The rise of remote work has blurred international borders in exciting ways. Many people, whether H-1B hopefuls who aren’t lucky in the H-1B visa lottery, those who have a work visa but don’t want to wait decades for their US green card, are drawn to the idea of living in Canada while continuing to work for a US-based employer. The reasons can vary from proximity to Canadian family members, the allure of Canada’s natural beauty or lifestyle, or seeking a smoother path to immigration for non-US citizens. It can seem tempting to simply keep your existing employment arrangement, simply move to Canada on a tourist or other visa, and avoid “rocking the boat” with your employer by asking them to employ you correctly in Canada. However, choosing the simplest path in the short term can lead to frustrating tax complications and fines down the road. We’re going to discuss working remotely in another country without the proper setup, which isn’t the best option. While employing someone correctly in Canada has associated costs, it can actually be cost-effective in other ways, making it a good business move and, importantly, compliant. Let’s dive in.
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Working Remotely in Canada for US Employer: Why It Isn’t a Good Idea to Do It Quietly
Keeping your US remote work arrangement informal while in Canada can lead to unexpected problems down the line, particularly when it comes to taxes. Tax laws are complex on their own, and crossing international borders adds a whole new dimension.
Working in Canada without informing your US employer means they will likely continue deducting and withholding US taxes. However, Canadian authorities would expect you to pay income tax as a resident if you remain in Canada over 183 days. This can result in double taxation, penalties, and a potential stressful paperwork burden for you and the company.
Additionally, understanding income taxes is crucial for remote workers in Canada to avoid legal complications. Other potential problems exist when you operate “under the radar.” You may unknowingly miss out on social benefits offered by Canadian labor laws by not being an official remote employee there, and your existing US-based benefits like health insurance and retirement plans might not be valid in your new location. There are also many extra benefits to being hired legally in Canada. For example, once you’ve lived there as a permanent resident for five years, you can apply to become a Canadian citizen. This can open up a lot of immigration doors, especially if you’re frustrated with the US H-1B visa process and are looking for another option, and also provides a level of additional security.
The most transparent and beneficial path is an honest conversation about working remotely in Canada with your US employer. While this might feel daunting, it protects you and can be cheaper for the company in the long run if they do decide to hire remote workers in Canada. And they don’t need to have an office in Canada and don’t need to understand Canadian labor laws either. Working with a Canadian EOR (Employer of Record) offers a streamlined solution that allows you to work in Canada for your current employer without them needing to do anything out of the ordinary.
Understanding Remote Work in Canada
Remote work has become increasingly popular in Canada, with many employees and employers embracing the flexibility and benefits it offers. As a result, it’s essential to understand the ins and outs of remote work in Canada, including the benefits, tax implications, and employment laws that apply. Whether you’re a seasoned remote worker or new to the concept, being informed about these aspects can help you make the most of your remote work experience.
Benefits of Remote Work
Remote work offers numerous benefits for both employees and employers in Canada. Some of the most significant advantages include:
Increased flexibility and work-life balance: Remote work allows employees to create a schedule that fits their personal and professional lives, leading to better work-life balance.
Reduced commuting time and expenses: By working from home, employees save time and money that would otherwise be spent on commuting.
Improved productivity and efficiency: Many remote workers find that they are more productive and efficient when working in a comfortable and personalized environment.
Access to a wider talent pool for employers: Employers can hire the best talent from across the country, not just those within commuting distance of their office.
Reduced overhead costs for employers: With fewer employees in the office, employers can save on expenses such as office space, utilities, and supplies.
These benefits make remote work an attractive option for both employees and employers, contributing to its growing popularity in Canada.
Tax Implications for Remote Workers
As a remote worker in Canada, it’s crucial to understand the tax implications of your work arrangement. The Canada Revenue Agency (CRA) requires remote workers to report their income and pay taxes accordingly. Navigating these tax responsibilities can be complex, but being informed can help you avoid potential issues and ensure compliance.
Canada Revenue Agency (CRA) Requirements
The CRA considers remote workers to be employees of the company they work for, regardless of their location. As such, remote workers are subject to the same tax laws and regulations as traditional employees. This includes:
Reporting income earned from remote work on their tax return: All income earned from remote work must be reported to the CRA.
Paying income tax on their earnings: Remote workers are required to pay income tax on their earnings, just like any other employee.
Contributing to the Canada Pension Plan (CPP) and Employment Insurance (EI): Remote workers must contribute to these social programs, which provide benefits such as retirement income and unemployment insurance.
Claiming deductions and credits for business expenses related to their remote work: Remote workers may be eligible to claim deductions for certain expenses, such as home office costs, which can reduce their taxable income.
Understanding these requirements is essential for remote workers to ensure they meet their tax obligations and avoid potential penalties.
