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Canada

Employer of Record Canada

Global Expansion's Employer of Record services provide the ability to quickly grow, manage, and pay international teams, without the need for a local entity. Our award-winning tech platform plus integrated support services make hiring, managing and paying your global workforce a breeze.

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Hiring in Canada

For companies that want to hire employees and run payroll in Canada without first establishing a business entity or subsidiary, Global Expansion provides Employer of Record services (EOR Canada).

Our EOR services streamline and simplify the global hiring process. We handle your outsourced core global HR tasks - compliance, contracts, payroll, global benefits, and more - so that you forgo hours of ongoing admin, human error, and risky compliance.

In Canada, companies would historically establish a subsidiary or branch office to legally hire in that country. With Global Expansion, this step is no longer necessary. We have subsidiaries all over the world and therefore can legally hire on your behalf. The employees are ours only on paper and report directly to managers within your company.

Need assistance hiring in Canada? Contact us about our International EOR Service

Labor Laws in Canada

The employment laws in Canada are designed to protect the rights of workers. These laws cover topics such as minimum wage, hours of work, overtime pay, and vacation pay.

According to Canada's employment laws, employers must follow all human rights laws and can only judge employees based on their skills and merits. Human rights laws at both the federal and provincial levels say that discrimination and harassment at work are prohibited. Employers may hire those under 17 years old in federally regulated industries.

All employees in Canada are covered under the employment standards legislation. Federal jurisdiction applies to certain companies, such as airlines and railways, and to inter-jurisdictional transportation and communication companies.

Employment Contracts in Canada

  1. Fixed-term contract

    The relationship between the employer and employee exists for a specified period. There is no notice or pay-in-lieu required when the term ends.

  2. Indefinite-term or open-ended contract

    This is given to employees with a permanent status under a company. If ended without cause, employees are entitled to a notice of termination.

  3. Probation period employment contract

    This contract is for employees under a three-month (3) trial period. During this period, employers may terminate the agreement without notice or pay as long as the reasons do not contravene the laws regarding discrimination.

  4. Independent contractor agreements

    These are contracts established for freelancers or self-employed for the duration of a specified project. The applicable employment standards legislation does not cover it.

Employee Probation Period

The typical probationary period is 3 months. The maximum probationary period permitted varies by province and typically ranges from 3 to 6 months.

Annual Leave in Canada

Canada's national minimum vacation entitlement is two weeks of paid leave for every year of employment. After five consecutive years at the same job, you are entitled to three weeks of paid annual leave. Employees who have worked for the same company for ten years or more usually get four weeks of vacation every year.

Vacation time does not begin later than ten months after the completion of each year of employment. Employers frequently reserve the right to designate scheduled vacation time. When this happens, they must give the worker at least two weeks' notice from the start of the leave period. The employer can also pay the employee within 14 days of the vacation starting.

Your vacation pay is calculated as a percentage of the gross wages that you earn during your “year of employment". When your vacation is:

  • 2 weeks; vacation pay is 4% of earnings
  • 3 weeks; vacation pay is 6% of earnings, and
  • 4 weeks; vacation pay is 8% of earnings

Holidays in Canada

As a federally regulated worker, you are entitled to 10 paid general holidays each year.

Here is the full list of those public holidays in Canada.

New Year’s Day 1st January
Good Friday 7th April
Victoria Day 22nd May
Canada Day 1st July
Labor Day 4th September
National Day for Truth and Reconciliation September 30
Thanksgiving Day 9th October
Remembrance Day 11th November
Christmas Day 25th December
Boxing Day 26th December

 

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Maternity Leave Canada

Canadian mothers who have worked for at least 6 months and have proof from a licensed doctor can get up to 17 weeks of maternity leave. This leave can start up to 12 weeks before the child is due to be born and can't go on for more than 17 weeks after the birth. Benefits for women workers can add up to $638 per week, which is 55% of their pay.

Paternity Leave Canada

Workers can choose between 2 options:

  • standard parental benefits
  • extended parental benefits

The choice determines the number of weeks and the weekly amount received. These periods are:

  • standard parental: within 52 weeks (12 months)
  • extended parental: within 78 weeks (18 months)

Individuals may receive up to a maximum of $638 per week, or 55% of their weekly earnings. This begins between 1 week and 1 year after the birth.

