Hypothetical Establishing US Residency Question

[EldrickOnIce]

I do not know of any company who would do that - put you on the payroll of a foreign subsidiary. This would be an HR issue.

[flamesrule_kipper34]

Originally Posted by EldrickOnIce

I do not know of any company who would do that - put you on the payroll of a foreign subsidiary. This would be an HR issue.

HR? But the OP is making it seem like it's a legal issue. As in illegal to live in one country and get paid from another country's payroll.

I think as a contractor you could pull this off, is there a reason why this is more grey for employees?

I assumed benefits would have been the biggest challenge.

[EldrickOnIce]

Originally Posted by flamesrule_kipper34

HR? But the OP is making it seem like it's a legal issue. As in illegal to live in one country and get paid from another country's payroll.

I think as a contractor you could pull this off, is there a reason why this is more grey for employees?

I assumed benefits would have been the biggest challenge.

Yeah. HR. As OP suggested. That his company didn't see how they would do it without him relocating there. Most multinational companies, in my experience, have strict HR policies regarding such things. The way I understood OP was that the company wasn't opposed to it if he was willing to move to the US.
Yes, as a contractor you can work from anywhere. As an employee, unlikely.

[Enoch Root]

Originally Posted by iggyntangs

Let's put it this way. Due to their compensation structure I could get paid 125K Canadian vs. 125K USD.

I assume I'd be paying the higher of two taxes either way, which would be Canada.

I'm really just wondering is there a way for me to be a part of their US payroll vs. Canadian payroll since it's financially lucrative to be so.

They aren't against it other than saying they can't see a way for it to happen unless I'm physically living in the US. I have no interest in relocating to the US, so I was wondering if there's a way outside that.

Appreciate people's insight on this thus far.

No.

All corporations are subject to the tax laws of the jurisdiction in which they (more specifically, the employees) reside.

To put it another (hopefully simpler and clearer) way, wherever you reside, that is where you pay taxes. So if you live in Alberta, you are going to be subject to the tax laws that govern Alberta and Canada. Period.

Your company could pay you in US dollars, if you and your employer both agree to that. But regardless, you are a Canadian, governed by Canadian tax laws.

Frankly, I doubt that your employer would be willing to pay you an equal number of US dollars or Canadian dollars. There is no reason why they would do this (paying you in US dollars would essentially mean giving you a 20% raise).

Large companies have HR departments, and analyze compensation variances between regions and vs other companies. There is a vast amount of publicly-available information which quantifies the pay-scale differences from city to city, and large companies do not function in blind vacuums. Because this information is available, most companies use it, more or less. What that means is that there is readily available information which fairly quantifies how the same job would garner different pay, depending on where the person performing it resides. In other words, your job is worth X in Calgary, Y in Toronto, and Z in Halifax.

This process also applies across the border. Many, many firms hire in both Canada and the US. Compensation variances are well documented. So again, I highly doubt that a company would be indifferent to paying you an equivalent number of US dollars vs Canadian dollars. But if they will, then good on you I guess.

Nonetheless, you would still be a Canadian taxpayer, and you would owe income taxes in Canada and Alberta, based on the Canadian equivalent amount of US dollars that you received for compensation.

[Weitz]

^^ just to clairiy, and I may be wrong, but it's where you perform the work you pay the tax no? I worked for a few months in the USA and paid American tax IIRC. This was years ago and my memory is fuzzy.

[Enoch Root]

Originally Posted by Weitz

^^ just to clairiy, and I may be wrong, but it's where you perform the work you pay the tax no? I worked for a few months in the USA and paid American tax IIRC. This was years ago and my memory is fuzzy.

Yes, you are correct. I was making a general statement about residency, because typically, you are permanently resident where they are working. However, there are situations where you can work for a short period of time, without becoming a resident. But for anything longer than a few months, you simply take on resident status (or acquiring a work visa, or whatever).

Anyway, unless I misread the OP and the post I quoted, I don't think that is what they were referring to.

To put it all in another, simple, way... if you live here and work here, you are subject to the tax laws of Alberta and Canada, regardless of whether you get paid in Canadian dollars, US dollars, or sacks of grain and chickens.

[Enoch Root]

Originally Posted by Weitz

^^ just to clairiy, and I may be wrong, but it's where you perform the work you pay the tax no? I worked for a few months in the USA and paid American tax IIRC. This was years ago and my memory is fuzzy.

To clarify on your situation, you were a temporary employee. You were a taxpayer of the local jurisdiction in which you were working, even though you didn't remain there long enough to actually be deemed a resident.

I hope this doesn't confuse things further.

[Enoch Root]

I should clarify one more thing...

I was commenting, based on the assumption that where you are residing, and where you are performing your work duties, is the same place. I shouldn't make that assumption.

Let's say you live in Canada, but are working across the border in the US (we'll ignore the fact that you would need a work visa for that). In this case, if you were working in the US, you would be a US taxpayer, even though you are not residing there.

That is a pretty rare situation though. Typically people reside where they work, which is why I referred to them as equivalent.

[Enoch Root]

To get the thread back on topic, I thought I should re-read the OP...

