Off topic: freelance translator in Canada income tax?
Thread poster: Conny Gritzner

Conny Gritzner  Identity Verified
Germany
Local time: 22:14
English to German
+ ...
Oct 19, 2011

Hello,

Can I write an invoice for a translation I did in Canada (with a Working Holiday visa)? I know that you have to pay income tax if you work for an employer in Canada (it is automatically deducted from your income). What about freelance work? Do I have to charge VAT? Where can I find information about that? Thank you!


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Jenni Sheppard  Identity Verified
Canada
Local time: 13:14
French to English
+ ...
Not an expert... Oct 19, 2011

So I'll state how I see things so far after having been here about 7 weeks and a lot of research. I might be wrong but hopefully others will be able to come forward and correct me if so.

Under a working holiday visa, the restrictions of your work permit depend on your original country of residence. I assume yours is Germany, in which case you have a twelve-month 'open' work permit, which allows you to freelance as a translator.

Please note, that you will need to register as a business with the Vancouver City license office: http://vancouver.ca/commsvcs/licandinsp/licences/business/index.htm

Some important notes: if you are going to register your business under anything other than just your own name, you will also need to register at a provincial level, which also involves having your business name approved: http://www.bcbusinessregistry.ca/

You may then need to register with the Canada Revenue Agency to get a Business Number: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/menu-eng.html

There is no such thing as VAT here in Canada, but there is HST/GST, sales taxes which are added on to a range of products and services, including translation services. You do not have to register to pay and collect HST/GST until your income received in Canada reaches $30,000, although you can register voluntarily before that. You can find out more info about it all here: http://www.cra-arc.gc.ca/gsthst/

In terms of income tax, you will need to fill out a tax return for income earned during the tax year, which in Canada is the same as the calendar year, by the end of April of the following year. So I expect to file my tax return for 2011 by the end of April 2012. More info here: http://www.cra-arc.gc.ca/tx/ndvdls/menu-eng.html?lhf


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Michael Wetzel  Identity Verified
Germany
Local time: 22:14
German to English
tax residency Oct 20, 2011

Hello Conny,
The Wikipedia article on tax residency includes some decent sources. I think (I am not a lawyer or accountant) that the key question is whether you will be living in Canada or another country for 183+ days (half of a year) during the present calender year. If this is the case, then you are very likely a tax resident of that country. As a freelancer you are then treated as doing business in the country where you are a tax resident. Your business needs to be registered there, this is the address that needs to be included on your invoices, you need to charge or be officially exempted from VAT/sales tax there, you need to pay income tax there, etc.

If, for whatever reason, you do not want to be a tax resident of a specific country, the regulations seem to be somewhat flexibile: If you have legitimate arguments and hire a tax attorney, you may be able to define your tax residency on another basis.

There was a similar thread here in reverse (Canadian citizen in EU):
http://www.proz.com/forum/business_issues/202277-help_with_irish_immigration.html

I don't know how helpful this thread really is. At any rate, the Wikipedia sources make clear that the 183-day-rule also applies in Canada.

Sincerely,
Michael


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