Reg 102 waivers are a nuisance. Their days are numbered.
If you work in HR, payroll, global mobility or corporate tax and have employees who travel to Canada, you know that Canada has rules in place for employers that could be defined as nothing less than cruel and unusual punishment!
Basically, any employer who has employees who travel to Canada for work, even if it is only for one day, must report those wages in Canada for payroll purposes and withhold tax in Canada in respect of those wages – even if, at the end of the day, those wages are not subject to tax under a tax treaty in place between Canada and the country the employee is resident in for tax purposes. Pretty bad starting place, eh.
The situation is slightly improved by virtue of what is commonly referred to as a Regulation 102 waiver. It’s a waiver that can be filed, in advance of the actual travel taking place, for each and every employee, to request that CRA provide the employer with reprieve from withholding. Of course, the employer still needs to file a non-resident Form T4 in respect of each employee, which precipitates the requirement of filing a non-resident Canadian personal income tax return.
Faced with both of these ugly choices and exposure to increasing audits by Canada Revenue Agency, employers have spent considerable time and money in compliance (don’t even get me started on funding employees Canadian tax liabilities and having to coordinate getting it returned to the company after employees file their non-resident Canadian tax return – especially when they no longer work for you! I digress…)
Reg 102, Say Your Prayers…
But no longer! Death to these rules and Death to Regulation 102 Waiver for my business travelers into Canada! Canada Revenue Agency recently issued for RC473 – Application for Non-Resident Employer Certification – and with it defined a path for U.S employers (really any employer whose employees who travel to Canada who are resident in a place that has a tax treaty with Canada) to end all of this pain and suffering.
By signing up and being accepted by CRA as a Certified Non-Resident Employer, you, and your employees get the VIP treatment, relatively speaking. Filing requirements drop significantly, no more Regulation 102 waiver filings, no more doling out Canadian withholdings on the company dime with the hassle of having to then recover it from individual employees.
What CRA will require, however, is that you implement an employee travel tracking process to record the number of days each qualifying non-resident employee is either working in Canada, or present in Canada. Also you will need to document the income attributable to those days.
Blackspark can help.
We help our existing customers comply with CRA’s requirements for non-resident employer certification. If you would like to learn how, contact us. We’ll be happy to explain how to put the final nail in the Reg 102 coffin!