Taxation of international executives
Both federal and provincial governments levy income tax. In all provinces but Québec, the individuals file a single tax return with the federal government, which collects both federal and provincial taxes. Québec collects its own tax using a separate tax return. Compliance is based on a self-assessment system.
Income of individuals, corporations, and trusts is subject to tax. Partnerships are not taxed directly; partners are instead taxed on their share of partnership income.
Residents are subject to Canadian income tax on their worldwide income. If any income is attributable to compensation for services performed outside Canada and is subject to foreign tax, relief from double taxation is available by claiming foreign tax credits.
Non-residents are subject to Canadian income tax on compensation attributable to services performed in Canada, as well as on gains from the disposal of “Taxable Canadian Property”, as defined in the Income Tax Act (Canada). Income earned in Canada from property and certain other sources such as dividends, rents, and royalties is subject to a federal tax levied at a flat rate of 25 percent (which may be reduced under the terms of an applicable tax treaty) that is withheld at source.
The official currency of Canada is the Canadian Dollar (CAD).
Herein, the host country/jurisdiction refers to the country/jurisdiction to which the employee is assigned. The home country/jurisdiction refers to the country/jurisdiction where the assignee lives when they are not on assignment.
All information contained in this publication is summarized by KPMG LLP, the Canadian member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on The Income Tax Act (R.S.C., 1985, c.1 , 5th Supp.), The Excise Tax Act (R.S.C., 1985, c. E-15), the Immigration and Refugee Protection Act (S.C. 2001, c.27), and on current information for 2019 regarding personal income tax rates and thresholds, payroll taxes, sales taxes and income tax treaties and social security tax agreements provided by the official websites of the Canada Revenue Agency, the Canadian Department of Finance, Immigration, Refugees and Citizenship Canada, the Ontario Ministry of Finance, the Québec Ministry of Revenue, the British Columbia Department of Finance, the Newfoundland and Labrador Department of Finance, the Nunavut Department of Finance, the Northwest Territories Department of Finance, and the Manitoba Department of Finance.
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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.