To those who intend to come back to Canada on a work permit as a temporary worker and who do not plan to declare their revenues to Revenue Canada and who think they need not have any deductions from their pay:
I have news for you.
The Canadian taxman will come knocking at your door just like European taxmen are now knocking on the doors of Ryanair pilots in several European countries.
Since I know some people are going to try to tell you I am just blowing hot air and not to worry about this, I am posting, for your edification, the Canadian Regulations. You can see for yourself.
For those who continue to think that all I do is blow hot air, well just continue to ignore me.
And by the way, I did not research this in any way. I just had a long conversation with the good people at Revenue Canada who were kind enough to provide me with all the information and show me the relevant Laws and Regulations, which I am sharing with you here.
I know this will get around quickly, so do not say you were not warned when the Tax Man comes knocking.
http://www.cra-arc.gc.ca/E/pub/tg/t4001/t4001-12e.pdf
On page 8:
Social insurance number (SIN)
As an employer, you have to get the correct SIN from each
employee. Every person employed in pensionable or
insurable employment has to show you their SIN card.
See page 28, "Non-resident employees who perform services in Canada".SIN beginning with the number “9”
An eligible person who is not a Canadian citizen or a
permanent resident of Canada and who applies for a SIN
will get a SIN beginning with the number “9.”
If you hire a person whom you know is not a Canadian
citizen or permanent resident, make sure that:
■ the person’s SIN begins with the number “9”;
■ the SIN card has an expiry date and the card has not
expired; and
■ the person has a valid work permit issued by Citizenship
and Immigration Canada (CIC).
Non-resident employees who perform services in Canada
Employees not resident in Canada who are in regular and
continuous employment in Canada are subject to tax
deductions in the same way as Canadian residents. This
applies whether or not the employer is a resident of
Canada. A tax treaty between Canada and the country of
residence of a non-resident employee providing service in
Canada may provide relief from Canadian tax deductions.
If you pay taxes in a country that has a treaty with Canada, you do not have to pay taxes in both countries. But that does not mean that you can just ignore the Tax Man in Canada. You have to APPLY for a tax waiver. The instructions are here:Application for a waiver of tax withholding
A non-resident employee who wants a reduction of the
withholding based on a tax treaty can send a letter with
supporting documentation to the Non-resident Section
of their tax services office. For more information,
call 1-800-959-5525.
Note
Payments to non-resident individuals, partnerships, or
corporations for services rendered in Canada (that they
did not perform in the ordinary course of an office or
employment) are subject to tax withholdings. See
Guide RC4445, T4A-NR – Payments to Non-Residents for
Services Provided in Canada. In addition, tax withholding
may apply, if you pay or credit an amount to a
non-resident of Canada, such as interest, a dividend,
rental income, a royalty, pension income, a retiring
allowance, or other similar types of income, or if you
pay, credit, or provide an amount as a benefit for film or
video acting services rendered in Canada. See Guide
T4061, NR4 – Non-Resident Tax Withholding, Remitting and
Reporting
http://www.cra-arc.gc.ca/tx/nnrsdnts/cm ... g-eng.html
Here is the waiver aplication form:
http://www.cra-arc.gc.ca/tx/nnrsdnts/cm ... g-eng.html
Now some legislation:
http://www.cra-arc.gc.ca/E/pub/tp/ic75- ... -6r2-e.pdf
PART II
Remuneration from an office or employment provided in Canada by non-resident employees
Canadian withholding from remunerations paid
to non-resident employees
Withholding legislative and administrative framework
¶ 64. Pursuant to paragraph 153(1)(a) of the Act and
Regulation 102, remuneration paid to non-resident
employees who provide services in Canada is subject to the
same withholding, remitting, and reporting obligations as
those for Canadian resident employees. This remuneration is
subject to deductions at source based on graduated rates that
may need to be remitted on an accelerated basis (see section
108 of the Regulations) depending on the source deduction
history of the employer. Therefore, any person paying
another person salary, wages, commissions, bonuses, or other
remuneration in respect of an office or employment in
Canada must deduct or withhold, remit, and report these
amounts to the CRA. These obligations extend to
non-residents of Canada employing either resident or
non-resident employees for services performed in Canada.
Here is where your Canadian employer went wrong:Obligations of the employer
Regulation 102 withholding, remitting, and reporting
¶ 68. Employers are required to withhold and remit
withholding tax, Canada Pension Plan contributions (CPP),
and Employment Insurance Premiums (EI) for each of their
employees unless a waiver of withholding tax (see ¶s 86-96)
has been issued and/or an exemption provided for CPP based
on a Reciprocal Agreement on Social Security that Canada
has with the employee’s home country. Questions concerning
these reciprocal agreements should be referred to the CPP/EI
Rulings area of the TSO. These deductions on behalf of the
non-resident employee(s) must be remitted, together with the
applicable employer’s portion, to the employer’s CRA
business number account.
¶ 69. Employers are required to prepare and file a T4
Information Return (T4 Slips and Summary Form), reporting
all amounts paid to their employees whether or not a waiver
of withholding was received from the CRA. The T4
Information Return must be filed with the CRA by the last
day of February in the year following the year in which the
payments were made. Employees, both resident and
non-resident, must be provided with a copy of their T4
information slips by the last day of February.
¶ 70. The employer, whether a resident or non-resident of
Canada, who fails to deduct and remit an amount as required
by paragraph 153(1)(a) of the Act and Regulation 102, will
be held liable for the whole amount together with any interest
and penalties.
If you come to Canada under a wet-lease, you do not need a work permit and are not considered an employee of the Canadian Airline, but of your foreign employer. You pay nothing in Canada.
However, if you came to Canada under the reciprocal agreement and obtained a work permit, or you came to Canada under an LMO, and also obtained a work permit, you are considered a contract employee of the Canadian Airline. In that case, your employer has 3 days to ask you for your Social Insurance Number or help you obtain one if you do not already have one. Non-Resident Social Insurance Numbers always begin by the number 9. It is when such a number is issued that you become visible to Revenue Canada. The SIN is your employee account number, under which your taxes and pay deductions are filed.
By never having you apply for a Social Insurance Number, your Canadian Employer essentially hid you from the Tax Man. Normally, you would think that once Immigration Canada (CIC) would provide you with a work permit, that they would send a heads up to Revenue Canada informing them of your presence in Canada, but they don't. They way the law is written, it is up to the employer to notify Revenue Canada that you are employed with them, within 3 days of employing you. And in your case, they didn't. They treated you as though you were all wet-lease pilots. But you were not wet-lease pilots. Revenue Canada did not know it then. They do now.
So in the past few years, there were hundreds of you who worked in Canada for 6 months out of the year, collected high salaries, and had zero deductions from your paychecks, in violation of the Tax Laws of this country.
Yes, some of you COULD claim a waiver, but you didn't. You just remained under the Tax Man's RADAR, until now.
I do not know if the Tax Man will go after the individual pilots or the employers, but he is hungry for money and is now looking for ways to tax me even more than he already does.
I am suggesting that he go look to tax those that do the same thing I do, for sometimes more money than I earn, and who pays not a dime of tax in this country.
