Who this is for
- US employers sending commissioning engineers, field technicians or supervisors to Canadian data center sites
- Temporary crew rotations in Alberta, Ontario or Quebec
- US corporations, LLCs, partnerships and sole proprietors with employees
Not covered here
- Work permits, entry rules, trade licensing and customs
- Employees’ personal return preparation and foreign tax credits
- Detailed corporate permanent-establishment analysis
- Canada-resident hires or permanent moves
Do we withhold Canadian tax from the first workday?
Yes. Canadian employment-pay deductions (Regulation 102 withholding) start with the first Canadian workday. Treaty exemption alone does not stop them: obtain employer certification or an employee waiver (CRA payroll guide).
Certification covers CRA-administered income tax; Quebec is separate. Work permits, entry, trade licensing and equipment customs are outside this page.
How does RC473 non-resident employer certification work?
Approved RC473 certification removes CRA-administered withholding during the approved period, for employees qualifying at each payment.
| Requirement | Who or what qualifies |
|---|---|
| Corporation or sole proprietor | Treaty-country resident employer, including an individual sole proprietor |
| US LLC | Can qualify if treaty-country resident when treated there as a body corporate |
| Partnership | At least 90% of fiscal-period income/loss belongs to treaty-resident members or corporations meeting the LLC row’s rule |
| Employee treaty exemption | US treaty resident; Canadian-work pay no more than $10,000 in Canadian dollars, or presence no more than 183 days in any 12-month period beginning or ending in the fiscal year with pay neither paid by or on behalf of a Canadian resident nor borne by a Canadian permanent establishment |
| Additional employee day test | Canadian work below 45 days in the payment’s calendar year or presence below 90 days in any 12-month period including payment |
| Application timing | CRA should receive RC473 at least 30 days before Canadian services begin |
| Approval duration | Up to two calendar years; follow the approval dates |
See section 153(6), Article XV and CRA certification guidance.
US payroll or citizenship alone does not establish treaty residence; review Canadian ties in the worker’s Canadian tax guide (Article IV).
An authorized officer signs RC473. Send it through My Business Account or to the Pacific International Waivers Centre of Expertise (submission instructions).
What if a crew member reaches the certification day limits?
Either test suffices; reaching its limit fails it. Workdays are paid days physically in Canada, including worked weekends; presence counts part-days across calendar years (CRA day-count guidance).
If both tests fail, notify CRA’s international waivers office immediately. Treaty-exempt employees can apply for R102-R; CRA may waive future and earlier withholding after prudent monitoring. Immediate notice can also prevent penalties on earlier payments. Withhold unless CRA relief covers them. Non-disclosure risks tax, interest, penalties and revoked certification (CRA).
Mobilization is close: what happens to first paychecks?
Withhold until effective certification or an approved waiver covers the payment; an application alone does not suffice.
The employee, or an authorized representative, signs R102-R; send it at least 30 days before Canadian services or the initial payment. Apply anyway at short notice; CRA tries to process complete late applications. Ordinary waivers cover only payments after issue (IC75-6R2, paragraphs 89–90). Recover earlier withholding through the worker’s Canadian return.
Gather each worker’s social insurance number (SIN), or individual tax number (ITN) if ineligible for a SIN. Send T1261 separately, ahead of the waiver; it cannot accompany online waiver submissions (ITN rules; submission routes).
Employers owe missed tax, interest and a 10% penalty; a repeated knowing/grossly negligent failure that year attracts 20%. A sole proprietor owes this personally; the non-resident worker shares liability for interest (section 227(8)–(8.4)).
Corporate directors can owe missed deductions, interest and penalties, subject to collection conditions and due-diligence defences. Recovery proceedings cannot start later than two years after the director last ceased to be a director (section 227.1).
Do we need a Canadian payroll account, and which tables apply?
You need a business number for RC473 and a payroll deductions account (RP) for remittances or T4s (application instructions; T4001). Register through CRA’s non-resident online form or Form RC1.
For non-resident employees, use the work province’s tables and federal/applicable provincial TD1 even without a Canadian establishment (CRA rules); see working in multiple provinces. Apply Quebec’s separate conditions below.
Ontario sites can also trigger Employer Health Tax under its own establishment rules. For remittances, see running Canadian payroll.
Do we deduct CPP and EI for US employees?