Sick Leave in Canada

Canadian workers in all federally regulated private sector companies are entitled to 10 days of paid sick leave per year. This includes employees working in:

  • air transportation, including airlines, airports, aerodromes and aircraft operations
  • banks, including authorized foreign banks
  • grain elevators, feed and seed mills, feed warehouses and grain-seed cleaning plants
  • First Nations band councils and Indigenous self-governments (certain activities)
  • most federal Crown corporations, for example, Canada Post Corporation
  • port services, marine shipping, ferries, tunnels, canals, bridges and pipelines (oil and gas) that cross international or provincial borders
  • postal and courier services
  • radio and television broadcasting
  • railways that cross provincial or international borders and some short-line railways
  • road transportation services, including trucks and buses, that cross provincial or international borders
  • telecommunications, such as, telephone, Internet, telegraph and cable systems
  • uranium mining and processing and atomic energy
  • any business that is vital, essential or integral to the operation of one of the above activities

Working Hours in Canada

All employees in Canada are covered by national labor laws, with the majority (approximately 90%) covered by provincial labor laws. Provincial Labor laws not only may differ from national labor laws but also may vary between one another. Thus, employees based in different provinces are covered by different labor laws and hence varying levels of working hours apply to them. This inadvertently complicates the process of hiring and retaining employees whilst complying with statutory Labor requirements. Therefore, as an “Employer of Record'' firm, Global expansion can play a pivotal role in assisting companies with their labor policies.

The typical Canadian workweek (the period between midnight on Saturday and midnight on the following Saturday) consists of 40 working hours a week and 8 hours a day (any period of 24 consecutive hours). Employees are entitled to one full day of rest each week, which usually falls on a Sunday.

Regulations set out exemptions from or different standard hours of work for certain classes of employees:

  • drivers in the trucking industry (Motor Vehicle Operators Hours of Work Regulations)
  • employees on ships in the East Coast and Great Lakes shipping industry (East Coast and Great Lakes Shipping Employees Hours of Work Regulations, 1985) and the West Coast shipping industry (West Coast Shipping Employees Hours of Work Regulations)
  • running trades employees in the railway industry (Railway Running-Trades Employees Hours of Work Regulations)
  • the commission salespersons in the broadcasting industry (Broadcasting Industry Commission Salesmen Hours of Work Regulations), and
  • the commission-paid salespeople in the banking industry (Banking Industry Commission-paid Salespeople Hours of Work Regulations)

Overtime in Canada

The majority of employees (approximately 90%) in Canada are covered by provincial labor laws. Work and overtime regulations are among the various provincial laws that vary. In general, most jurisdictions have established an overtime rate equivalent to 1 and ½ times an employee’s regular rate of pay.

You have the right to refuse overtime to carry out family responsibilities related to:

  • the health or care of any of your family members, or
  • the education of any of your family members who are less than 18 years of age

Termination of Employment in Canada

When an employer wants to let a worker go, they must give at least two weeks' written notice. In lieu of written notice, the employer must give the employee two weeks' wages at the regular rate. This notice period rule applies to all employees whose jobs are ending, except in the cases below:

  • An employee who has not completed three consecutive months of continuous employment
  • An employee who is on a lay-off that does not constitute a termination of employment
  • The contract provides an end date and that the work ends on that date
  • A worker who is dismissed for just cause, but this dismissal is not considered grounds for dismissal

Employees who have been with the company for at least a year are eligible for severance pay. Employees who have worked for the same employer for at least 12 months and are not covered by a collective agreement have the right to be protected from being fired unfairly.

Group termination of employment:

A group termination of employment is when 50 or more workers from the same business are let go anywhere between on the same day to within four weeks of each other.

Employers who are regulated by the federal government must give written notice to the Head of Compliance and Enforcement at least 16 weeks before a group of employees is let go.

Severance in Canada

In Federal and Provincial Jurisdictions, employees dismissed without cause may be entitled to severance payments in addition to notice of termination (or pay in lieu of notice).

The Canada Labor Code (Federal Jurisdiction) provides that employees with 12 months of continuous service receive the greater of two days’ wages at their regular wage rate for each completed year of employment or a minimum of five days’ wages at their regular wage rate.

Except in the following cases, employers are required to pay severance pay:

  • when a layoff does not result in the termination of employment;
  • when an employment contract contains an expiration date and the contract expires;
  • when an employee is fired for reasonable cause; and
  • when an employee resigns

Canada Salary and Wages

Accurately estimate your costs when employing in Canada in 2023. includes base salary, dependents, benefits, taxes, social contributions, and payroll costs.

