, unless there is a legal justification for the employee’s termination (or the employee has a written employment agreement specifying a termination package), the employer is obligated to provide reasonable notice or pay in lieu of notice.
- Overtime-Exempt Positions. In Canada, the exemption of employees from overtime is governed by the applicable jurisdiction’s employment standards legislation.
- Employees With Disabilities. Like in the United States, an employer is prohibited from engaging in discriminatory practices, unless it meets a stringent bona fide occupational requirement (BFOR).
If you’re a US company paying Canadian employees internally, you’ll have to do so legally. This means establishing a presence in the country, setting up the relevant insurance and banking infrastructure, opening a payroll account, and learning about payroll laws and employee classifications.
Aug 19, 2020 · We regularly advise American clients on expanding their businesses to Canada. In this document, we outline key differences between employment law in Canada and the United States and discuss some of the most common considerations for businesses with employees in one or both countries.
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Canada's Employment Insurance Economic Regions. This map also includes a long text description below. A map of Canada showing the Employment Insurance regional boundaries. Newfoundland and Labrador. Prince Edward Island. Nova Scotia. New Brunswick. Quebec. Ontario.