Income tax certification does not settle Canada Pension Plan (CPP) or Employment Insurance (EI). Without a Canadian establishment, a non-resident employer is generally excepted from CPP (CPP Regulations, section 22); see optional coverage in hiring across the border. An owned or rented site office where employees report can change this (establishment rules). Otherwise deduct CPP unless exempt. Qualifying US transfers expected to last no more than 60 months can retain US coverage instead (Canada–US agreement, Article V). Keep a US coverage certificate from SSA as proof.
EI is separate. Employment is excluded where premiums are payable for Canadian services under US state unemployment law through the bilateral unemployment agreement, or under the worker’s home-country unemployment law. Confirm legal coverage; US deductions alone do not prove it (EI Regulations, section 7(c)–(d)).
What changes on a Quebec site?
Quebec deductions generally require the employee to report to, or be attached to, your Quebec establishment, or to report to none of your establishments and be paid from one in Quebec. Working only at a customer’s site may not qualify; a site office can change that (employer conditions).
RC473 does not stop required Quebec income tax deductions. Withhold until Revenu Québec authorizes relief. The employee/representative signs TP-1016-V; send it 30 days before services or the first payment (form instructions).
Quebec Pension Plan (QPP) excludes crews whose employer has no Quebec establishment (employer guide, section 4.3). Qualifying postings follow the US–Quebec agreement. Their wages are generally exempt from QPP and the health services fund (posting rules).
Where Quebec deductions apply, deduct employee and pay employer Quebec parental insurance plan (QPIP) premiums on eligible wages, including non-residents’ pay. EI exemption alone does not exempt QPIP; check wage eligibility and excluded employment.
Directors can owe missed Quebec tax on non-residents’ wages, with statutory defences; assessment cannot occur later than two years after the director last ceased to be a director; partnership members may be personally liable (Quebec liability rules). For registration and QST, see doing business in Quebec.
Does our US payroll keep running?
Yes, for US citizens or residents. US income tax withholding generally continues unless foreign law requires withholding on those wages. RC473 generally leaves US withholding running; required Canadian withholding can change it (IRS).
Which slips and company returns do we file?
File and distribute required T4 slips, and file the T4 Summary, by the last day of February following the calendar year to which the slips apply, or the next business day if that date is a weekend or CRA-recognized public holiday (CRA T4 guide). The enacted certified-employer exception requires reasonable enquiry establishing no reason to believe the qualifying employee’s Canadian taxable income, including treaty-exempt income, exceeds C$10,000 (Regulations, section 200(1.1)(b)). Required CPP or EI deductions still trigger T4 reporting (RC473 instructions).
Include other employers’ Canadian wages and other Part I income; retain the response.
For ongoing Quebec payroll, file/distribute required RL-1s and file the summary by the last day of February of the following year; RC473 does not exempt these filings (RL-1 guide).
Certification preserves return duties: a corporation carrying on business in Canada must file T2 with Schedules 91 and 97, even if treaty-exempt (RC473 conditions); see withholding on services in Canada.
Can the crew’s work create a Canadian permanent establishment?
Yes. An installation project lasting more than 12 months can create one. Subject to that rule, a services establishment can arise in any twelve-month period from either:
- 183 days of services on the same or connected project for Canadian-resident customers or customers whose Canadian permanent establishment the project serves.
- One individual’s presence reaching that count, with their Canadian services producing more than 50% of the enterprise’s gross active business revenue for that period (Article V).
Wages borne by that establishment or paid by/on behalf of a Canadian affiliate through a recharge can defeat short-visit relief; the pay-amount test may survive. Review contracts and costs in US business expansion into Canada.
What day counts and records should we keep?
Update employee files at each payment (RC473 duties). Gather:
- Calendar-year workdays and presence in every relevant rolling window, including personal visits.
- Sites/provinces, travel dates, Canadian pay and currency conversions.
- Treaty residence evidence (passport or NR301) and exemption calculation.
- RC473 dates, R102-R letters and US coverage certificates.
- Contracts, recharges, rotations and the Canadian-income enquiry for T4 relief.
Make records available in Canada on request.
Example
Figures are illustrative Canadian dollars. Assume US treaty residence and employment, no other Canadian visits/income, and wages neither paid by/on behalf of a Canadian resident nor borne by a Canadian permanent establishment.
A Sturgeon County rotation grows
A Texas switchgear supplier sends three commissioning engineers and two technicians to a Sturgeon County data center for 10 weeks: 50 workdays, 70 presence days and C$35,000 pay each. With RC473 approval, 70 presence days pass while 50 workdays fail. Without a Canadian establishment, CPP is excluded; otherwise US coverage can replace it. EI depends on home-state coverage. Each needs a T4: Canadian pay exceeds C$10,000.
