Canadian businesses that carry people or goods to the United States are subject to various tax obligations.

Carriers are subject to both U.S. federal and state tax rules. Note that tax obligations vary greatly from state to state, and in some states, simply transiting through a state may trigger a state tax obligation.

Federal requirements

Under the Canada-U.S. tax treaty, a Canadian carrier is not subject to U.S. federal tax provided it does not have a permanent establishment in the U.S. and is only involved in international transportation (Canada to the U.S. and U.S. to Canada).

However, the carrier must file the required form to invoke the tax treaty and a non-resident tax return with the U.S. tax authorities. These documents must be submitted within five and a half months of the fiscal year-end. In the absence of this return, the Canadian carrier would be taxable at the U.S. federal level.

Generally, carriers must also file an information return with the federal government and pay the annual highway use tax. This tax is based on the number and weight of heavy vehicles on U.S. highways. The required return covers the period from July 1st to June 30th. The return and payment must be submitted by August 31st of the year to which they apply.

Each state has its own rules

To be subject to U.S. state taxes, a business must have a sufficient presence or Nexus in a state. For example, having an office or inventory on consignment in a state will generally trigger Nexus.

Each state has its own definition of Nexus. For a Canadian carrier, Nexus could be triggered by one or more of the following criteria:

  • Annual total number of pick-ups and deliveries in a state;
  • Annual total number of trips in the state;
  • Annual total kilometrage travelled in a state.

Several states are party to the Canada-U.S. tax treaty. In these states, a Canadian carrier does not have to pay state income tax (if it does not maintain a permanent establishment there). On the other hand, it could be subject to another form of taxation, such as a minimum tax based on sales or a capital tax.

It should be noted that major states such as New York, Pennsylvania and California are not party to the tax treaty.

The company must file an annual tax return in each state where it has Nexus (whether or not the state is party to the tax treaty), within three and a half months of the fiscal year-end (two and a half months if the year-end is June 30th).

To determine its state tax obligations, a Quebec carrier usually relies on its internal pick-up and delivery reports, as well as on its quarterly fuel tax returns submitted to the Quebec government. These returns determine the kilometrage travelled in each territory: Canadian provinces/territories and U.S. states.

U.S. taxation is complex, and there are several tax implications that must be considered in the case of cross-border transportation activities with that country. Do you have questions or need advice? Contact our international tax experts.

Next article

Jean-François Boudreault
Vice President and General Manager - AURAY Leadership | Human resources consulting

Updated on March 2, 2022

The pandemic have highlighted the importance of worker health. What can companies do to create a healthy work climate?

The pandemic has forced us to acknowledge something we already knew but failed to pay attention to: workers need to be physically and mental well in order for companies to run smoothly.

Burnout, layoffs, high turnover rates, harassment, lack of motivation and isolation—all these are warning signs that companies should be on the lookout for, even when they appear to be isolated cases. Since recurring incidents or widespread problems require major interventions, it makes sense to stay vigilant and take a preventive approach so that you don’t end up with problematic situations in which nobody wins. When red flags go up, managers and business owners should pay attention right away.

The right diagnosis

Before acting prematurely, it’s important to understand the interpersonal dynamics at play within your organization so that you can determine what interventions are needed. Problems don’t usually stem from a single cause. Most often, a combination of inter-related factors causes collateral damage and affect workers.

The work climate is based on how employees perceive their work environment. These perceptions are shaped by their needs, expectations and what they value most in a typical work situation. Factors that influence employee perceptions include team spirit, recognition, the values emphasized in the workplace, management leadership, individual roles, career development opportunities, equity, respect, the feeling of being useful, etc.

Obviously, these impressions tend to shift over time in response to changes within the organization or society at large, such as restructuring, new management or a pandemic. Employees also influence each other when they share their thoughts on these constantly changing circumstances.

In other words, the work climate reflects the group’s emotional state. These feelings are linked to how employees perceive their work situation and shaped by informal conversations with each other. Studying the work climate can therefore shed light on the wellbeing of a team, business unit or entire organization.

If an assessment reveals that your work climate is tainted by uncertainty, management might consider reviewing or updating its structure or management practices. Or the discovery might simply confirm that employees are responding negatively to a planned change (such as restructuring). Either way, it’s always important to pinpoint the right diagnosis before springing into action. You need to know what are the key drivers behind the situation so that you can focus on the right factors.

A 6-step process

Even though every organization is different, with unique operating conditions and challenges, we recommend a tried-and-true approach that’s equally effective for SMEs, non-profit organizations and major corporations, regardless of the business sector. The process contains six steps to be completed in order.

