Do you mean he traveled to Canada for business and he is liable for Canadian tax on his wages related to those workdays? How much time did he spend in Canada? What kind of business activities did he/project team engage in? How were these costs ultimately borne, by the US employer or the Canadian entity? Were there recharges and, if so, how were these structured? These are some of the questions that need to be raised for treaty application purposes.
If your client was eligible for treaty exemption, he can't voluntarily pay Canadian tax and claim FTC on the US return.
Have seen it all too often, especially for smaller firms, that line managers or even senior management structuring these projects/transactions without engaging Corporate Tax, Finance, Compliance, HR, and external tax advisors on both sides of the border in advance or at all. Getting these wrong without the proper structure and mitigation strategies could have serious tax, legal, regulatory consequences at not only the individual but also corporate level.
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Still an AllStar
