Question on Taxes - Living in Canada / Employer in the UK

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Question on Taxes - Living in Canada / Employer in the UK


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  #1 (permalink)  
Old 10th August 2020, 06:10 PM
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Default Question on Taxes - Living in Canada / Employer in the UK

Hi guys

wasnt't sure where to ask this question, thought it would be good to come back to this forum after a long time away!

I'm originally from the UK, and have been living in Canada for 10 years (I am a Citizen now).

I am considering a new full time job, strangely the employer is in the UK. I am located in Toronto and will not be moving back, i'll work wholly from here.

Its not clear to me how I recieve a salary from the UK and what my/their tax implications are.

I have read various articles on the topic and talked to my accountant, I don't think I got very clear advice, so was hoping folks here may have been through something similar - i'd apprecaite any thoughts!

1) Is the burden on my to take the full gross salary and set aside what taxes would be paid in Canada?

2) Is there any burden on the employer to pay any UK taxes considering im a Canadian citizen

3) The salary is in UK pounds, how do I deal with paying taxes as it will fluate every month depending on the exchange rate.

4) Is there anyway I can partake in E.I

5) Is there anyway to get RRSP room?

Apprecaite any advice or thouughts people have.

Thanks
TM

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Old 11th August 2020, 10:38 AM
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Quote:
Originally Posted by themistry View Post
1) Is the burden on my to take the full gross salary and set aside what taxes would be paid in Canada?
Yes.



Quote:
2) Is there any burden on the employer to pay any UK taxes considering im a Canadian citizen
No idea, but can't see why there would be.


Quote:
3) The salary is in UK pounds, how do I deal with paying taxes as it will fluate every month depending on the exchange rate.
You calculate your pay according to the exchange rate the day you receive it.



Quote:
4) Is there anyway I can partake in E.I
I don't believe so.


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5) Is there anyway to get RRSP room?

No idea.

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Old 11th August 2020, 10:50 AM
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CRA provides exchange rate information.

https://www.canada.ca/en/revenue-age...nge-rates.html

Normally you can use the average and not worry about daily changes.

https://www.canada.ca/en/services/be...d-workers.html

EI. You'll need to pay the full amount being basically self employed. Factor that into the salary negotiation

https://www.canada.ca/en/revenue-age...deduction.html

RRSP. You're like any other self employed.

You'll likely be required to file quarterly and pay that way. You can't wait until April if your income is mainly not taxed at source.

https://www.canada.ca/en/revenue-age...stalments.html

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Old 11th August 2020, 12:28 PM
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The general rule is that you are considered tax resident based on what some call "the butt rule" - i.e. you owe taxes to the jurisdiction where your butt is located while you are doing the work. Where your employer is located is of no importance.

For working remotely like this, there may be a number of approaches for you to consider. If your UK employer has offices or some other sort of presence in Canada, they may be able to put you on their "Canadian payroll" which would mean you would be paid in Can$ with the Canadian taxes and social insurances taken from your pay. It then becomes an internal accounting matter how the HQ office reimburses the Canadian office for your payroll expenses.

It may also be possible for your UK employer to register with the Canadian authorities as a non-resident employer, where they would then pay into the various Canadian tax and insurance authorities on your behalf. (I have no idea if this option exists in Canada.) It does take the hassle off you, but makes things a bit more complicated for your employer.

Otherwise, you can set up as a contractor or vendor to your UK "employer" - you bill them the agreed upon amounts and then you become responsible for paying in the various taxes and insurances on your own behalf. It may be necessary to establish a "business" of some sort in Canada, or you may be able to work under the local "self-employment" statutes. Just be careful, though, because you'll be responsible for both the employee and employer portions of most benefits and insurances, so may want to negotiate a somewhat higher billing rate to cover those expenses. (You'll also be responsible for your own costs for things such as supplies, utilities, etc. which you'll want to allow for when negotiating what you'll be paid.)

What currency you'll be paid in becomes a negotiating point and one you want to consider carefully. You may want to look into something like the Transferwise business accounts if you'll be working between two currencies (i.e. paid in one, while bearing your expenses in another).

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Old 11th August 2020, 09:33 PM
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How you get paid and where you pay taxes will depend on whether you are taken on as an employee of the company or are self-employed.

If the company is employing you then you would be on the UK payroll and pay taxes there. How Canada handles this I don't know.
If you are going to be a contractor for the company and bill them for your work, then YOU will pay your taxes direct to Canada

Why don't you ask the company how they intend to pay you?

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Old 11th August 2020, 09:53 PM
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No real chance he's paying UK taxes. If he's an employee the employer has all the obligations. Employer part of EI,CPP and vacation pay plus everything else covered by Canadian labour law.

But sitting in Canada working he isn't UK taxable.

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Old 11th August 2020, 10:23 PM
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Better to ask the UK company how they intend to pay him.

I would agree that being in Canada, taxes should/would be paid in Canada.

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Old 20th August 2020, 05:11 PM
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Hi everyone, sorry for the slow response

Thank you all for taking the time to reply, it is greatly appreciated!

In general I do not have an option to operate as a contrator, so will need to be paid as a salary. With that said, i'm struggling to find details on the points NickZ raised about getting the employer to handle EI and CPP etc, does anyone have any suggestions here?

Thanks
TM

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Old 20th August 2020, 05:42 PM
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Quote:
Originally Posted by themistry View Post
Hi everyone, sorry for the slow response

Thank you all for taking the time to reply, it is greatly appreciated!

In general I do not have an option to operate as a contrator, so will need to be paid as a salary. With that said, i'm struggling to find details on the points NickZ raised about getting the employer to handle EI and CPP etc, does anyone have any suggestions here?

Thanks
TM
Why do you not have an option to operate as self employed and bill the UK company?

Have you asked the UK company whether they can employ you i.e put you onto the UK payroll?

Surely they should be the ones to sort out how they put you onto the UK payroll and then pay Canadian taxes.?

Although have never heard of a UK company doing this.

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Old 20th August 2020, 05:47 PM
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Thank you for your reply.

Due to the role I am playing as an officer in the firm, I cannot operate as a contractor.

Regarding UK Payroll - this would require payment of UK taxes, that I can then not claim back, nor can I accrue RRSP room or EI.

Unless I have misunderstood something?

Thanks
TM

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