Proposed changes to U.S.-Canada tax treaty

Number of employees subject to tax in the other country likely to increase
By Jennifer Horner
|Canadian HR Reporter|Last Updated: 12/19/2007

Proposed changes to the Canada-United States tax treaty are likely to affect every employer with a cross-border workforce or that transfers employees between the two countries.

The fifth protocol to the treaty, signed in September, outlines changes to the permanent establishment rules and to the rules that determine when an employee is subject to tax in the other country.

Combined, these changes are likely to increase the number of cross-border employees subject to tax in the other country. The protocol contains a number of other measures, such as changes to pension contributions, stock-option benefit allocation and the taxation of U.S. business trainees in Canada.