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Canadian Employees working for a US Company
Do you currently have employees who are Canadian residents and are exempt from Social Security and Medicare withholding because they are participating in the Canadian Pension Plan? Well this is no problem if you are running Enhanced Payroll thru QuickBooks. Enhanced payroll allows you to mark such employees exempt from SS & Medicare. However, if you using Assisted Payroll you will have to take a few additional steps in order to get Payroll setup correctly.
For Canadian residents who are exempt from Social Security and Medicare withholding you will need to fill out the CPT56 Form for each employee. This form can be located at http://www.cra-arc.gc.ca/E/pbg/tf/cpt56/. Once the forms are filled out, they must be sent to your Assisted Payroll representative. Once this occurs, your representative will walk you thru unlocking your Assisted Payroll file so that you can make your employees exempt.
The reason these employees are exempt from SS and Medicare is because they are participating in the Canadian Pension Plan. The amount withheld from the employees is only applied to the pensionable wages – which are determined by the Canadian Revenue Agency:
For 2009, CPP contributions begin January 1 on all eligible earnings, and will continue throughout the year until the maximum contribution levels are reached. The new rate and maximum are provided below:
Year’s Maximum Pensionable Earnings – $46,300.00
Year’s Basic Exemption – $3,500.00
Contribution Rate – 4.95%
Maximum Contribution – $2,118.60
US entities can not file with the Canadian Revenue Agency; however, the amount can be remitted to them using the employees Canada Social Insurance Number. The employee will also have to include this amount when they file their T4.
Tags: Assisted Payroll, Pension Plan, QuickBooks