The calculator for Canada is coming soon, development in progress.

Canada Salary Ranges

Lowest average wage

  • The lowest average salary in Canada is around CAD 30,200 per year

Average salary Canada

  • The average salary is CAD 75,000 per year.

Highest average wage

  • Canada’s highest average salary is CAD 534,000 per year .

Canada Salary Ranges Visualized

Lowest average salary
$30,200
Average salary
$75,000
Highest average salary
$534,000

Canada Minimum Wage

Minimum Wage ($)

Province/Territory

15.65

British Columbia

15 Alberta
13 Saskatchewan
13.50 Manitoba
15.50 Ontario
14.25 Quebec
13.75 New Brunswick
13.75 Nova Scotia
13.70 Prince Edward Island
13.20 Newfoundland and Labrador
15.70 Yukon
15.20 Northwest Territories
16 Nunavut
15.55 Federal

Benefits in Canada

  • All employees have the right to refuse overtime work when family responsibilities take priority.
  • Standard work hours are reduced by eight (8) hours for each holiday that falls during the week.
  • Annually paid vacation leaves are determined by the employee's years of service.
    • Two (2) weeks of vacation for employees with one (1) year of continuous employment with the same employer
    • Three (3) weeks of vacation time are entitled to employees after their fifth year with the same employer
    • Four (4) weeks of vacation time for those with ten (10) consecutive years of employment with the same employer
  • Most large companies offer employer-sponsored pension plans, a registered plan where both employer and employee regularly contribute money.

13th Month Salary in Canada

There is no mandatory requirement to pay the 13th or 14th month's salary. However, employers do give Christmas bonuses, but only 15% of those bonuses are monetary.

Income Tax in Canada

  • Individuals resident in Canada are subject to Canadian income tax on worldwide income.
  • Relief from double taxation is provided through Canada's international tax treaties, as well as via foreign tax credits and deductions for foreign taxes paid on income derived from non-Canadian sources.
  • Non-resident individuals are subject to Canadian income tax on income from employment in Canada, income from carrying on a business in Canada and capital gains from the disposition of taxable Canadian property.
  • Individuals resident in Canada for only part of a year are taxable in Canada on worldwide income only for the period during which they were resident.
  • Personal tax credits, miscellaneous tax credits, and the dividend tax credit are subtracted from tax to determine the federal tax liability

Federal tax rates for 2022

Federal taxable income ($)

Tax on first column ($)

Tax on excess (%)

Over

Not over

   
0 50,197 0 15.0
50,197 100,392 7,530 20.5
100,392 155,625 17,820 26.0
155,625 221,708 32,180 29.0
221,708   51,344 33.0

A person who lives in or earns money in any province or territory is also subject to provincial or territorial income tax. This is on top of federal income tax. Except for Quebec, provincial and territorial taxes are calculated on the federal tax return and collected by the federal government.

Federal, provincial, and territorial taxable income does not take provincial and territorial taxes into account. Recognizing that Quebec collects its own tax, federal income tax is reduced by 16.5% for Quebec residents.

Instead of provincial or territorial tax, non-residents pay an additional 48% of the basic federal tax on income taxable in Canada that is not earned in a province or territory. Employment income and business income from a permanent establishment (PE) in the province or territory must be taxed at provincial or territorial rates by people who don't live there. Different rates may apply to non-residents in other circumstances.

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Social Security in Canada

The Old Age Security (OAS) pension for people 75 and older will go up by 10% permanently beginning in July 2022. The Old Age Security (OAS) pension is a monthly payment you can get if you are 65 or older. Workers in Quebec pay a maximum of $3,776.10 into a Quebec government pension plan, $723.60 into an employment insurance plan, and $434.72 into a Quebec parental insurance plan.

Starting on January 1, 2019, the Canadian and Quebec governments raised their pension plan contributions over a seven-year period.

If you are self-employed, you pay the full 11.4%. Self-employed people pay twice as much into the government pension plan as an employee (up to $6,999.60 in 2022 or $7,552.20 in Quebec). They can deduct 50% of their base (non-enhanced) contribution and 100% of their enhanced contribution. The non-deductible portion qualifies for a tax credit. In Quebec, people who are self-employed must pay up to $772.64 to the Quebec parental insurance plan.

