Remote Working Arrangements: Tax Planning & Pitfalls

The COVID-19 pandemic has caused many employers in Canada to re-examine the extent to which they need to maintain a physical presence. As a result, many employers have closed or downsized their offices, or otherwise introduced temporary or permanent remote work arrangements in order to provide employees with increased flexibility to work from alternate locations such as the employee's home. These new arrangements raise questions as to the impact on an employer's payroll withholding obligations and, in some cases, the appropriate provincial payroll tax rates to apply on remuneration paid to employees. Remote working arrangements can also create issues for employers as they could find themselves inadvertently becoming subject to tax in jurisdictions where they no longer or never have had a physical presence.