Canadian Taxes

[Jake]

I saw that Mr. Levy has found this Community and I f I remember correctly he is very knowledgeable on US/ Canadian Tax issues. I am hoping that he or someone else might be able to help me out with a question.

I have a client that is a company with three owners and all of the owners are employees of the company. It is set up as an LLC and has elected to be treated as a Sub Chapter S Coproration. For about the last 8 months the company has been working on a contract in Canada all three employees/ owners have been working exclusivley in Canada. They have continued to draw a salary from the company and have continued to file 941's and the state employment tax forms. They only plan on being in Canada for 12-24 months. All three have maintained thier homes in the US and they come home about every six weeks for a two week visit. I was speaking to one of the owners and they indicated that the the organization that is paying their company is withholding 15% for Canadian Taxes.

My question is what if anything does the Company or the owners/ employees need to do on the Canadian side. Does the company need to file a tax return do the owners/ employees need to file a tax return. My assumption based on my limited understanding is that they will get a refund from Canada or else they will get a credit on thier US return.

Thank you in advance for any help that you can provide.

[ed_accountant]

Canadian taxes like the US are complicated. I suggest that your client hire a Canadian accountant to assist your client in filing and registering the Company to do business in Canada. I believe the withholding is due to the LLC not being registered in Canada as a Canada business. Therefore they are withholding at the highest rate. Just like in the US when a LLC or Corporation does business in another state, the LLC or Corporation must register in that State and file state returns and pay state fees and taxes..

We can't be experts on everything and making mistakes can be very costly..

Good luck

[Jake]

Thanks for the response Ed. I have no interest in doing the Canadian Taxes I just wanted to get them pointed in the right direction and let them know what questions they need to ask a Canadian Accountant. BTW I spoke to them again today and I have found out that they have contacted an accountant out of Washington State that will help them with the Canadian filing.

Thanks again