Q. What is the CRA Non-Resident Employer Certification program?
Prior to the CRA Non-Resident Employer Certification program, foreign employers would trigger Canadian payroll reporting obligations from day one of their employee business travel in Canada. These employer obligations would be in effect, even if the compensation earned by those employees for work performed in Canada would ultimately not be subject to tax in Canada by virtue of the tax treaty between the country of residence of the employee and Canada. In an effort to ease this significant administrative burden on Non-Resident Employers (i.e. U.S. based organizations with customers and/or operations in Canada), CRA has introduced the Non-Resident Employer Certification program. Under this new program, where tax relief is available under a tax treaty in force between Canada and the country of the Non-Resident Employee, the employer can apply, provided it has the appropriate business traveler tracking controls in place, to be a Certified Employer and be subject to a far less burdensome employer payroll reporting compliance process.
Q. Why should I care?
Absent being certified under the new program (by filing Form RC473), the old CRA rules will continue to apply to your organization. To that end, CRA has and will continue to enforce these obligations by audit and the imposition of financial penalties for prior and current tax years.
Q. What can I do about it?
Act sooner rather than later. Under this new certification program, your organization can achieve compliance, principally by doing the following three things:
- Tracking number of days your employees are either present in or working in Canada.
- Determining or classifying your employees to identify those that are resident in a country that has a tax treaty with Canada.
- Filing an annual CRA Form T4 Summary and Information Return for employees who have performed services in Canada where the compensation attributable to those services is greater than C$10,000 in the tax year.
Blackspark can help you implement an effective business traveler tracking process to assist certification with CRA. Contact us and we’ll walk you through it.