CRA confirms that there can be double source deductions where a resident Canadian is employed in the US by a US employer

CRA confirmed that where a non-resident employer was paying salary, subject to US source deductions, to a Canadian resident employee performing the employment services in the US, the employer was required to withhold the amounts prescribed under Reg. 102(1). The Reg. 104(2) exemption regarding a non-resident employee was inapplicable.

The employee could annually request, through submitting a form T1213, a Letter of Authority to authorize the non-resident employer to reduce the Canadian source deductions to take into account the employee's foreign tax credit (FTC) for the year. It was recommended that the request include a completed form T2209 (computing the FTC), or a letter providing FTC details.

Neal Armstrong. Summary of 12 December 2023 External T.I. 2023-0967811E5 under Reg. 102(1).