Canada’s new digital nomad program has created a lot of buzz among remote workers in the tech sector. Here’s what to consider before planning a move to our northern neighbor.
Canada is wooing remote workers in the technology sector with a digital nomad program that allows visitors to stay in the country for up to six months without needing a work permit and opens the door to what could be a permanent move.
The initiative comes as Canada faces a tech labor shortage. The country’s new Tech Talent Strategy aims to create a talent pool of people who will stay in Canada in the long term. There is a preference for candidates in science, technology, engineering and mathematics (STEM) – including data scientists, software developers and programmers, mathematicians, statisticians and actuaries, and electrical and electronics engineers.
“Ultimately, the strategy is set to and best adapts to the needs of high skilled tech workers who, just by the nature of their jobs, have the opportunity to work remotely,” Julie Lafortune, a spokesperson for Immigration, Refugees and Citizenship Canada, said in an email. “This in conjunction with the other measures set in place to attract tech talent and ensure Canada remains competitive in the global talent race.”
Speaking last month at the Collision Conference in Toronto, Sean Fraser, the Canadian immigration minister, said the new digital nomad program “will allow people who have a foreign employer to come live in Canada for up to six months, live and spend money in communities in this country and, should they receive a job offer while they’re here, we’re going to allow them to continue to stay and work in Canada.”
Fraser’s agency is creating an exemption from the Labor Market Impact Assessment process, which typically requires employers to document a need for a foreign worker to fill a job.
“What they have announced is definitely cutting back on a lot of the red tape that exists in in normal Canadian immigration,” says Nicole Cieslicki, Senior Director of International Services at MBO Partners, a Texas-headquartered firm that connects enterprises with independent workers.
During the pandemic, millions of American remote workers embraced the idea of location independence. Since 2019, the number of digital nomads with salaried jobs has more than tripled, according to a 2022 study by MBO Partners.
While some of the most prominent U.S. tech giants — including Amazon, Apple, Google and Meta — have been bringing employees back to the office for several day a week, Cieslicki notes that many U.S. companies still embrace fully remote work. “Companies of all sizes in all industries are trying to find a way to balance being a an employer of choice,” she says. “How do we satisfy the workers’ need to be remote for at least part of time, but also benefit from the collaboration that occurs when people naturally get together in the office?”
Before deciding whether to spend six months, a year or longer in a foreign country, a digital nomad should consider several factors, Cieslicki says, starting with whether their current employer has a formal digital nomad policy. “Some companies are drawing lines in the sand about how long they will let people be digital nomads,” she says. “Some adopt 30 days, 60 days, 120 days and some go as high as six months,” she says, noting that firms are often looking at their own tax risk.
Second, since American citizens are required to file U.S. income taxes even when living outside their home country, digital nomads should consider any tax treaties between the U.S. and a specific destination country such as Canada.
During the first six months living in Canada, American expats working for U.S. companies are only be subject to taxes in the U.S., thanks to Canada’s so-called “183 days rule,” which allows foreign expats working for foreign employers to stay six months in a given year without paying Canadian taxes.
After those first 183 days, if American expats get hired by Canadian employers, they would become subject to Canadian taxes in addition to U.S. taxes.
At that point, a digital nomad can typically find multiple ways to lower the tax bill in the U.S.. For example, the Foreign Earned Income Exclusion typically allows the exclusion of the first $120,000 of foreign earnings from being taxed in the U.S. And there’s also the Foreign Tax Credit, which essentially gives American expats a credit equal to at least part of the taxes paid to a foreign government.
“The devil is in the details,” Cieslicki says. “The person who is best prepared and has taken the right immigration and tax counsel will make the right decisions on where to go and for how long.”
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July 18, 2023 at 07:49PM
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Canada's Digital Nomad Program: Come For 6 Months, Stay Indefinitely - Forbes
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