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Paying a Canadian IT Expert from the United States

Posted by Stacey Duggan

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Nov 3, 2014 8:05:00 AM

Paying a Canadian IT Expert from the United StatesWhether you’re a technology company or a staffing firm in the IT niche, you know that the need for expertise in the IT world is growing faster than we’ve ever seen it.  You also know that these experts are very difficult to find.  Within California itself, IT workers and contractors demand high wages and jump from job to job quite often.

As one of the largest PEO’s in Canada, we have seen a growing trend where these tech or staffing companies in the U.S. and abroad are reaching out to Canadians to fill the job gap in the world of information technology.  With the ability to work remotely, these companies, many within the Silicon Valley area of California, are reaching out to workers outside of their geographical location to take advantage of more competitive wages and workers who tend to be more engaged and committed than those close to home. 

Finding the workforce may be the easy part; paying Canadian employees can be much more difficult. With a whole different set of rules and regulations, the Canadian government legislation around payroll taxes and employment standards can seem very daunting.

We often find that a company calls us after they have tried the following:

1) Taxed the Canadian IT professional the same way they would their U.S. counterparts, converting the pay into Canadian funds and mailing or wiring out a cheque across the border.

2) To pay them as independent contractors.

The first way not only evades calculating the proper federal and provincial taxes in Canada as well as fails to remit them to the appropriate authorities but also sidesteps employment standards legislation as laid out by the Ministry of Labour (MOL).

The second way only works if the person is a true independent contractor in which the Canada Revenue Agency, similar to the IRS, has very strict rules surrounding the qualification of these businesses.  Unsurprisingly, an independent contractor is expected to be just that - independent. They set their own hours, provide their own tools, and can subcontract their work to other people. By law, you have very little say in how they conduct their business. Ensure that you have put them through a compliance checklist before paying them as an independent.

While the above may seem easier, both are illegal and can result in huge fines, back payments, criminal penalties, and the loss of your right to conduct business in Canada.

The Payroll Edge is a Professional Employer Organization with a specialty in paying Canadian IT workers for our clients based in the United States or abroad. A Professional Employer Organization (PEO) takes on the role of the Employer of Record in Canada ensuring that all employment and taxation is compliant. 

We also:

  • Provide employment agreements encompassing all Canadian government policies.
  • Pay Canadian workers at a schedule you choose.
  • Deduct and calculate the appropriate taxation and remit them to the various provincial and federal level governments.
  • Manage any HR or worker’s compensation claims.  
  • Provide comprehensive insurance coverage.
  • Provide benefits and RSP (401 k) administration.
  • Provide T4 (W2’s), Record of Employment (ROE) and employment verification issuance.

If engaging with a Canadian IT expert can ease your staffing needs, engaging with a PEO in Canada (EOR) can ease your stress even further.  Contact The Payroll Edge today to learn more about how we can be your PEO or EOR (Employer of Record) service provider. 

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Paying Canadian IT Workers

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