Contribution

Group 1083

Pension

Self Employed

Group 1083

11.4%

Employee Group 1083 5.7%
Employer Group 1083 5.7%
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Deductible Expenses in Canada

Employment expenses

Registered Retirement Savings Plans (RRSPs) and Registered Pension Plans (RPPs) are common registered savings plans that allow individuals to save for retirement on a tax-deferred basis.

An individual who is a resident of Canada may deduct from income, up to a certain limit, the amount of their contributions to an RRSP, PRPP, or SPP. Contributions made to an RRSP or PRPP during the year are deductible for the current year if the contributor was 18 or older at any time in the year and contributed to the RRSP or PRPP before the end of 2016.

The Canada Revenue Agency (CRA) says that Canadians who are self-employed, have rental income, or have a job can also make tax-deductible contributions to registered retirement savings plans (RRSPs).

People who are both employed and self-employed can usually contribute up to 18% of their total employment, self-employment, and rental income that was taxed in Canada the year before, up to a maximum of $29,210 per year in 2022. When someone works in Canada and is a member of an RPP, PRPP, or a foreign pension plan, they are also limited in how much they can contribute.

Personal Deductions

  • Deductible non-business expenses include alimony and maintenance payments (if taxable to the recipient), certain child care expenses, and eligible moving expenses for relocation within Canada (usually in connection with a change of employment).
  • Periodic alimony payments made by a taxpayer under a divorce decree (or under the terms of a written divorce or separation agreement) to a former or separated spouse (or for the spouse's benefit) are generally deductible, subject to restrictions as to the precise nature of these payments.
  • Neither alimony nor child support is subject to WHT if paid to a non-resident.
  • Canada allows working parents to deduct child-care expenses if certain conditions are met.
  • The maximum yearly deduction is generally $8,000 per child under seven years old and $5,000 per child from seven to 16 years old.
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Interest Deductions

  • Generally, you can deduct the interest on money you borrow to purchase an investment property or to start a business.
  • Personal loan interest is not deductible for tax purposes. This includes mortgage interest paid on a loan used to purchase a residence for personal use.

Business Deductions

  • Business deductions for self-employed individuals generally include all reasonable expenses that have been incurred to earn business income.
  • A self-employed individual can also deduct expenses for the business use of a work space in the individual's home, if the home is the individual's principal place of business, or the individual uses the work space only to earn business income and it is used on a regular and ongoing basis to meet business clients, customers, or patients.
  • Home expenses that may be deducted include utilities, home insurance, property taxes, mortgage interest, and capital cost allowance.

Deductible Expenses:

Employment Deductions
  • Allowable deductions in computing employment income include traveling and certain other expenses of officers or employees required as a condition of employment.
  • A deduction is available with respect to an employee's contributions to a Registered Pension Plan (RPP), a Pooled Registered Pension Plan (PRPP), or to a Registered Retirement Savings Plan (RRSP), within certain limits.
  • In certain cases, individuals can deduct their contributions to an employer-sponsored foreign pension plan if they participated in the plan before moving to Canada.
  • Self-employed individuals can also make deductible contributions to RRSPs.
  • For both employed and self-employed individuals, the deductible contribution to an RRSP is generally 18% of the total employment, self-employment, and rental income that was subject to Canadian tax in the preceding year, to a maximum annual contribution amount ($29,210 in 2022).
  • The allowable contribution is further limited when an individual is a member of an RPP, PRPP, or a foreign pension plan while working in Canada.
Interest Expenses
  • Interest on money borrowed to acquire investment property or to invest in a business is usually deductible.
  • Interest on loans used for personal purposes, including mortgage interest on a loan to purchase a home for personal use, is not deductible.
Business Deductions
  • Business deductions for self-employed individuals generally include all reasonable expenses that have been incurred to earn business income.
  • A self-employed individual can also deduct expenses for the business use of a work space in the individual's home, if the home is the individual's principal place of business, or the individual uses the work space only to earn business income and it is used on a regular and ongoing basis to meet business clients, customers, or patients.
  • Home expenses that may be deducted include utilities, home insurance, property taxes, mortgage interest, and capital cost allowance.
Personal Deductions
  • Periodic alimony payments made by a taxpayer under a divorce decree (or under the terms of a written divorce or separation agreement) to a former or separated spouse (or for the spouse's benefit) are generally deductible, subject to restrictions as to the precise nature of these payments.
  • Neither alimony nor child support is subject to WHT if paid to a non-resident.
  • Canada allows working parents to deduct child-care expenses if certain conditions are met.
  • The maximum yearly deduction is generally $8,000 per child under seven years old and $5,000 per child from seven to 16 years old.

