Remote Work Arrangements: Employer Payroll Deductions And Updated CRA Guidance

On January 1, 2024, a new Canada Revenue Agency ("CRA") administrative policy will take effect to determine an employee's province of employment ("POE") for employer payroll deduction purposes. The updated administrative policy can be found here. This new policy provides, in particular, updated guidance in determining an employee's POE where a full-time remote work arrangement is in place in respect of an employee. In an environment where the traditional office-based employment is evolving, this new policy will aid both Canadian resident and non-resident employers alike in understanding their payroll deduction obligations in Canada.

Remote Work Approach to POE

Ordinarily, the amount of payroll deductions an employer is required to withhold is dependent on the employee's POE, though the employee's ultimate tax liability is dependent on their province of residence. A POE for an employee is generally where the employee "reports to work at an establishment of