Short-term assignment to Canada: Does it mean no Canadian payroll obligations?

In the context of global mobility, many employers assume that no Canadian obligations arise when their employee spends only a short period of time in Canada. However, the reality is often more nuanced.

Before concluding that no withholding or reporting is required, here are 5 key elements to review:

1. Number of days of your employee in Canada

The 90- day presence threshold (within a 12-month period) and the 45-workday threshold (within a calendar year) are often critical when assessing Canadian payroll and tax compliance obligations.

2. Application of an income tax treaty

An income tax treaty may provide an exemption of an employment income earned by the employee from Canadian income tax, but it does not automatically eliminate the employer’s Canadian reporting obligations.

3. Non-resident employer certification

Without certification, an employer may still be required to withhold Canadian payroll taxes, even if the employee is ultimately exempt from Canadian tax under an income tax treaty.

4. filing requirement

In certain situations, even with certification, an employer may still be required to file a T4 slip and T4 summary. purposes, even when

5. Planning before travel

Reviewing your Canadian payroll and tax obligations before your employee arrives in Canada can help avoid payroll adjustments, late filings, and potential penalties.

Key takeaway

A short-term assignment does not necessarily mean there are no Canadian compliance obligations. Understanding the distinction between tax exemption, payroll withholding obligations, and T4 reporting requirements is essential for foreign employers sending employees to Canada.

Is your organization sending employees to Canada for meetings, training, projects, or temporary assignments?

Feel free to reach out to Arda Minassian or Valerie Seng from the Global Mobility Tax team at Forvis Mazars Canada.