Principal Issues: An employer located in Alberta sends employees to industrial, institutional and commercial construction sites in other provinces. Alberta is the employees' province of permanent residence and the projects run from 2 days to 2 years. Whether the Alberta tax tables, or the tax tables of the province where the construction site is located, should be used in preparing the payroll which is paid out of Alberta.
Position: The province of employment for purposes of the payroll deductions tables depends on whether or not the employee is required to report for work at an establishment of the employer.
Reasons: If the employee reports for work at an establishment of the employer, the province of employment is the province where the establishment is located. If the employee is not required to report for work at an establishment of the employer, the employee's province of employment is the province where the establishment of the employer is located and from where the employee's salary is paid.
XXXXXXXXXX 2004-010007
Kathryn McCarthy, CA
February 11, 2005
Dear XXXXXXXXXX:
Re: Establishment of the Employer
We are writing in response to your facsimile of October 25, 2004, concerning the above noted subject.
You described an employer located in Alberta that sends employees to industrial, institutional and commercial construction sites in other provinces. Alberta is the employees' and superintendents' province of permanent residence. The employees on site report to the superintendent on site, who reports to the project manager in Alberta. Temporary job shacks are set up on site and the projects run from 2 days to 2 years. You enquired whether the Alberta tax tables, or the tax tables of the province where the construction site is located, should be used in preparing the payroll in Alberta.
Our Comments
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to provide the following comments.
Generally when you pay employment income such as salaries or wages and want to know which tax tables to use, you have to determine your employee's province or territory (province) of employment. This depends on whether or not you require your employee to report for work at an establishment of the employer. If the employee reports for work at your establishment, the province of employment is the province where your establishment is located. For example if your head office is in Alberta but you require your employee to report to your establishment in Manitoba, the Manitoba Payroll Deductions Tables should be used. If your employee lives in Alberta but you require your employee to report to your establishment in New Brunswick, then the New Brunswick Payroll Deductions Tables should be used. If you do not require your employee to report for work at your establishment, the employee's province of employment is the province where your establishment is located and from which you pay your employee's salary. For example if your employee does not have to report for work at your establishment but you pay the employee from your office in Alberta, in that case, the Alberta Payroll Deductions Tables should be used.
For more information see the T4001, Employers' Guide - Payroll Deductions Basic Information, which is available on our website at http://www.cra-arc.gc.ca/E/pub/tg/t4001/t4001-e.html or contact the Trust Accounts Division of your local Tax Services Office.
We trust our comments will be of assistance to you.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch