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US Citizen - Canada Tax


I am negotiating a position at the Bruce Plant in Ontario province Canada and would like some information on taxes and per diem.  The Company I am negotiating with is a Canadian affiliate of a major company in the US.  How are the taxes paid if paid by the Canadian company and for how long does per diem run in Canada?  Please provide a much information as possible so I am firm ground when talking to the money folks of the Company.

Taxes are pretty straight forward.  You will pay Canadian income tax on all income earned here.  Per diem is just like the states and tax free.  The one catch is that you have to file taxes in Canada and file the appropriate forms to pay taxes in the US also.  As long as you make <$80k/year here it is straight forward, no income tax from the US, but go over that and you have to file more forms to get credit for the taxes paid in Canada. Trust me it is a pain in the butt. Heck I live and work here and still have to file US taxes just for the privilege of being a citizen. If you get on up here contact me via email or PM and I can help you find lodging etc. as I work on the Bruce site for OPG.

Jim Rodgers
RP Supervisor
Ontario Power Generation
Western Waste Management Facility 8)

Already Gone:
For US citizens working in Canada, an agreement exists between the two countries.  If you are working for an american company, and you are in Canada for fewer than 183 days in the calendar year, you need not have taxes withheld to Canada and you do not need to file a tax return to Canada.  If, However, you exceed this limit the tax applies to ALL the income you earned in Canada that year.  So, if you don't have taxes withheld and end up staying 190 days, than you are behind.

You are still required to pay taxes on ALL your income (worldwide) to the US.  The US will allow you a credit for taxes paid to Canada.  If all your income for the year is from Canada (or any other foreign country), and you make less than $US80,000, then you may be exempt from US taxes on that income for that year.  But if you earn any income from inside the US for that year, you are not exempt and must file a return and claim a credit  for the taxes paid to Canada.

Before you accept this job, consult with a tax professional (not the storefront tax preparers or even most CPA's) and the IRS.

Thanks for the ensight.  Can you tell me approximately what the Canadian tax rate is?  I will be earning >80k and will be contracted for 1.5 to 2 years.  Will the per diem extend for the entire period unlike here in the US?

I can sum up the Canadian tax rate for >$80k in one word, HIGH. Not going to tell you how much I make, but my tax rate is above 30%.  Also, just like in the US, if you work a lot of OT expect to be taxed to death, but you get a portion of it back on your return.  As for the per diem, I have no idea if they will extend it for the entire time. It would be a good question to pose during negotiations with them.  As stated by BeerCourt talk to a tax pro before accepting!! You would much rather know ahead of time what you are getting in to then when it is too late.

As a side bar, you will also be eligible for health care after 90 days.  You will need your work visa with an expiry date longer than 6 months from when you apply for your health card. It is a pretty good idea to do this ASAP once the 90 days has passed, otherwise if you have a health problem you will pay out of pocket or through your private insurance assuming you have it.

Jim Rodgers


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