Immigration Canada

Learn about immigration requirements in Canada, work visa requirements, work permits and more.

Regardless of length of stay or source of income, the majority of people who provide services in Canada's labor market, with very few exceptions, need a work permit. Typically, visas to enter Canada are issued with a time limit and for a specific purpose. All foreign nationals attempting to enter Canada must make sure they report the proper status for their intended activities and intended length of stay.

Need assistance hiring in Canada? Contact us about our International EOR Service

Labor Market Impact Assessment (LMIA)

In general, unless a foreign national meets the criteria for an exemption, a Labor Market Impact Assessment (LMIA) is required before the foreign national can apply for a work permit. In general, the LMIA process requires the employer to demonstrate to Service Canada that a job offer to a foreign worker is likely to have a positive or neutral impact on the Canadian labor market. The most commonly relied on LMIA confirmation-exempt category is for intracompany transferees.

Intracompany Transferees Exemption

The exemption for intracompany transferees is designed to facilitate the transfer of “executive,” “senior or functional managerial” and “specialized knowledge” personnel from companies affiliated with those established in Canada. The applicant must be employed by the foreign related company for at least one year in the three years preceding the transfer, and must come to Canada to take a similar role in a “senior management,” “executive” or “specialized knowledge” position.

The Global Talent Stream

Foreign workers employed in lower-skilled and lower-wage occupations have greater restrictions on their ability to work in Canada or apply for permanent residence. The Global Talent Stream, which is a subset of the Temporary Foreign Worker Program, allows innovative firms in Canada a more streamlined process to hire highly skilled foreign talent when Canadians are not available.

In June 2017, the Canadian federal government launched the Global Skills Strategy (GSS) to support faster access to high-skilled talent in Canada and to help Canadian businesses support the creation of jobs for Canadians.

Canadian Work Permits

There are two types of work permits: open work permits and employer-specific work permits. Visa processing times vary depending on the type of work permit.

Open Work Permit

An open work permit allows you to work for any employer in Canada, except for an employer who is listed as ineligible on the list of employers who have failed to comply with the conditions, or who regularly offers striptease, erotic dance, escort services or erotic massages.

You may be eligible for an open work permit if:

  • You are an international student and are eligible for the Post-Graduation Work Permit Program
  • You are a student who’s no longer able to meet the costs of your studies (destitute student)
  • You have an employer-specific work permit and are being abused or at risk of being abused in relation to your job in Canada
  • You applied for permanent residence in Canada
  • You are a dependent family member of someone who applied for permanent residence
  • You are the spouse or common-law partner of a skilled worker or international student
  • You are the spouse or common-law partner of an applicant of the Atlantic Immigration Pilot Program
  • You are a refugee, refugee claimant, protected person or their family member
  • You are under an unenforceable removal order
  • You are a temporary resident permit holder
  • You are a young worker participating in special programs

Employer Specific Work Permits

An employer-specific work permit allows you to work according to the conditions on your work permit, which include:

  • the name of the employer you can work for
  • how long you can work
  • the location where you can work (if applicable)

Other Types of Work Permits

Some of the main categories of work permits are for Professionals, Intra-company transferees, and Temporary resident permit holders. You can only apply for a work permit from inside Canada if:

  • you, your spouse or parents have a valid study or work permit,
  • you have a work permit for one job but want to apply for a work permit for a different job,
  • you have a temporary resident permit that is valid for six months or more, or
  • you are in Canada because you have already applied for permanent residence from inside Canada. You will have to pass certain stages in the main application process before you can be eligible for a work permit.

Visa requirements Canada overview

Learn about the visa policy in Canada and all the ways to obtain a regular or a work visa for Canada.

Professionals

Vector 75

Intra-company transferees

Vector 75

Temporary Work Permit

Vector 75
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Value Added Tax (VAT) in Canada

There are three relevant VAT taxes that corporations must pay in Canada: Federal Good and Services (GST), Harmonised Sales Tax (HST), and Provincial Retail Sales Tax (PST).

Goods and Services Tax (GST)

The GST is a federal tax levied at a rate of 5% on the supply of most goods and services made in Canada. The tax does not apply to supplies that are zero-rated (i.e. taxed at 0%) or exempt.