A second eight-week rotation in the same year adds 40 workdays and 56 presence days: totals are 90 and 126. Both tests fail, including first-rotation payments. Notify CRA immediately; request employee waivers and retroactive relief for earlier pay after prudent monitoring. Withhold unless CRA relief covers the payments. Treaty relief can still hold at 126 days with the wage conditions satisfied.
A supervisor makes repeated visits
A supervisor visits Calgary and Ontario for 60 days annually: 48 workdays, C$40,000 Canadian-work pay. Only presence supports certification. October-to-March visits can reach 90 days in a rolling window despite shorter calendar-year totals.
Two engineers commission equipment in Quebec
Two engineers spend three weeks energizing switchgear: 15 workdays, 21 presence days and C$12,000 each. RC473 can remove federal withholding. If they report to the supplier’s Quebec establishment, withhold Quebec tax unless authorized otherwise; confirm US coverage and QPIP eligibility. Without one, Quebec deductions generally do not apply. File T4s and required RL-1s.
Coordinate both payrolls:
| Item | US payroll | Canadian payroll |
|---|---|---|
| Income tax | Generally continues unless foreign withholding is required | First-day duty; RC473 or R102-R relief; Quebec separately if its establishment conditions apply |
| Pension contributions | Social Security and Medicare continue under US coverage | Confirm/document CPP or QPP exemption |
| Unemployment insurance | Citizens’ Canadian services for American employers: FUTA-exempt; check state coverage | EI depends on statutory exclusions; QPIP separately |
| Year-end slips | W-2 includes reportable wages | T4 unless exempt; RL-1 separately |
| Company return | US filing duties continue | Filing depends on activity/entity |
See W-2 instructions and Publication 15’s foreign-service table.
Different for you?
- Longer rotations, Quebec or missed deductions: bring contracts, travel logs, payroll and approvals to a cross-border review. Payroll is quoted separately; confirm Quebec payroll scope before engagement.
- Worker T1/TP-1 returns, refunds or US tax credits: see US employee working in Canada.
- Canadian hires or permanent moves: see hiring across the border.
- Canadian crews going to US sites: see sending employees to work in the US.
Figures on this page
| Figure | Value | Source |
|---|---|---|
| CRA non-resident employer certification application lead time CRA says Form RC473 applications should be received at least this long before Canadian services start | 30 days | CRA: Non-resident employer certification Checked |
| Qualifying non-resident employee Canadian workday limit Less than this many Canadian workdays in the calendar year is one alternative, along with treaty exemption and treaty-country residence | 45 days | CRA: Non-resident employer certification Checked |
| Qualifying non-resident employee Canadian presence limit Less than this many days of Canadian presence in any 12-month period including payment is the alternative to the workday test | 90 days in any 12-month period including payment | CRA: Non-resident employer certification Checked |
| Treaty-resident member share for non-resident employer certification Minimum share of partnership income or loss for the relevant fiscal period belonging to treaty-resident members or corporations satisfying the special corporate residence rule in section 153(6). | 90% | Income Tax Act: section 153 Checked |
| Canada–US treaty employment income limit in the country where work is performed Article XV(2)(a): remuneration for employment exercised in the other country does not exceed this amount in that other country's currency, applied per calendar year (Treasury Technical Explanation of the Fifth Protocol); separate from the alternative 183-day test | $10,000 | Department of Finance Canada: Canada–US tax convention, Article XV(2)(a) Checked |
| Canada–US treaty employment short-visit presence limit Article XV(2)(b) also requires remuneration not paid by a resident employer or borne by a permanent establishment in the work country | 183 days in any 12-month period beginning or ending in the fiscal year | Department of Finance Canada: Canada–US tax convention, Article XV Checked |
| CRA non-resident employer certification validity Maximum certification period after CRA approval | Two calendar years | CRA: Non-resident employer certification Checked |
| Regulation 102 waiver application lead time CRA recommends applying this long before Canadian employment services begin or the initial payment | 30 days | CRA: Required Withholding from Amounts Paid to Non-Residents Providing Services in Canada Checked |
| Payroll failure-to-deduct penalty Share of required CPP, EI, or income tax not deducted | 10% | CRA: Employers' Guide – Payroll Deductions and Remittances Checked |
| Repeat knowing payroll failure-to-deduct penalty Second or later failure in a calendar year made knowingly or with gross negligence | 20% | CRA: Employers' Guide – Payroll Deductions and Remittances Checked |
