Starting January 1, 2024, the Canada Revenue Agency (CRA) has implemented a new administrative policy regarding the province or territory of employment (POE) for payroll deduction purposes for employees engaged in remote work under a full-time remote work agreement.

The new administrative policy is used to determine the POE for income tax, Canada Pension Plan (CPP) or Quebec Pension Plan (QPP), Employment Insurance (EI), and Quebec Parental Insurance Plan (QPIP) deductions.

The POE depends if the employee physically reports to an employer’s establishment or is considered “attached” to it. If the employee works in Canada but doesn’t report to an employer’s establishment, the POE is the province or territory where the employer’s salary is paid. Typically, this is to the location of the employer’s payroll department/records, or the establishment incurring expenses for T2 reporting purposes.

The CRA specifies that an employer’s establishment refers to any place or premises owned, leased, or rented by the employer in Canada, where employees either report for work or receive their payments from. This doesn’t necessarily have to be a permanent physical location and can extend to temporary sites like construction job locations.

The CRA also outlines that an employee’s home office is not considered an establishment of the employer. Although there are exceptions such as situations where the employee holds general authority to contract on behalf of the employer or maintains a stock of the employer’s merchandise, regularly fulfilling received orders from their home office.

If you have any questions on the new CRA administrative policy, please do not hesitate to reach out to us at 905-475-5200!