Coming January 2024, New CRA Policy Will Impact Remote Employee Payroll Deductions

The Canada Revenue Agency (CRA) has introduced a new administrative policy for determining a remote employee's province of employment for payroll purposes (the New Policy).

New primary and secondary indicators are to be reviewed by employers for determining the proper province for income tax, CPP and EI withholding purposes of employees who have entered into full-time remote work agreements with their employer. The policy will come into effect January 1, 2024.

Under the existing rules, an employee's province of employment is determined by the establishment of the employer where the employee reports for work. This establishment is any place or premises in Canada that is owned, leased or rented by the employer where employees report to work. If an employee does not physically report for work, the province of employment is determined by the location of the establishment from which employees are paid.