Are UN Employees Tax Exempt?

Allan Madan, CA
 Apr 30, 2015
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If you are a Canadian working for the United Nations, you may generally be exempt from taxation on any income earned from the UN. Depending on if you are a resident or non-resident of Canada, your tax filing obligations may differ. Want to learn more on UN employee tax exemption? Then this article is for you.

blue-un-logo-vectorised-md1Have you ever wondered whether United Nations employees have to pay any taxes in Canada? Are you a Canadian resident working for the United Nations or one of its affiliates? If so, you are probably wondering what your tax filing obligations are.

Generally speaking, any income that you earn from the United Nations can be received on a tax free or a tax reduced basis in Canada. This will depend on the specific convention between the United Nations and that specific country. There are different rules to follow depending on whether your employment is directly with the UN or one if its affiliate bodies. To be considered an employee of the United Nations, you must have a clear written employment agreement with the UN. However, this situation may be further complicated if you work for the United Nations abroad. In this case, the Canada Revenue Agency will have to assess whether you are a resident or a non-resident of Canada. The CRA does this by examining your personal, family, and economic ties to Canada.

Non-Residents of Canada

If you are deemed to be a non-resident of Canada, then the United Nations tax convention with Canada will not apply to you; therefore, you will not be liable for Canadian income taxes on your UN earnings. Find out the 10 major tax implications of becoming a non-resident of Canada.

Residents of Canada

If you are deemed as a resident of Canada, then the income earned from the United Nations can be exempted from tax in Canada. When completing your Canadian tax return as a resident of Canada, report the amount you received from the UN on line 104 of your income tax return. Also, report the same amount on line 256 as a tax deduction; this line is called Income Exempt from a Tax Treaty

In summary, Canadian residents working for the United Nations must still file a Canadian tax return and report their UN earnings. However, a careful analysis must be done of the Income Tax Act to see if you qualify for a deduction on line 256.

Are you a Canadian who is working abroad, overseas, or outside Canada tax implications? Find out what the tax implications are for Canadians working abroad.

Disclaimer

The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.

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Comments 25

  1. Dear Sir,
    I am a Canadian Permanent resident card holder but have been working abroad in Ethiopia for the United Nations in the last 12 months. I have significant ties to Canada with my wife and son in schooling in Montreal. What is my tax liability? As an employee of the UN do I qualify for tax exemption on the income earned abroad? How should I go about in filing my tax?

    1. Hi Charles,
      You must file a T1 Tax Return and report your worldwide income on that return. If you are an employee of the UN you can claim a tax deduction on your T1 return for the employment income earned from your UN job.

  2. Hi,
    I have been working for UN and I don’t have significant ties. I come to canada for 2weeks every six month. But I have a bank account and ontario health card. Do you think I qualify for non-resident status or what do you advice I do.
    Thanks.

    1. Hi Peter,
      You will likely qualify for non resident status. But it also depends on the country where you are moving to and if Canada has a tax treaty with that country. If you move to a non-treaty country, the rules are more strict when assessing your residency status with Canada for tax purposes.

  3. Hi, I am consulting with the UN on a home-based contract while living in Ontario. I am a Canadian Citizen. Can I declare the income on line 256? Appreciate your response. Many thanks!

    1. Hi Ramya,
      If you are an employee of the UN, then yes you can. Review your contract to determine if you are an employee or self employed contractor.

  4. Hi Ramya,

    I worked for the UN in Rome for 11 months out of the year for the last 2 years. I have a Canadian bank account, drivers license and health card, can I deduct my salary on line 256? I am assuming that I am a deemed non-resident of canada because I am out of the country for longer than 183 days? I’m also confused about schedule A because in the income from canadian sources on line 1 it states that I should enter the amount from line 236 but that includes my UN income from line 104 which is income from outside Canada, is this correct? Thank you for your help.

    1. Hi Maggie,
      Include your employment income from the UN on line 104 and claim a deduction for the same amount on line 256. Schedule A only applies to non-residents of Canada. You do not become a non-resident of Canada simply because you were living outside of Canada for more than 6 months.

  5. hi,

    i have a similar question to one already posted. i have been a consultant with the u.n. for the past year and a half. the contract i have with the u.n. clearly states that i am a consultant. does this make me a self-employed contract and does this prevent me from exempting my u.n. income on my canadian tax return? i have tried to find a copy of the u.n.-canada tax treaty, but have been unable to.

    thanks for your help

    1. It depends on whether you were acting in the capacity of an employee. A consultant can be an employee in fact if:

      – employer provides all tools to complete job
      – compensation is fixed in amount
      – employer pays for all expenses
      – you do not have more than one client or customer
      – your hours are fixed

      So my advice to you as to examine your situation based on the points I provided above and determine if you are truly an employee or self employed individual.

