Canada: Cross-border employee relief extended for 2021 (COVID-19)

Reporting relief extended for certain Canadian-resident cross-border workers

Reporting relief extended for certain Canadian-resident cross-border workers

The Canada Revenue Agency (CRA) extended reporting relief for certain Canadian-resident cross-border workers to 2021 (extended from 2020).

The CRA has updated its administrative guidance for individuals who performed their employment duties from their home in Canada instead of at the office of their U.S. employer because of travel restrictions. According to the CRA, these individuals may file their 2021 Canadian income tax returns as in prior years and claim a foreign tax credit for amounts paid in the United States, or alternatively file in accordance with the income sourcing rules in the Canada-United States income tax treaty (i.e., treat the income as sourced from Canada).

When these sourcing rules are relied on, the CRA will again consider interest and penalty relief for the individual's 2021 income tax payment (or instalment payments).

Previously, the CRA's reporting relief was only provided for the 2020 tax year.

KPMG observation

Individuals need to be aware of potential timing issues when filing a CRA relief request. For example, individuals must wait for the U.S. tax agency (IRS) to process their U.S. tax returns before they can request a U.S. account transcript, and it may be several more weeks before this transcript is received. As a result, individuals need to consider filing their U.S. tax returns on time.

Further, the CRA may take additional time to process RC4288 forms, since each employment arrangement must be examined on a case-by-case basis.

Read a January 2022 report prepared by the KPMG member firm in Canada


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.