Foreign employers are generally required to withhold and remit source deductions from the wages or salary of an employee working in Canada. This obligation exists even if the employee is exempt from tax in Canada.
The Canada-U.S. Tax Convention provides that employment income of a US resident is not taxable in Canada, and vice versa, if:
- The income is less than $10,000 CAD from any source, or
- The employee is in Canada for less than 183 days and the employment cost is not paid by or on behalf of a business with a Canadian permanent establishment.