Employers may be excluded from payroll withholdings for cross-border employees if proposed amendments to the Income Tax Act of Canada come into effect. Currently, individuals that are non-residents of Canada are subject to income tax on monies that they receive for work performed in Canada. If the applicable requirements are met, these monies are later returned to U.S. residents pursuant to a treaty between the U.S. and Canada. However, if the amendments are passed, an employer that resides in a country with which Canada has a tax treaty, will be excluded from payroll withholdings requirements for monies paid to an employee who works in Canada on a short-term basis, as long the employee is not liable for Canadian income taxes by virtue of the applicable treaty.
Canada