Income Tax
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If you work remotely in Canada, you pay taxes in Canada. Tax obligations in Canada are based on place of residence, not citizenship, immigration status, or employer. Canadian citizens, foreign workers, and visa holders who work in Canada must pay income taxes in Canada, whether you’re employed by a local or global company. Taxation can be complicated and there are a number of factors to be aware of:
Location of employment:
- As a remote worker, your employer will deduct taxes for you in the province or country where they are located, not necessarily where you live. For example, if you live in Vancouver and are working for an Ontario company, your employer will tax you at the Ontario rate. Remote workers employed by an international business may likewise taxed according to the rules of the country in which the company is located.
- As a Canadian resident working for an international company, you’re taxed on your worldwide income, no matter where the income is earned. This applies to both contract/freelance work and full-time employment.
Province of Residence:
- While your employer will tax according to the rules of their location, you are required to pay provincial taxes where you reside. If there is a difference between what your employer has deducted and what you owe, this will be reconciled with the Canadian Revenue Agency (CRA) when you file for taxes. This could mean either a bill or a refund depending on the tax rates of you and your employer’s home province.
Freelance/Contract Work:
- If you are hired as a contractor, you are considered self-employed. This means you are responsible for filing your own taxes.
As an employee or freelancer you may be able to claim certain home office expenses (work-space-in-the-home expenses, office supplies, and certain phone expenses). These deductions can reduce the amount of income you pay tax on.