Taxes and pension plans
When you come to work in Canada, even temporarily, you will necessarily declare to the authorities of your home country that you have left the territory and declare Canada as your new country of residence. You will thus be considered, in the eyes of the Canadian authorities, as well as in the eyes of the authorities of your country of origin, as a Canadian tax resident.
This notion of residence is important since it will determine the payment of your taxes and social and employee contributions.
The tax system in Canada is based on the place of residence and not nationality. This is why the notion of residence is essential in defining whether or not a foreign worker is subject to Canadian income tax.
Bilateral tax treaties help reduce the risk of double taxation for a person who may be considered as residing in two different jurisdictions.
As this is a complex question, we encourage you to seek advice from a fiscal specialist for more clarity (each to their own trade!).
In general, foreign workers holding an employer-specific work permit are not entitled to unemployment benefits if they lose their job whilst in Canada. This is because they are not considered as being “available” to take on a new job in Canada at that time (without changing the work permit beforehand).
Those holding an open work permit are generally entitled to unemployment benefits. See here to consult regulations in more detail.
For the duration of your work permit, and whilst you are employed, you contribute to the Canadian retirement pension scheme. However, you have to differentiate between Canada and the Province of Quebec who has its own pension system.
- In Canada, outside the province of Quebec, all adults earning over a certain legally determined annual amount have to contribute to the Canada Pension Plan. If you are employed, even temporarily, a contribution will be necessarily taken from your salary.
- In Quebec, it is the Quebec Pension Plan that is in force, and not the Canada Pension Plan.
They both function in the same manner: from the moment you work, a contribution will be taken from your salary. If you wish to continue contributing to a pension scheme in your country of origin, several solutions exist. There again, we encourage you to seek professional advice.
FREQUENTLY ASKED QUESTIONS
This section aims to give you general information on immigration to Canada, to simplify terms and cannot be used as legal advice. Contact our team of professionals to receive full legal advice.