Canadian in Australia...providing services to a Canadian client

[suleos]

I need some help with understanding the implications of the following setup. But first a couple of details about myself:

- I am a Canadian citizen

- I am a deemed non-resident of Canada

- I am a tax resident of Australia

I have a sole proprietor business here in Australia providing software development services. If I was to provide a service to a Canadian entity whilst rendering that service here in Australia, then would I have to pay tax in Canada as well as Australia? They would be sending the funds (AUD) to my Australian bank account. I assume that this would be an Australian tax matter as the services are rendered here, but now I'm not so sure...and the Canada-Australia tax treaty is confusing.

Any help is much appreciated.

Edit: This thread hasn't gained too much traction...however, for anyone else needing help, I found this in the Income Tax Act: https://laws-lois.justice.gc.ca/eng/acts/i-3.3/page-1.html#h-279747

Tax payable by non-resident personsWhere a person who is not taxable under subsection 2(1) for a taxation year

(a) was employed in Canada

(b) carried on a business in Canada, or

(c) disposed of a taxable Canadian property

Edit 2: Some further reading: https://www.fasken.com/en/knowledge/doing-business-in-canada/7-taxation

A non-resident is generally subject to taxation on Canadian-source income, such as:

• Income from a business carried on in Canada
• Income from an office or employment in Canada
• Capital gains on the disposition of property, known as “taxable Canadian property”
• Income of a passive nature received from Canadian residents (e.g., dividends, rent, royalties)

https://www.canada.ca/en/revenue-ag...de-electing-under-section-216.html#P204_18666

Other Canadian-source income

• If you have other Canadian-source income for 2022, you may have to send the CRA a separate Canadian return to report it.
• If you received Canadian-source employment or business income or you realized a taxable capital gain from disposing of taxable Canadian property in 2022, see Guide T4058, Non-Residents and Income Tax.

Edit 3: therealatsak is correct. I confirmed these details with a Canadian tax accountant.

 

[concernedboardmember]

@suleos No. Just invoice to your Canadian client. No GST for Australia or Canada. Declare as income in Australia.

You can invoice in CAD if you want. Get an account through Wise that's Canadian domiciled and they can EFT to you instead of having to wire in AUD. Wise is good exchange rates. Then transfer to your Australian account using your bsb / account info from Wise.

 

[suleos]

@concernedboardmember Right ok, so payments from the Canadian client would not be classed as "Canadian-sourced income"? I think this is the part that is confusing to me.

 

[concernedboardmember]

@suleos No you're performing the service in Australia. If you go and do it in Canada in person that's another matter.

 

[suleos]

@concernedboardmember Ok thanks for the info, and that's also a good tip about wise...

One last thing though, you mentioned GST...but I was specifically talking about income tax. GST wouldn't apply in Australia due to the client being overseas and the service being used outside of the country.

EDIT: i'm tired...I think you were referring to Income Tax in general.

 

[concernedboardmember]

@suleos Yes I'm just mentioning that you also wouldn't charge GST in Canada (ie HST) unless you go in person to do it. You didn't ask that question but it merits making mention so it's clear across the board.

 

[suleos]

@concernedboardmember Thank you.

 

[suleos]

@concernedboardmember FYI - I attached some links in my original post, which appear to give credit to the points you made.

 

[concernedboardmember]

@suleos Fyi I am a dual Australian / Canadian citizen and have actually done what you want or do in another industry. I called the ATO and CRA to find out how to do it properly - they both told me this information which made me reasonably sure I was doing it properly. In my case it was the other way around but at any rate I'm pretty confident on this. You can also get an accountant to confirm from both countries.

 

[suleos]

@concernedboardmember No, I appreciate the help...I just spent my morning digging through some official documents in order to get a better picture.

Yeah, it's tough - I haven't been able to find an accountant here in Sydney who knows the Canadian tax system...and I just keep going around in circles. I might just be better off calling the CRA.