      1. Nope.

        You have to have a letter of appointment from the Secretary General of the UN to be considered staff. Revenue Canada will ask this question.

        You actually pay tax to the United Nations if you are staff and it will show on your paystub.

        The Canadian Mission in NY knows who is appointed to the UN (and I expect revenue Canada does as well.)

  6. Hi,

    I’ve recently became a perm resident but working in Europe for the European Union where my income is exempt from national taxation as its taxed at sourced by EU.

    Would I be able to benefit from same treatment as UN employees i.e. exemption or otherwise deduction on line 256. If not would the double taxation treaty with Belgium apply?

    As my wife and kids are Canadians and studying in Canada I would not qualify as non-resident.

    Thanks

    1. Hi Ovi,

      You should check with the International Tax Service Office if the agency you are working for is a prescribed agency similar to the UN. If yes, then you can claim a deduction like UN employees do for the income you earned. Otherwise, you will have to pay Canadian tax on your income, but you can claim a foreign tax credit on your Canadian tax return to reduce double taxation.

  7. Hello, I have been working overseas for the UN for more than 10 years and was deemed non-resident by CRA. I am now planning to purchase a home in Canada and have my family live there while I continue to work for the UN overseas. I assume this will now establish residential ties and I will have to file tax returns. However, will I be liable for tax on income earned overseas from the UN? Is this affected by the phase out of the overseas employment tax credit phase out?

    Thanks.

    1. Hi Ross,

      You will become a resident of Canada once you purchase a home for your use or family’s use. Having your family live in the home in Canada is also a significant tie to Canada, supporting your status as a Canadian tax resident.

      You must report your UN income on line 104 of your Canadian tax return. However, if you are an employee of the UN, you can claim a tax deduction on your tax return for the income reported on line 104.

  8. Hi, thanks for this post. I’m a Canadian citizen who has been working for the UN since 2010, mostly in New York–I just realized I haven’t filed my taxes since 2010 and the Revenue Agency called me. The person who called didn’t know much in terms of steps to take if you are a UN employee. Do I understand correctly from your post that 1) I need to fill a form to determine if I’m a resident of Canada or not 2) then Revenue Agency determines if I’m a resident, and then I file my taxes only if I’m deemed a resident? Thanks so much,

    -A

    1. Hi AlexanderSL,

      Yes, you have to first determine if you are a resident of Canada or not. If you severed all ties with Canada, and are a nonresident, then you are not liable for tax in Canada on income earned abroad. However, if you are considered a factual resident of Canada, then you are taxable on your worldwide income. Employment income earned by a UN employee is tax-exempt in Canada.

  9. Hi Madan,
    Thanks for putting together this helpful post. I am a consultant for the past 18 months with a UN agency. I live in Canada and also work at a University for the past few months and lived in Canada since 2009. My income last year was pretty minimal but I will be getting a substantial payout for my UN contract this year (2017) and will be a full time researcher at the University in Canada. I am a US citizen on a post-grad work permit (currently applying for PR). Could you please guide me in whether or not I will be able to not pay taxes on my salary if I file in Canada? THX!

  10. Do you have to be a non-resident for this exemption to apply? I’ve heard that as long as you’re outside of Canada for 3 months, that permits you to file for the exemption, without having to file a non-resident tax return. Any advice? Thanks!

  11. I have tution tax credits carried over from 2012. I am a resident UN staff member and have tax-free income. Is there a way I could use the tution tax credits?

    1. Hi Malik,

      No, you will be unable to benefit from your tuition credits in your case, because your taxes payable are already $0. Once you start paying tax in Canada, then you can take advantage of your tuition credits.

  12. Hi,
    I am a Canadian citizen , currently on extended leave (up to 5 yrs) from a job at the Canadian Governement (I do not own a property in Canada, do not have OPHIP health care anymore, but still have bank accounts here that i use regularly). I am doing consultancy work (6mts now in Philippines , then 8 mts in Switzerland) for the UN . I work in the office, am provided laptop, phone, have a supervisor and a schedule, whcih is not really like self-employed conditions. Is that income taxable? I am getting very different information from everyone in my office , and am not getting any support on this matter from the UN.
    Thank you so much,

    1. Hi, Julie. Unless you are UN Staff Member (as per your contract with the UN), the income you receive as a consultant is taxable to you in Canada. On your contract, it should clearly specify if you are a UN Staff Member. Note: You could apply for non-residency status with Canada by filing a departure tax return and/or filing form NR73, Determination of Residency Status, with the CRA. Nonresidents of Canada do not pay Canadian taxes on income earned outside of Canada.

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