Generally, registrants charge GST on their sales and pay GST on their purchases, and either remit or claim a refund for the amount of net tax reported (i.e. the difference between the GST charged and the GST paid). Suppliers are entitled to claim input tax credits for the GST paid or payable on expenses incurred relating to making fully taxable and zero-rated supplies (i.e. commercial activity), but not on expenses relating to the making of tax-exempt supplies.

Harmonised Sales Tax (HST)

  • Five provinces in Canada have fully harmonised their sales tax systems with the GST and impose a single HST, which includes the 5% GST and a provincial component.
  • HST applies to the same tax base and under the same rules as the GST.
  • There is no need to register separately for GST and HST because both taxes are accounted for under one tax return and are jointly administered by the Canada Revenue Agency (CRA).
  • The HST rates are 15%.

Provincial Retail Sales Tax (PST)

The provinces of British Columbia, Manitoba, and Saskatchewan each levy a PST (in addition to the 5% GST) at 7%, 7%, and 6%, respectively, on most purchases of tangible personal property, software, and certain services.

PST generally does not apply to purchases of taxable goods, software, and services acquired for resale; registered vendors can claim this resale exemption by providing to their suppliers either their PST number or a purchase exemption certificate. Certain exemptions also exist for use in manufacturing, farming, and fisheries.

Quebec’s sales tax is a VAT structured in the same manner as the GST/HST. The QST is charged in addition to the 5% GST and is levied at the rate of 9.975% on the supply of most property and services made in the province of Quebec, resulting in an effective combined rate of 14.975%.

Withholding Tax in Canada

WHT is charged at a rate of 25% on interest (except for most interest paid to arm's-length nonresidents), dividends, rents, royalties, certain management and technical service fees, and other similar payments made by a Canadian resident to a non-resident of Canada. Canada is constantly renegotiating and expanding its treaty network, some of which have effects that are retroactive in nature.

WHT is not levied in Canada on interest paid or credited to arm's-length non-residents (except for 'participating debt interest'). Most treaties expressly provide for higher WHT on interest in excess of FMV in non-arm's-length situations.

Copyright royalties and payments for a literary, dramatic, musical, or other artistic work (but not royalties for motion picture films, work on film or videotape, or other means of reproduction for use in television), and/or royalties for computer software, a patent, information concerning industrial, commercial, or scientific experience (but not royalties for a rental or franchise agreement), or broadcasting are generally subject to a zero royalty rate. In non-length arm's situations, most treaties explicitly provide for higher WHT on royalties in excess of FMV.

In some cases, a tax rate of zero may apply. The treaty was signed, but it is not yet in effect. Canada imposes a maximum WHT rate of 25% on dividends, interest, and royalties in the absence of a treaty.

Dividends

Dividends paid by a Canadian resident corporation to a nonresident are subject to a 25% tax, unless the rate is reduced under a tax treaty

Interest

Interest paid by a Canadian resident to a nonresident generally is subject to a 25% tax, unless the rate is reduced under a tax treaty. Certain exemptions may apply, including an exemption for nonparticipating interest paid to arm’s length foreign lenders.

Royalties

Royalties paid by a Canadian resident to a nonresident are subject to a 25% withholding tax, unless the rate is reduced under a tax treaty. Copyright payments made in respect of literary, dramatic, musical or artistic works are exempt from withholding tax under domestic law

Technical Service Fees

Depending on the facts, certain technical service fees may be subject to a 25% withholding tax.

Branch Remittance Tax

A 25% branch profits tax is levied, unless the rate is reduced under a tax treaty.

Withholding tax overview

Withholding Tax

25%

Dividends

25%

Interest

25%

Royalties

25%

Technical Service Fees

25%

Branch Remittance Tax

Mandatory Benefits in Canada

Understanding the legal requirements for hiring employees in Canada (whether they work remotely or in an office) is crucial for your company's continued compliance.

As part of Global Expansion’s International PEO and Employer of Record (EOR) solution, we guarantee employees are registered with the appropriate government agency, and that they receive mandatory benefits.

Also, all taxes related to the employee are taken out at the source, which means that our company in the country will pay all taxes to the government on behalf of the new hire.

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Mandatory Benefits Overview

  • Probationary Period

  • Annual Leave

  • Public Holidays

  • Sick Leave

  • Maternity Leave

  • Paternity Leave

  • Notice Period

  • Severance Pay

  • Overtime Pay

  • Social Security Benefits

Payroll In Canada

Here's everything you need to know about running payroll and withholding employee taxes in Canada.

