Canada’s Temporary Foreign Worker Program (TFWP) allows Canadian employers to hire temporary foreign workers to fill specifically skilled jobs or to satisfy a labour shortage when qualified Canadian citizens or permanent residents are not available. Hiring these temporary workers is regulated by Human Resources and Skills Development Canada (HRSDC) and must be done according to HRSDC’s rules.
For example, employers must submit a labour market opinion application to HRSDC along with a number of other documents for approval. If the application is approved, HRSDC has specific requirements regarding advertising efforts and hiring criteria for various categories of workers, including agricultural workers, live-in caregivers, and lower- and higher-skilled workers.
In addition, temporary foreign workers and their employers must be aware of the tax implications of working under the TFWP. Generally, foreign workers who are in regular and continuous employment in Canada are subject to tax deductions and tax return filings just as Canadian residents are. However, foreign workers may be exempt from these rules based on their income level, number of days worked in Canada and other circumstances, including special concessions for certain sectors such as film, entertainment and sports.
To avoid withholdings, employees can apply for a treaty waiver if they are a resident of a country with which Canada has a tax treaty. In most cases, however, the employer withholds the taxes and the employee simply files a return to claim the benefit of his or her country’s tax treaty, requesting a refund of the taxes withheld.
While all of this may sound daunting, HRSDC and CRA compliance is not terribly complicated. The tax professionals at DJB can help you on any tax issues involved, and the HRSDC website (www.hrsdc.gc.ca) provides an online portal for TFWP information and applications.
If your company is interested in hiring temporary foreign workers, please contact your CA to discuss potential tax obligations.