How to Determine the Province of Employment - POE for Remote Workers

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By L.Kenway BComm CPB Retired

Published July 22, 2024

WHAT'S IN THIS ARTICLE
New Admin Policy | POE Key Considerations | POE Factors | Audit Ready Documentation | Example 1 | Example 2

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CRA has changed its administrative policy on province of employment (POE) for full-time remote workers effective January 1, 2024. It's important to get this right as it determines payroll withholdings. You cannot chose the POE based on the most advantageous payroll taxes. 

Remote Worker in CanadaHow to Determine the Province of Employment - POE for Remote Workers

Generally, an employee's home office is not considered an establishment of the employer.

Prior to 2024, the province of employment (POE) for full-time remote workers was based on the location of the employer’s establishment that paid their salary. Under the new guidelines effective January 1, 2024, the POE for a full-time remote worker is now determined by the location of the employer's establishment to which the worker is reasonably linked. 

POE For Remote Workers Key Considerations:

Employers can use the following established indicators to help decide if a worker is attached to a specific establishment.

  • Nature of Interaction: Evaluate how frequently and closely the remote worker interacts with a specific office or the team therein.
  • Reporting Structure: Determine whether the remote worker regularly reports to a manager or team at a specific establishment.
  • Business Requirements: Consider whether the remote worker occasionally needs to be physically present at a specific establishment.

POE for Remote Workers Factors

The POE is determined by several factors, including the type of income, the employee’s residency status, and the establishment of the employer where the employee reports for work.

Generally, the CRA identifies a full-time remote work agreement as one where the employer and employee have agreed to a remote working arrangement that may be either temporary or permanent. This agreement should indicate that the employee performs their duties entirely remotely, away from any of the employer's establishments. Both parties should be able to justify that such an agreement exists.

For the purposes of these guidelines, an "employee" refers to someone who does not report to an employer's establishment for their work duties, such as full-time teleworkers or travelling representatives.

POE For Remote Workers
Audit Ready

Ensure you have proper records and agreements in place substantiating the full-time remote work arrangement and the determination of the POE based on the CRA’s indicators.

Example 1: Employee with Remote Agreement Attached to an Establishment

Consider an employee, Jane, who has a permanent remote work agreement with her employer, ABC Corporation. Jane performs her duties full-time from her home in Ontario. However, Jane regularly collaborates with the team at ABC Corporation's office in Toronto (e.g., she participates in weekly virtual team meetings, reports to a manager who works out of the Toronto office, and occasionally visits the office for important meetings).

POE: Since Jane is regularly interacting with the Toronto office team and this office effectively acts as her base for reporting and collaboration, the Toronto establishment can reasonably be considered the establishment to which she is attached. Therefore, the POE for Jane would be Ontario.

Example 2: Employee with Remote Agreement Not Attached to an Establishment

Now consider an employee, Mark, who also has a permanent remote work agreement with DEF Enterprises. Mark works full-time from his home in British Columbia and performs duties independently, without regular interaction or reporting to any specific DEF Enterprises office. His work is conducted through online systems, and he doesn't physically visit or interact significantly with any particular establishment of DEF Enterprises.

POE: Since Mark is not considered to be attached to any specific establishment of DEF Enterprises per the CRA indicators, the new administrative policy does not apply to him. Instead, the POE is determined based on the province where the establishment of the employer from which his salary is paid is located.

To determine the POE for Mark, the following factors must be looked at:

  1. Payroll Department Location: Identify where DEF Enterprises' payroll department or payroll records are maintained.
  2. Expense Incurrence for T2 Reporting: Determine which establishment of DEF Enterprises incurs Mark's salary expenses for corporate tax (T2) reporting purposes.


Assuming that DEF Enterprises’ payroll department and payroll records are located in Alberta, and the Alberta establishment incurs the expense of Mark’s salary:

POE: The POE for Mark would be Alberta, based on the location of the employer's payroll department or the establishment that incurs Mark's salary expenses, despite him working remotely from British Columbia.


Source: CRA What's new and updated for payroll

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