CRA clarifying how employers must determine province of employment for remote workers

The government is also clarifying that for income tax, Canada Pension Plan and employment insurance withholding purposes, an establishment of the employer qualifies as any place or premises in Canada that is owned, leased or rented by the employer where employees report to work or from which employees are paid. For purposes of the province or territory of employment, this doesn’t need to be a permanent physical location, it said.

Read: KPMG allowing employees to work remotely from another province, country

Under the new guidance, the employee will also be considered to be reporting for work at an establishment of the employer where a full-time remote working agreement was made and where the employee can be reasonably considered ‘attached to an establishment of the employer.’

Generally, the CRA said it considers a full-time remote working agreement to exist between the employer and the employee when the agreement is either temporary or permanent; the employer directs or allows employees to perform their employment duties full-time (100 per cent) remotely; and/or when the employment duties are to be performed at one or more locations that are not establishments of the employer. The employer and the employee must also be able to justify that a full-time remote work agreement was made.

The new guidance also clarified that the term ’employee’ also refers to a worker who doesn’t have to report for work at an establishment of their employer, such as a full-time teleworker or a travelling representative.

Read: Willful making remote working permanent, allowing staff to work from anywhere

It also outlined that indicators to consider for the employee to be reasonably considered ‘attached to an establishment of the employer’ must be done based on a thorough review of the facts in each specific case. The primary indicator is whether the employee would physically come to work to carry out the functions related to their employment duties at that establishment, if it wasn’t for the full-time remote work agreement. For employees who physically reported to an establishment of the employer immediately before entering a full-time remote work agreement, “that establishment is the one to which they would be reasonably considered to be attached, unless the employee’s circumstances or the nature of their duties have changed.”

Secondary indicators that can use be used to determine the establishment of the employer where the employee, if it wasn’t for the full-time remote work agreement, would physically come to work to carry out the functions related to their employment duties are the establishment where the employee attends or would attend in-person meetings, through any type of communication; the establishment where the employee receives or would receive work-related material or equipment or associated instructions and assistance; the establishment where the employee comes or would come in person to receive instructions from their employer regarding their duties, through any type of communication; the establishment that’s responsible for or supervises the employee, as indicated in the contractual agreements between the employer and the employee; and the establishment to which the employee would report based on the nature of the duties performed by the employee.

Read: Canadian workers value flexibility, autonomy in remote working: report