Contracting in Canada

[GillsMan]

I have a fair bit of Canadian experience.

You will find the recruiting culture in Canada much different than in the UK. Agencies, while present are not nearly as prevalent, there is much more direct recruitment with employers. As such you have to troll through allot of companies web sites to find the roles. As you mentioned allot of the contract roles are found through your network, mainly because of the aforementioned reasons. One site that does list a fair number of roles is Search Jobs in Canada. Find a New Career. Get Employed. | Workopolis

Trawl

Although I like the thought of someone trolling potential clients.

[Scoobos]

Scoobos, what do you mean 'theres no need to contract anymore out there'?
Are you saying you're better off getting a permie job?

Thanks for the advice regarding the 'direct approach'.

Yep, I'm saying that you can get short term contracts without the need for any of the gubbins we do here, there's no advantage at all (as far as I am aware).

You are also exempt from most canadian employment tax (or I was in 2005/2006, although again I might be outdated).

[knight007]

If i was to take up a short term contract there i.e 3-6 months, what would be the best way to bill? Assuming i would be resident in canada for 3-6 months.

I'm thinking i should still bill through my UK ltd company without the VAT element. This is assuming the client doesn't have issues with entering into a consultancy agreement with a Uk company. This would be the most tax efficient way to bill I think.

Alternativley i could trade as a sole trader in canada for 3-6 months where they could pay money into a canadian bank account. I'd probably have to pay uk tax on the income rather than canadian tax due to still being resident in uk for tax purposes.

Another option is to setup a canadian branch of my uk ltd co but i dont know what the implications would be.

[Scoobos]

You wouldn't be resident in Canada for tax purposes (as long as you are working there for more than 183 days in a single year).

Non-residents of Canada

Contracting in the UK sense is not really there unless you can pass certain tests , regarding guarantees , insurances etc.

In my view, the easiest path is just to work through an agency or direct on payroll and keep the UK ltd out of it.

Tax returns in Canada are also very easy, you can go to MoneyMart and pay them 3% and get it in cash within the day!

I don't understand the insistence on trying to bring the UK LTD into it. Just have a "year out" as a working holiday. But maybe I'm missing the point.

[BlasterBates]

I don´t know the rules in Canada, but experience in European countries, is that is safer to tax yourself where you do the work.

The 183 day rule isn´t the only factor in deciding whether you are taxed in a country.

Just a general note, the 183 day rule is a key factor (but not the only one) for determining whether that is your main tax residency. You will be liable in Canada for tax for any income sourced there. i..e let us say you buy a house and let it out, now you will pay tax on that regardless of whether you live in Canada or not. Now if you use a UK Ltd this is "grey", because although you are billing through a UK Ltd you are in Canada and running your company from there.

Some contractors especially in Germany who used the 183 day rule as a guide are now facing criminal prosecution. The Germans argue that the income from their UK company was from Germany not the UK and hence they should pay tax, even though they were there less than 183 days.

I would play safe and register and tax yourself in Canada. That way there will be no nasty surprises in the future.

Now the fact that you are in Canada for less than 183 days will mean you can take advantage of tax free allowance there and so effectively end up with a lower tax rate. Let us say you worked for one month, then probably you´d be below the threshold and will pay no tax. You should still declare it though. It is also probable that if you are there for less than 183 days that you don´t need to pay into any mandatory insurance schemes. That is often the case.

[knight007]

You wouldn't be resident in Canada for tax purposes (as long as you are working there for more than 183 days in a single year).

Non-residents of Canada

Contracting in the UK sense is not really there unless you can pass certain tests , regarding guarantees , insurances etc.

In my view, the easiest path is just to work through an agency or direct on payroll and keep the UK ltd out of it.

Tax returns in Canada are also very easy, you can go to MoneyMart and pay them 3% and get it in cash within the day!

I don't understand the insistence on trying to bring the UK LTD into it. Just have a "year out" as a working holiday. But maybe I'm missing the point.

My reasoning behind bringing my Ltd Company into it was that the income will only be subject to 20% CT in the UK rather than canadian income tax which is higher than UK Corporation Tax.

If I worked direct through an agency, I would probably need to reduce or stop my small salary that I pay myself through my Ltd company because you are taxed on your "worldwide" income so both canada and UK income will need to be totalled up.

[redgiant]

My reasoning behind bringing my Ltd Company into it was that the income will only be subject to 20% CT in the UK rather than canadian income tax which is higher than UK Corporation Tax.

If I worked direct through an agency, I would probably need to reduce or stop my small salary that I pay myself through my Ltd company because you are taxed on your "worldwide" income so both canada and UK income will need to be totalled up.

I would setup a local LTD company in the province you are going to be working in over in Canada. The CT over in Canada is around 15% if memory serves me correct (varies on the province) so it's going to be better off for you to keep it separate from your UK Ltd.

Also unless there is a specific reason not to why don't you close down you UK LTD and claim entrepreneurs relief if you're going to be out there for 3-6+ months? HM Revenue & Customs: Capital Gains Tax reliefs for business assets

[knight007]

I would setup a local LTD company in the province you are going to be working in over in Canada. The CT over in Canada is around 15% if memory serves me correct (varies on the province) so it's going to be better off for you to keep it separate from your UK Ltd.

Also unless there is a specific reason not to why don't you close down you UK LTD and claim entrepreneurs relief if you're going to be out there for 3-6+ months? HM Revenue & Customs: Capital Gains Tax reliefs for business assets

Is it worth opening up a new company just for 3-6 months? Also, if closing down the UK company, is there restrictions on opening up another one after 3-6 months?

[Scoobos]

My reasoning behind bringing my Ltd Company into it was that the income will only be subject to 20% CT in the UK rather than canadian income tax which is higher than UK Corporation Tax.

If I worked direct through an agency, I would probably need to reduce or stop my small salary that I pay myself through my Ltd company because you are taxed on your "worldwide" income so both canada and UK income will need to be totalled up.

I worked there in 2006 and there was no tax payable at all, they gave me it all back.

The german case is based on using your company and "contracting".

My experience in Canada is there is neither a market, nor an acceptance of working though a foreign limited. Again, I only worked for 2 clients in Ontario.

I paid 8,000 in tax and got 7,600 back when I left the country.

[knight007]

I worked there in 2006 and there was no tax payable at all, they gave me it all back.

The german case is based on using your company and "contracting".

My experience in Canada is there is neither a market, nor an acceptance of working though a foreign limited. Again, I only worked for 2 clients in Ontario.

I paid 8,000 in tax and got 7,600 back when I left the country.

Yeh but surely you must have declared that income on your UK self assessment and paid the tax in UK instead???