Reporting Business Income from Other Countries

Hogg, Shain & Scheck’s entrepreneurial clients need to understand how to properly report business income from other countries to avoid taxation penalties. Businesses succeed because they strategically operate within a global value chain that elevates their products while minimizing their costs. However, when you earn income in other countries, come tax time, you need to be wary. Follow the tips below to ensure that your enterprise is operating in a fair and legitimate way.

1. On your income tax report, treat income from countries outside of Canada in the same fashion as the income your report from within our country
   1. Make sure that you convert this external income into Canadian dollars
   2. Use the Bank of Canada exchange rate to avoid discrepancies
2. You need to differentiate between income earned in another country and income that is simply paid to you by a stakeholder from another country
   1. For example, if you have a client in Europe who pays you in Euros, you can deposit this money into your business account and incorporate its converted currency into your comprehensive income tax report
   2. However, if you are actually generating income in a foreign country, you need to pay the applicable income tax in accordance with that country’s laws and tax regulations
   3. Know what taxes apply to your business when you operate in another country: some countries do not even have income tax while others have rates that change between state/provincial borders
3. If you are earning income in another country, you will need to file two income tax reports: one in Canada and one in the alternative country
   1. Do not worry: you will not pay double the income tax on income earned when you are operating in more than one country
   2. However, the government needs a clear and accurate representation of your earnings to ensure that you are paying the correct taxes on the income that you earn, regardless of which country said taxes are attributed to

Running a business is complicated, and operating a business in more than one location compounds the difficulty of taxation processes even further. If you are looking towards expansion or if you already operate across borders, contact Hogg, Shain & Scheck for guidance regarding reporting business income from other countries. Our accountants will help you to understand the different taxation rules that affect your bottom line. They will enable you to mitigate your tax payouts and help you to take advantage of legitimate tax breaks. Don’t wait. Secure your cross-border success with our knowledgeable accounting team today.