Working remotely has become increasingly common in recent years, particularly during the COVID-19 pandemic when many people had to work from home. In a very short time, companies around the world adapted to having employees doing their jobs online instead of from the desk at the office. Working remotely has now become the norm for many businesses, and many workers have moved to completely different countries yet continue to work in the same employment, just remotely.
We are often asked about the Canadian immigration requirements for remote work being done by foreign nationals inside Canada, as well as by permanent residents abroad.
There are immigration and tax consequences to consider. In this article, we’ll answer some common questions related to remote work.
Do I Need a Work Permit to Work Remotely in Canada?
Whether you need a work permit to work remotely in Canada depends on the nature of your work and where your employer and clients are located. Here are the three different scenarios:
- Remote work inside Canada for a company and clients based outside of Canada. If you are a foreign national working remotely from inside Canada for a foreign company, attending to clients entirely outside of Canada, and are paid by an employer outside of Canada, you are not required to obtain a work permit. In this situation, you are not considered to be entering the Canadian labor market, and you can work as a visitor while inside Canada.
- Remote work inside Canada for a Canadian company and clients based in Canada. If you are living inside Canada and working remotely for a Canadian company and attending to clients who are based in Canada, you will need a work permit. In this situation, you are considered to be entering the Canadian labor market, and you will need to comply with Canadian immigration laws.
- Remote work abroad for a Canadian company and clients based in Canada. If you are a foreign national working outside of Canada for a Canadian company and attending to clients based in Canada, you will not need a work permit. If you are a Canadian permanent resident, living outside of Canada, performing your work remotely for a Canadian company, you will not be able to use this time towards your PR residency obligation or towards your eligibility for Canadian citizenship.
Does Remote Work Count as Canadian Work Experience?
Whether remote work counts as Canadian work experience depends on the nature of your work and whether your clients are located in Canada or abroad. Here are the three different scenarios:
- Remote work inside Canada for a company and clients based outside of Canada. If you are a foreign national working remotely in Canada for a foreign company with foreign clients, this work experience does not count as Canadian work experience. These types of remote jobs will not, for example, help you on an Express Entry application where you get points for Canadian experience.
- Remote work inside Canada for a Canadian company and clients based in Canada. If you are working remotely for a Canadian company and your clients are based in Canada, this work experience does count as Canadian work experience. Such jobs, as long as you are classified as an employee and not doing contract work, and as long as you have legal immigration status to do this work, can count as Canadian work experience on a PR application, for example under the Canadian Experience Class of Express Entry.
- Remote work abroad for a Canadian company and clients based in Canada. Foreign nationals who are working outside of Canada for a Canadian business with Canadian clients can not count this employment as Canadian work experience.
Provincial Nomination and Remote Work
Once of the complications that can arise with working remotely while inside Canada is related to the Provincial Nominee programs. Although working remotely inside Canada for a Canadian company will count as Canadian Work Experience, you may not be able to use that work experience to apply for a Provincial Nominee program. The reason is that provinces require applicants to both live in the province and work for a company based in the province, in order to be eligible for a Provincial Nomination Program (PNP). Therefore, if you are working for a company based in one province, but living in another province, you will have to rely upon a federal immigration program to gain Permanent Residence. Some of the PNP programs go as far as to exclude workers who work remotely, even if you are working in the same province as your employer is located. Essentially, you have significantly limited your options for PR with this sort of working arrangement.
Do I Need to Pay Income Taxes to Work Remotely in Canada?
It is near certain that you will have to pay taxes to someone, somewhere. We recommend that you speak to your accountant to tax professional to sort out this issue as part of your overall planning when implementing your remote work arrangement.
If you are working remotely inside Canada, you will likely be subject to Canadian tax laws and regulations. Whether you need to pay income tax in Canada depends on the nature of your work and your tax resident status. Here are some important factors to consider:
- Residency status: If you are a Canadian citizen or permanent resident, you will be subject to Canadian income tax laws and will need to pay taxes on your worldwide income, regardless of where you are working. If you are a foreign national working inside Canada, you will only be subject to Canadian income tax laws on your Canadian-source income, not income sourced from abroad. Both employees and self-employed workers must pay income taxes in Canada.
- Tax treaty: Canada has tax treaties with many countries, including the United States, that provide relief from double taxation. If you are a U.S. citizen working remotely in Canada, you may be able to claim foreign tax credits to reduce your U.S. tax liability. Anyone should check whether a tax treaty exists with any other country in which you have status for tax purposes to determine your tax obligations. Where two countries have tax rules affecting you, you need to obtain professional tax advice, as the tax implications are usually pretty technical to navigate.
- Tax deductions: If you are working remotely in Canada, you may be able to deduct certain expenses, such as home office expenses, from your taxable income. The rules are fairly complex, but Canada recognizes the home office concept even for employees in the new world of remote work.
Can I access public health care in Canada while working remotely?
Eligibility to access Canada’s public health care system is different from Province to Province. In most cases, if you have a work permit while you are living inside Canada, you will be eligible for public health care coverage. In most cases, if you are living in Canada as a visitor, you will not be eligible for public health care coverage. In all circumstances, ensure that you check the eligibility rules for the Province where you plan to live, as some Provinces will grant health care coverage on the day you arrive, and other Provinces have a waiting period to obtain coverage. It is always a good idea to purchase private coverage for any period of time when you will not be covered by the public health care system in Canada.
Can I work remotely and meet my PR Residency Obligation?
Permanent residents of Canada are required to maintain a physical presence inside Canada for 2 years in every 5 year period of time, in order to continue to have PR status. There are very limited exceptions whereby days spent working outside of Canada will count towards your residency obligation. If you are working outside of Canada for a Canadian corporation or the Canadian government, you are considered to meet your PR residency requirement only if you are assigned to that foreign work location by the employer – the Canadian company must have made a decision that you are physically required to work outside of Canada in order to accomplish your duties. If your situation is that you have simply chosen, for personal reasons, to work remotely for a Canadian company in a different part of the world, those days will not count towards fulfilling your residency obligation.
Working Remotely in Canada
Working remotely from Canada can be a great way to enjoy Canada’s quality of life and experience a high degree of independence while still pursuing your career goals. However, it’s important to understand the Canadian immigration requirements for remote work and to comply with Canadian taxation laws and regulations.
Just to be aware – immigration and taxation are two different and very specialized fields in Canada – not many professionals are qualified to advise a person on both. Employees working remotely who wish to know the immigration implications should consult with a Regulated Canadian Immigration Consultant. For the tax implications of your remote work, you will need to consult with a tax specialist. Luckily, many professionals in both fields also work remotely these days, and you should be able to access the advice you need online at a reasonable cost.
At The Way Immigration, we frequently consult with clients regarding the immigration implications of remote work arrangements. We are happy to meet with you and explore whether a work permit will be required and the rules concerning work arrangements that will count for a permanent residence application. If you decide to accept remote employment, we would be happy to discuss the impact on your immigration journey with you.