Are UN Employees Tax Exempt?
Allan Madan, CA
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.
Have 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 the 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 direct with the UN or one of 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.
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.
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?
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.
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.
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.
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!
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.
Hi, thanks so much for your response. I am a consultant on contract and not an employee. Do you beleive this can be non taxable? Thanks. Ramya
Hi, I am a Canadian citizen and will be leaving to work in Taiwan. My family and kids will stay in Ontario / Canada. I will be working in a partner organization of FAO which is non-taxable salary for Taiwan. Can you suggest me how should I proceed?? I heard that there is non tax-deduction from 2016 onwards, is it true??
thanks in advance
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.
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.
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
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.
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.)
Thank you for your insights Shane.
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.
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.
My situation is very complicated and I have received conflicting answers. I am Canadian, moved to Germany, worked in Germany for 6 months then moved to Austria to work as consultant for the UN for 6 months. I am not sure if I would be a non-resident for tax purposes as I still need my BC medical card and I have bank accounts. SO as of right now I am considered a resident in Canada, Germany and Austria…If Canada consideres me a resident I assume I pay taxes to Canada first (question is whether my UN earnings are tax exempt or not) and then I have to file my German taxes also as they also require it …but do I say I already filed my taxes in Canada? Do I have to claim the UN earnings in Germany…….alll very complicated 🙁 Any advise would be helpful! Many thanks, Tanya
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?
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.
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,
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.
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!
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!
There isn’t a ‘3 month rule’ as you indicated. You do not have to be a non-resident for this exemption to apply.
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?
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.
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,
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.
I am employed with the UN on peacekeeping operations in Central African Republic for the past 3 years. CRA is asking me for supporting documentation for my claim at line 256. I have provided them with copies of my pay slips. What else should they need?
Hi Mike, please also provide them with a copy of your UN staff contract to prove that you are a UN staff member.
Hi – very helpful but I’m still not clear if as a consultant for the UN I can declare the entire fee paid to me for the tax year on line 256? I’m NOT an employee of the UN, I AM a Canadian resident and I AM working out of the country for this consultancy. THE CRA website says it’s only the additional expenses (insurance, travel etc) that can be deducted. Thanks.
Hi, if you are a consultant and not a UN STAFF MEMBER, then you cannot deduct your UN earnings from your income on line 256 of your Canadian return. However, you may be classified as a non-resident of Canada, if you do not have any primary ties to Canada and a limited number of secondary ties to Canada. Non-residents of Canada do not pay Canadian income taxes on income earned outside of Canada.
I was born in Canada and left Canada in 1990 then joined with UN as a career staff member in 1999. I will retire from the UN at age 58 in a year or so. I have not been a resident of Canada nor have submitted a tax return in Canada since 1999. I have been told by a Canadian lawyer that I am not a resident due to my very minor ties since 1999.
If I retire soon in a country like Costa Rica, Equador etc and gain residency there, that does not tax foreign earned income, will I still have to file a CRA tax return ???? Or will my tax issues be solely between this third country and the USA (source of UN pension).
Hi Bill, if you retire in a country outside Canada, and you are receiving a UN pension (sourced from the US), then this has nothing to do with Canadian taxes.
1. I am a Canadian Citizen but deemed to be a Non-Resident since February 1989 when I left Montreal for Washington DC USA.
2. As an International civil servant, on a G4-visa, working as a staff member at the World Bank in Washington DC , I don’t pay taxes to the US government on my salary.
3. Not being able to use the bilateral agreement between Canada and the US, I would like to know how I should pay the taxes on the interest to be received during 2018 as a Jt account holder of my late sister Canadian bank accounts . I have no other secondary ties to Canada.
As a non-resident of Canada, there is no tax payable nor deducted from interest payments made to you from a Canadian financial institution. Do not file a Canadian tax return to report the interest.
Thanks for the helpful post. I am a Canadian PR recently retired to Canada as an employee from the UN system in the US, and was wondering exactly how my UN pension (so not salary) will be taxed in Canada. If I understand correctly, the UN pension is considered US-sourced in Canada, and thus treated in Canada as the US would have treated it. Do I interpret correctly that this means that employer and employee contributions made to the pension will not be taxed in Canada, but only the earnings component of the UN pension will be taxed in Canada? Many thanks for any guidance you may be able to give.
UN pensions are taxable in Canada. However, since UN pensions originate from the US, Canadian residents will receive the same tax treatment as US residents who also receive a US pension. This means that part of the UN pension will be tax exempt for Canadians. The tax-exempt portion is equal to the sum the employer and employee contributions made to the UN pension plan, which represents the ‘cost amount’. The remainder of the pension is taxable.
You will be required to provide certain documentation to the CRA:
1. Letter from UN Pension Administration stating the amount of the employer and employee contributions made to the pension plan
2. Annual Pension Statement (issued by UN Pension Administration)
3. Letter from UN Pension Administration pertaining to the lump-sum amount of pension received
4. The average exchange rate between the Canadian and US dollar for the year the pension payment is received
Hi Allan, Thank you for such an insightful post.
I wish to understand, what will be the income tax liability if I work with a UN Agency (UNICEF or UNHCR) being a Canadian Permanent Resident?
Looking forward to hearing back from you. Thanks!
You will have to check with the CRA if this is a prescribed international agency. If it is, then the income is tax-exempt.
So how do we estimate income if we are paid in USD. We can easily check the exchange rate at time of filing but it may have fluctuated over the 12months of paycheques.
Use the average exchange rate for the year.
Hi and thanks for this useful post
I recently became PR in Canada and work in Washington DC for the Worldbank which is a specialized agency of UN. We haven’t moved yet to Canada permanently. I live with my wife and kids in Washington but I plan to send them to Canada next year.
What is the tax implication for me this year and next year when my family moves there?
You do not need to file a tax return with the CRA for 2020 since neither you or your family are residing in Canada. However, when your family moves to Canada permanently, you will become a tax resident of Canada at that time, and you will be liable for Canadian income tax on your global income. Furthermore, if the Worldbank is a Prescribed International Agency, you can claim a tax deduction for the full amount of your salary such that your earnings are tax-free in Canada.
Greetings. I am a Canadian citizen about to retire from one of the UN Specialized Agencies in Switzerland. In that capacity, my salary has been tax free. I am about to retire and return to Canada to live. Question: Will my UN pension be taxable in Canada?
UN pensions are taxable in Canada. However, part of the pension amount is tax-exempt for Canadian tax purposes. In general terms, the non-taxable portion is equal to the contributions made by your organization and yourself to the pension plan. An application must be made with the CRA to determine the tax-exempt portion.
Hi. I probably will be working in Mali for a company that has been hired by UNITED NATIONS MULTIDIMENSIONAL INTEGRATED STABILIZATION MISSION IN MALI. I will be living on a UN established military base and using all of the UN’s facilities including meals and accommodation.
Will my salary be tax free and what proof would i need to show ?
Hi Rick, If you are employed with the UN then the income is tax-free.