Do I need to come to your office?
No, though you are welcome to: we have offices in India, the USA, Canada and the UAE. Documents move through a secure portal, and meetings can be in person or by video, arranged around your time zone. Clients in the Gulf, India, Europe and across North America all work with us the same way.
Does it matter which of your offices handles my file?
No. The same named reviewer signs off, the same authorisation is filed with the tax authorities, and the same fixed fee is agreed in writing before any work starts.
We hired our first employee in the United States do we owe US tax?
Possibly, and the answer depends on what that employee does rather than on the fact of hiring. Two separate questions arise. The first is payroll: an employee performing duties in the United States generally creates a local employment withholding and reporting obligation for the employer, whatever the company's own tax position. The second is the company's own exposure, which turns on whether the activity amounts to a permanent establishment there, either through a fixed place of business or through a person habitually concluding contracts on the company's behalf. A company can easily have the first obligation without the second. Both should be settled before the first pay run, because registration is far cheaper than a retrospective correction.
Does one salesperson in the States create a permanent establishment?
It can, and it depends on authority rather than headcount. A fixed place of business is one route, but the more common route for a single employee is the dependent agent test: a person who habitually exercises authority to conclude contracts in the company's name, or who plays the principal role leading to the conclusion of contracts that the company then routinely signs without change, can create a taxable presence even with no office. A representative who only solicits interest, demonstrates product and passes everything back for negotiation and signature usually does not. The evidence is the day-to-day reality, so the job description, the delegated authority limits and the email trail matter more than the contract of employment.
My UK parent set up a Canadian subsidiary what does it file here?
A Canadian-incorporated subsidiary is a Canadian resident company in its own right, so it files a Canadian corporate return on its worldwide income and is not sheltered by its parent's treaty position. Beyond the return itself, the obligations that catch new inbound subsidiaries are the ones arising from dealing with the parent: amounts charged between them must be priced as they would be between unrelated parties, cross-border transactions with related non-residents are separately reportable, and payments upward such as interest, royalties and dividends attract withholding at a rate the treaty may reduce. The subsidiary also has its own payroll and sales tax registrations. None of that follows automatically from the incorporation, so it is worth a checklist at the start.
Do we need transfer pricing documentation for charges from our parent?
If the charge is between related parties across a border, yes in substance. The requirement is not paperwork for its own sake: the amount must reflect what unrelated parties dealing at arm's length would have agreed, and the documentation is how you show that. For a management or service charge the questions are whether the service was actually rendered, whether it gave the Canadian company a real benefit it would otherwise have bought or performed itself, how the cost was measured, and how it was allocated among the group. Shareholder costs, the parent's own reporting and oversight, are not chargeable. Contemporaneous documentation also protects against penalties that apply to the adjustment, not merely to the tax.
Our US employee works from home which state can tax us?
A home office is a location like any other, and sub-national rules are not bound by the federal treaty. A state generally applies its own tests for whether an employer has a taxable connection to it and for which income is sourced there, and an employee performing duties from a house in that state is frequently enough to trigger employer registration, withholding and a filing obligation. Treaty protection at the federal level does not carry down. The practical sequence is to identify each state where duties are performed, deal with the employment registrations first because they arise soonest, and then consider the company's own filing position in each of those states separately.
Can we pay a worker based in the United States on our Canadian payroll?
It is usually the wrong way round, and it tends to create two problems rather than solve one. Employment withholding generally follows where the duties are performed, so paying a US-based employee through a Canadian payroll can leave Canadian deductions taken where they are not due while the local obligation goes unmet. The employee then has to reclaim one and fund the other. If the company has no local entity, the choices are typically to register as a foreign employer for payroll purposes, or to use an employer of record, each with different consequences for the permanent establishment question. Decide that question first, because the payroll arrangement should follow it rather than drive it.
Do I have to file in both countries?
Frequently yes, and the two filings do different jobs. The country where the income arises taxes it at source; the country where you are resident taxes your worldwide income and then gives credit for the tax already paid. Filing only one side is what leaves relief unclaimed — the credit has to be asked for on a return. We prepare both sides so the numbers agree. See dual filing.
How many days can I spend in a country before I become tax resident?
It depends on the country, and a day count is only ever the start. Many use a threshold in a tax year, some also look at averages across several years, and some have no day test at all and decide on where your home and life are. Two countries can both conclude you are resident, which is what the treaty tie-breaker exists to settle. Counting days without checking the tie-breaker is how people end up filing as resident nowhere. See the residency tie-breaker.