Individuals' income is based on various types of factors, including whether or not they're married. People who are married are taxed separately from one another. Non-residents of Canada are exempt from filing income tax returns if they have employment or business income (including resource income) in Canada or capital gains from the sale of taxable Canadian property.

Tax Filing Deadlines in Canada

In Canada, people have until June 15 to file their income tax returns. Self-employed or business owners have until April 30 to file their taxes. This new deadline also applies to partners and coworkers of people earning less than $80,000 per year. Penalties and interest are imposed if a tax is not paid on time. Unpaid income taxes must be paid by April 30th of the following tax year.

Tax Installments for Individuals in Canada

Individuals may be required to make quarterly installment payments if the difference between tax payable and the amount withheld at source is greater than $3,000 (for Quebec residents, $1,800 of federal tax payable after federal withholding) in both the current year and either of the two preceding years. The amount of the quarterly installments is based on the lesser of the liability calculated by the tax authorities on installment notices, the liability for the preceding year or the liability projected for the current year after deduction of withholdings.

Global Expansion’s EOR and international PEO solutions can help you run payroll in Canada with ease. In just a few clicks, your employees will be onboarded and enrolled in our payroll system. Additionally, we can invoice clients locally, meaning we can enroll any new hire quickly and efficiently, whether they're an expatriate or a local national.

Our Role

Global Expansion’s International EOR and Global PEO solution can help you run payroll in Canada with ease. We will not only ensure accurate payroll administration but also ensure regulatory compliance. Hence, this will save you the time and money needed to understand income tax and employment laws and regulations. In just a few clicks, your employees will be onboarded and enrolled into our payroll system in a seamless manner. Additionally, we can invoice for clients locally, i.e. we can enroll any new employee quickly and efficiently, regardless of whether they are an expatriate or a Canadian resident.

Payroll Accrual in Canada

Country Accruals Additional Information

1.95

Employer Health tax

5.25

CPP

2.21

Employment Insurance  

96.15

Maternity Leave

8.22

Vacation

0.55

Severance per year of service  

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Description

For 2020, Canadian-resident employees are required to pay government pension plan contributions of up to $2,898.00 and employment insurance premiums of up to $856.36. However, Quebec employees instead contribute a maximum of $3,146.40 in Quebec government pension plan contributions, $650.40 in employment insurance premiums, and $387.79 to a Quebec parental insurance plan.

Starting 1 January 2019, Canadian government and Quebec government pension plan contributions were increased by an enhancement that will be phased in over seven years.The enhanced portion of the contributions is deductible, while a credit equal to 15% of the lesser of the base (non-enhanced) amount payable and the required base premiums for the year is allowed in computing an individual's federal taxes payable.

Self-employed persons contribute double the employee's government pension plan contribution (i.e. for 2020, up to $5,796.00, or if in Quebec, $6,292.80) and are permitted to deduct half of the base (non-enhanced) contribution and 100% of the enhanced contribution. The non-deductible portion qualifies for a tax credit.

Self-employed persons are not liable for employment insurance premiums, but may opt to pay them. Self-employed persons in Quebec must contribute up to $689.23 to the Quebec parental.

Payroll Accruals Additional information

Annual Leave

Vector 75

Maternity Leave

Vector 75

Paternity Leave

Vector 75

Overtime

Vector 75

Severance

Vector 75

Social Security

Vector 75

Accrued Benefits in Canada

Christmas Bonus % 0%
Christmas Bonus Over Vacations % 0%
Severance per Year %

Employees are entitled to severance pay that equals 2 days of pay for each completed year of service and is capped at 5 days of pay (1.37% of annual salary)

1.37%
Of annual
salary
Vacations %

The national minimum entitlement in Canada is two weeks for every 'year of employment' (2.74% of annual salary)

2.74%
Of annual
salary
Notice %

Employees are entitled to 2 weeks of notice after one year of service (2.74% of annual salary)

2.74%
Of annual
salary
Christmas Bonus Over Notifications % 0%
Vacations Plus % 0%

Total percentage of Salary (yearly)

The total employment accruals as a percentage of salary per anum are equal to 6.85%

6.85%

Why use Global Expansion to hire in Canada

Establishing a branch office or subsidiary in Canada can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Canadian labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Canadian law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Canada. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our International Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.

Ready to hire anywhere in the world?

Grow your team the right way with Global Expansion.

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