Originally Posted by iggyntangs

My understanding from a particular company is that because it has operations in both US and Canada if I want to join the company as an employee I have to go through their Canadian payroll (and get paid Canadian $).

If I were to relocate to the US then I could join the US payroll and get paid USD.

I'm of course asking because getting paid in USD poses a significant financial advantage.

First of all I didn't know the above was true, I thought you could live in Canada and join the US payroll version of a company but I suppose not.

Question and not trying to cheat any system, asking from a legal perspective, is there any way to genuinely establish a residence in the US to get paid in USD satisfying those requirements while continuing to remain in Canada for living purposes? E.g. Renting out cheap property, setting up a bank etc.

From a work perspective I will have to go to the US quite a bit throughout the year (year-round) for work on a TN visa anyway as most of my work is performed there. But would love to spend my weekends in Canada in my hometown where I reside.

And I'm a Canadian citizen if that means anything.

Any help or advice would be greatly appreciated, thanks!

With a TN visa, by definition, you are not a US resident. If you want to establish US residency, you would need a green card.

But again, as for being paid in USD, that is a simple choice that you and your employer can agree on, but it would have no effect on tax jurisdiction or residency.

[opendoor]

While TN visas are non-immigrant visas, holders of them can still be deemed to be US residents (for tax purposes at least) if they pass the substantial presence test (i.e. they're in the country often enough and have generally severed ties to their home country). Someone who works full time and lives in the US on a TN visa can certainly be considered a Resident Alien for tax purposes.

[iggyntangs]

Wow thanks for the great and lively conversation on this guys, I appreciate it.

I did want to comment on one thing though because this is where I was getting hung up and I think it was a communication between HR and the manager himself (who resides in the US).

His comment was:

"I have no issue paying you equivalent USD $ (125 USD vs 125 CAD as an example). But HR told me it is illegal unless you physically reside in the US or make your primary residence the US."

This is what I was trying to understand better, is this truly a legal issue or was this perhaps HR policy, either way fair but I was trying to understand better.

If it was a legal issue and I could do something to address it that is what I was wondering...but if it came down to company policy then of course it's moot as it won't matter.

From what Enoch Root is saying it doesn't seem to be a legal issue as long as the company allowed it?

[Hockeyguy15]

I read that as they will pay you the equivalent USD, as in 125 CAD would be 103 USD.

[Weitz]

Originally Posted by iggyntangs

Wow thanks for the great and lively conversation on this guys, I appreciate it.

I did want to comment on one thing though because this is where I was getting hung up and I think it was a communication between HR and the manager himself (who resides in the US).

His comment was:

"I have no issue paying you equivalent USD $ (125 USD vs 125 CAD as an example). But HR told me it is illegal unless you physically reside in the US or make your primary residence the US."

This is what I was trying to understand better, is this truly a legal issue or was this perhaps HR policy, either way fair but I was trying to understand better.

If it was a legal issue and I could do something to address it that is what I was wondering...but if it came down to company policy then of course it's moot as it won't matter.

From what Enoch Root is saying it doesn't seem to be a legal issue as long as the company allowed it?

You're still not very clear. Are you wanting to still live here and work here but have a residence in the USA??

[iggyntangs]

The hiring manager is willing to pay me 125k USD or 125k CAD.

Personally, I'd prefer to live in Canada and get paid USD.

The only reason I brought up the 'residency' aspect was because the hiring manager said HR was telling him, it's illegal to pay me in USD unless I live in the US.

So I was wondering are there options around this, or is this truly a legal issue or a HR policy issue.

When HR told him it was "illegal" I was trying to understand what specifically was illegal in their mind and why.

[Hockeyguy15]

So either HR is wrong and it isn't illegal but it's something HR is saying no to, or HR is right and it is illegal.

It sounds like you haven't been hired yet and you want to fight HR on it?

Either way it sounds like you should just stay in Canada and take the CDN salary and call it a day.

[iggyntangs]

Originally Posted by Hockeyguy15

So either HR is wrong and it isn't illegal but it's something HR is saying no to, or HR is right and it is illegal.

It sounds like you haven't been hired yet and you want to fight HR on it?

Either way it sounds like you should just stay in Canada and take the CDN salary and call it a day.

20% is significant, so I was/am trying to understand this. Also trying to understand this for the future as I work in a very niche industry this sort of situation could come up again in the future.

I wouldn't say 'fight HR' on it, I'd like to enable myself to understand really what the law on this is for myself is all.

[Flamenspiel]

Nm

[verda13]

Could you simply ask for an increase of say 15% or so of your salary (CAD), and explain that it's a cost savings to the company versus paying you in USD?

[iggyntangs]

Originally Posted by verda13

Could you simply ask for an increase of say 15% or so of your salary (CAD), and explain that it's a cost savings to the company versus paying you in USD?

I actually did ask originally if they could just make them comparable in that way.

But they said, that their HR guidelines paybands structures are pretty strict and clearly different between their Canadian and US payroll. So they're unable to do that.

[Fuzz]

I have a friend who works for a US software company that pays him in USD into a US account, but has always lived in Canada. I don't see how it is illegal. Company policy, maybe. I'd imagine for their tax purposes it gets more complicated, as would paying out things like benefits, EI etc.