Canadian source income, non-tax resident

Question

2147 viewsSeptember 23, 2019Accounting

0

cam (anonymous) Posted September 18, 2019

If I become a US resident and a non resident of Canada and have Canadian sourced income, how would this income be taxed? Will it be subject to 25% withholding on net income, or be just subject to federal income taxes? What about provincial income taxes? (I understand GST/HST is required on these sales.)

Im a sole-prop earning self employment income in Canada. I have my products stored by a third party in their Canadian warehouses and when sold and they ship to Canadian customers in Canada for me. I have no other “presence” in Canada then my products stored in a third party warehouse (Amazon FBA).

1 Answer

score 0 · Answer 1 · 2019-09-23T14:18:52+00:00

According to the Canada-US tax treaty, business profits are sourced to the country where there is a permanent establishment (fixed place of business, PE). A PE excludes a warehouse used for the storage and distribution of goods. It appears that your PE will be in the US, once you move, where you are physically working from (e.g. home office). As a result, the sales made to Canadian customers will be taxable to you in the US and should be reported on a US tax return (1040). GST/HST will still apply on sales made to Canadian customers.

Canadian source income, non-tax resident

1 Answer

Mississauga's Thought Leader

REQUEST A FREE CONSULTATION

Pin It on Pinterest