Employment Laws and Regulations in Canada
Canada has a complex system of employment laws and regulations that apply to remote workers. It’s essential to understand these laws to ensure compliance and avoid potential penalties. Being aware of your rights and responsibilities as a remote worker can help you navigate the legal landscape and protect your interests.
Canadian Employment Laws Differ Across Provinces
Canadian employment laws differ across provinces, and remote workers must comply with the laws of the province they work in. Some key differences include:
Minimum wage and overtime requirements: Each province sets its own minimum wage and rules for overtime pay, which remote workers must adhere to.
Vacation pay and holiday entitlements: Provincial laws determine the amount of vacation pay and holiday entitlements that employees are entitled to.
Workers’ compensation and employment insurance: Remote workers must be covered by workers’ compensation and employment insurance programs, which vary by province.
Health and safety regulations: Provinces have specific health and safety regulations that employers and remote workers must follow to ensure a safe working environment.
As a remote worker in Canada, it’s crucial to understand the employment laws and regulations that apply to your work arrangement. This includes knowing your rights and responsibilities as an employee, as well as the obligations of your employer.
By understanding the benefits, tax implications, and employment laws that apply to remote work in Canada, you can ensure a successful and compliant remote work arrangement. Whether you’re an employee or employer, it’s essential to stay informed and up-to-date on the latest developments in remote work in Canada.
A Canadian employer of record can help you work remotely for your US employer in Canada while complying with Canadian labor laws
Tech professionals can enjoy the best of both worlds – a vibrant career with a US employer and the stability and quality of life that Canada consistently delivers. If your current US employer doesn’t have an office based in Canada or isn’t familiar with the specifics of hiring remote workers in Canada, there are other options. They can try working with a Canadian EOR.
What is an EOR?
An EOR acts as a co-employer, handling human resources, payroll, and other administrative tasks, enabling you to continue working for your US employer even while based in Canada. This offers a legal framework for your employer and means they can easily comply with Canadian labor laws.
The EOR will act as the legal employer in Canada, and take over certain responsibilities – tax, insurance, benefits, immigration and legal and compliance. The employee and US employer can maintain their working relationship, meaning only the administrative aspects are routed through the EOR.
Your US employer gets to retain you as a key talent, make sure you’re working legally and compliantly in Canada, and have easy access to that employee when needed. They could even hire multiple Canadian employees and expand their business. You can carry on working for your employer and thus keep your US job while reaping the benefits of life in Canada. If your US employer has never hired anyone remotely in Canada, you may need to make a case for it. Fortunately, we’ve written a playbook with five reasons that you can present to your employer to make the case that they should let you move to Canada and work remotely in a compliant way.
Syndesus is a Canadian EOR and professional employer organization that can help you work remotely from Canada
Syndesus can help you get started in Canada while continuing to work for your American employer in a hassle-free and legal way. Whether you want to relocate to Canada and retain your current US tech job or you are looking to work for an American employer from Canada for the start and thus avoid the H-1B visa headache, Syndesus can help.
And if your US employer doesn’t have a Canadian office, no problem – as an EOR, Syndesus can legally hire you on behalf of your US employer. We take care of the billing, HR, legal, and other paperwork, and you carry on working in Canada.
Partnering with an Employer of Record (EOR) provider is an effective strategy for onboarding a foreign worker in Canada, ensuring compliance with local laws and allowing businesses to concentrate on their core operations without the complexities of labor regulations.
Whether you want to relocate to Canada and retain your current US tech job or you are looking to work for an American employer from Canada for the start and thus avoid the H-1B visa headache, Syndesus can help. And if your US employer doesn’t have a Canadian office, no problem – as an EOR, Syndesus can legally hire you on behalf of your US employer. We take care of the billing, HR, legal, and other paperwork, and you carry on working in Canada. Reach out to us to learn more about how we can help you work remotely for a US tech company from Canada!
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About Marc Pavlopoulos
Marc Pavlopoulos is the CEO and Founder of Syndesus, a Professional Employer Organization that provides PEO services for US companies seeking to employ workers remotely in Canada, builds engineering teams in Canada for VC-backed startups in the US, and set-up remote offices in Canada for US companies. Additionally, Syndesus can assist foreign-born tech workers (and their US employers) with options for working remotely in Canada if they cannot stay in the US due to immigration/work visa issues. As an American who has moved to Canada twice (for grad school and for work), Marc understands the challenges involved in starting a new life in a new country. Marc is a son of an immigrant and has great respect for people who leave their home country and seek a better life in the US or Canada. Marc’s goal is to do everything he can to help those individuals achieve their dreams. Independent contractors can also benefit from Syndesus’ services, as they offer flexibility in setting working hours and choosing clients, while also addressing the legal implications of misclassifying workers.