| Federal director liability recovery period Limit to start recovery proceedings for unremitted federal source deductions under Income Tax Act subsection 227.1(4); statutory liability conditions and a due-diligence defence apply | Two years after the director last ceased to be a director | Income Tax Act, subsection 227.1(4) Checked |
| Canada–US social security agreement temporary transfer limit Article V(2): expected assignment length for the ordinary sending-country coverage rule; longer assignments require prior mutual consent | 60 months | SSA: US–Canadian Social Security Agreement, Article V(2) Checked |
| Quebec withholding reduction application lead time TP-1016-V and supporting documents must be sent before services begin or the first payment; application by the employee or authorized representative. | 30 days | Revenu Québec: TP-1016-V instructions Checked |
| Quebec director liability assessment period Revenu Québec states that director liability is subject to reasonable-care and unawareness defences and a two-year period after permanently leaving office. This is an assessment limit, not a deadline to finish collecting an assessment already issued. | Two years after the director last ceased to be a director | Revenu Québec: Liability for payment Checked |
| T4 filing deadline T4 slips must be given to employees and the T4 return filed by this date; the next-business-day rule applies when the date falls on a weekend or recognized holiday | The last day of February following the calendar year to which the slips apply | CRA: Employers' Guide – Filing the T4 Slip and Summary Checked |
| Canadian income limit for the certified-employer T4 exception After reasonable inquiry, qualifying employer has no reason to believe the qualifying employee’s total taxable income earned in Canada for the payment calendar year, including treaty-exempt income, exceeds this amount. Required CPP or EI deductions still require T4 reporting. | C$10,000 | Income Tax Regulations: section 200 Checked |
| Regular RL-1 filing and employee distribution deadline Normal deadline for ongoing payroll, including the RL-1 summary. Stopping remittances or business activity can accelerate filing. | The last day of February of the following year | Revenu Québec: RL-1 filing guide, section 4.2 Checked |
| Canada-US treaty installation permanent-establishment duration Article V(3): installation project is a permanent establishment only if it lasts more than this period; V(9) services rule is subject to V(3). | 12 months | Finance Canada: Canada-US tax convention, Article V Checked |
| Canada-US treaty services permanent-establishment measurement period Article V(9): any such period applies to the 183-day services or individual-presence test; V(9)(a) tests gross active business revenue in that period. | Twelve-month period | Finance Canada: Canada-US tax convention, Article V(9) Checked |
| Canada-US treaty service permanent-establishment day threshold In any twelve-month period, if the Article V(9)(a) revenue test or (b) same-or-connected-project test is also met | 183 days | Finance Canada: Canada-US tax convention, Article V(9) Checked |
| Canada–US treaty services PE revenue test Article V(9)(a): services PE if an individual is present 183 days or more in any 12-month period and more than this share of the enterprise's gross active business revenues in that period comes from that individual's services there | 50% | Department of Finance Canada: Canada–United States Tax Convention (consolidated) Checked |
Primary sources
- CRA: Non-resident employer certification
- Income Tax Act: section 153
- CRA: Form RC473
- CRA: RC473 application and instructions
- CRA: Form R102-R
- CRA: IC75-6R2, non-resident withholding
- Finance Canada: Canada–US tax convention
- CRA: T4001 payroll guide
- Canada Pension Plan Regulations: section 22
- Employment Insurance Regulations: section 7
- Revenu Québec: Person not resident in Québec
- Revenu Québec: Form TP-1016-V
- Revenu Québec: Employer without a Québec establishment
- IRS: Persons employed abroad by a US person
- CRA: RC4120 T4 guide
- Income Tax Regulations: section 200
- CRA: Determine the province of employment
- CRA: Non-resident business registration
- CRA: Where to send waiver and certification applications
- CRA: Applying for an individual tax number
- SSA: Canada social security agreement
- SSA: US–Quebec social security understanding
- SSA: Certificate of coverage
- IRS: Publication 15
- IRS: Instructions for Forms W-2 and W-3
- Revenu Québec: RL-1 filing guide
- Revenu Québec: Remuneration subject to QPIP premiums
- Revenu Québec: Employment excluded from QPIP
- Income Tax Act: section 227
- Income Tax Act: section 227.1
- CRA: R102-R application and instructions
- Revenu Québec: Employer deduction and contribution conditions
- Revenu Québec: Guide for employers
- Revenu Québec: TP-1016-V application and instructions
- Revenu Québec: Liability for payment
- Ontario: Employer Health Tax
About this guide
Edited and reviewed by Di Lu, CPA on . It explains general rules for the tax year shown. It is not advice for your situation.
Changes
- : First published.