Work on a Canadian farm, meet the CRA

Eighty percent of seasonal agriculture workers in Canada are Canadian residents, but there is still a demand for additional workers, many of whom come from Mexico and the Caribbean. In 2014, for instance, more than 45,000 visas were issued for such workers, although only 40,000 took advantage of the access to work in Canada.

Of those, more than half came from Mexico, reflecting the increased difficulty of access to the U.S. labour market. This work is important to the migrant population because wages in their home countries are significantly lower than here or the work is just not available. In 2012, available records for some of the workers show that $174.1 million was sent back home to help support their families for an average of $9,879.32 per worker.

Tracking the numbers is difficult and inconsistent at best, but most of the data is collected by the Seasonal Agriculture Workers Program, which was started in the 1960s to supply Canadian farms with a much needed supplemental workforce.

There are three categories of temporary migrant farm workers, which will determine how their income is treated by the Canada Revenue Agency. They are considered to be either non-residents, deemed non-residents or deemed residents.

A non-resident worker is one who stays for less than 183 days and has no other significant ties to Canada. They are subject to income tax only on income earned in Canada. If 90 percent or more of their income is from Canadian sources, they can claim non-refundable tax credits and any personal amounts that apply, including basic personal, spouse or common-law partner and eligible dependent amounts. They may also claim Canada Pension Plan and Employment Insurance premiums as non-refundable tax credits regardless of whether the 90 percent rule is met.

Deemed non-residents are seasonal workers who are here for more than 183 days and are considered residents of another country with which Canada has an income tax treaty. In effect, however, they are taxed in the same manner as non-residents.

Workers from a country that has no tax treaty with Canada and stay for longer than 183 days are deemed a resident and subject to income taxes on income from all worldwide sources. One of the effects of a tax treaty is that it ensures the worker does not have to pay tax twice.

There is also a provision for withholding income tax from a foreign worker, although there are a number of federal, provincial and waiver forms to get around this feature. CPP and EI premiums must be withheld, however. Failure to deduct these amounts will leave the employer liable for both the employer and employee share, regardless if they are not recovered from the employee. There are also penalties and interest obligations for the employer associated with failure to deduct CPP, EI and income tax and/or delayed payment.

For more information on how to gain access to seasonal worker assistance, look into the federal Seasonal Agriculture Workers Program or visit the Employment and Social Development Canada website.

Grant Diamond is a tax analyst in Saskatoon, SK., with FBC, a company that specializes in farm tax. Contact: fbc@fbc.ca or 800-265-1002.

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