1. Define the causes and your objectives

This step allows you to fully understand the issues and determine what’s causing the issues arising in your organization (disengagement, lack of motivation, high turnover, poor attractiveness, etc.).

2. Select internal and external experts

Appoint a special committee to address the situation. If the members are in-house staff only (with no input from external experts), we recommend choosing people from different teams within your organization (HR, management, business units, supervisors, etc.). Be sure to include individuals who are directly affected by the problem.

Keep in mind that perceptions are important. An internal survey could be discredited if it’s not prepared right or appears to lack objectivity or impartiality. In fact, this would only exacerbate existing concerns. Most organizations appreciate getting help from a third party to ensure that facts are presented objectively and the situation is reviewed with impartiality. We advise companies to create a steering committee made up of internal employees and designate a project manager to liaise with the external firm and facilitate communications and logistics.

3. Determine your target group

The assessment and diagnostic exercise can either cover the entire company or just a specific unit, depending on the issue, goal, budget, time available and the size of your organization.

4. Choose the right method for collecting data (qualitative and quantitative)

Different data collection methods and tools can be used, depending on the situation. Typically, two approaches are used.

The first is qualitative. It involves collecting information through one-on-one interviews, discussions with a target group and real-time observation of what’s happening on the ground. This step gives you the chance to get a stronger understanding of the issues at hand and explore theories on what might be causing them.

The second approach is quantitative. It involves conducting surveys that are specially designed for this type of intervention. Surveys are a quick way of finding out whether your hypotheses hold true among a large sample. They also let you check in with workers on various organizational considerations related to the work climate. The information collected can help you link cause and effect.

We recommend combining both approaches so that you can cross-reference a wide range of data and either confirm or rule out your initial hypotheses.

5. Analyze and share the findings

After analyzing the results of your surveys and interviews, you have to share the findings. But the success and credibility of the entire exercise depends on getting the communications right. This means informing employees of the results and how you intend to make things better.

More specifically, once management presents the results—either to the unit involved or the entire workforce—through carefully planned internal communications, the company needs to implement measures right away so that workers don’t become disinterested or disillusioned. Instead, the idea is to empower the people involved. By ensuring your project leads to concrete action, you prove to employees that their opinions count and their engagement is essential to the success of the undertaking.

6. Draw up a game plan and stick to it

Certain corrective measures to restore the work climate within your organization should have become apparent during the previous step.

Implementing action plans is mainly the responsibility of managers and the teams themselves, though they should receive support from internal or external committees. That’s why it’s important to share all your survey results with all levels of personnel, rather than simply providing them with the organization’s overall results. Your action plan should be outlined in detail so that teams know what to expect and all actors get behind your efforts to improve the ambiance and engage teams.

Remember that effective follow-ups are the key to your success. The action plan should be developed around indicators established during the planning phase. It should also include well-defined steps so that you can track progress. A carefully designed dashboard can make it easier to compare the data collected throughout the process and anticipate corrective measures if there’s a significant gap between your target and your results. One indicator could be to plan a second survey on the work climate to be conducted in 12 or 18 months.

Take action to protect your business’s health

A work climate diagnostic exercise is a democratic and confidential method of evaluating your organization’s health. It’s a little like an annual physical at the doctor’s office. You check a set of indicators to see whether or not your system is in good working order.

For companies, the check-up involves asking employees how they feel by sending surveys to a specific group or to your entire workforce, including managers. The exercise gives you a quick and accurate reading of your organization’s health, often at a low cost.

The pandemic may have exacerbated latent problems that were bound to surface sooner or later. It’s worth checking in now, before the situation gets worse and drags down your team’s morale and performance, affecting the employee experience and your employer brand. After all, your workforce is your most valuable asset.

13 Jan 2021  |  Written by :

Next article

Marie-Eve Proulx
Senior Advisor | Management consulting

Updated on June 30, 2022

Did you know that half of all entrepreneurs are experiencing psychological distress? And yet, few are talking about it.

The pandemic has exacerbated the problems of psychological distress in the population, including entrepreneurs. Entrepreneurs have seen their stress levels increase over the past two years and they continue to face significant challenges.

Yes, we may have allies within our businesses and networks to support us, but being an entrepreneur can often feel like a lonely endeavour.

Preventing long-term consequences

Short-term stress can be beneficial. It can drive motivation and spark innovation. But over the long term, it’s damaging and can make you feel like you’ve lost control. Stress is your body’s reaction to a real or perceived threat. It sends a signal that triggers a fight or flight response. When that signal persists over time, a sense of powerlessness over the situation sets in. It’s perfectly normal for your concerns to give rise to negative emotions.

When your workload increases and your feeling of control decreases, the risk of burnout, exhaustion and depression is much higher. Entrepreneurs are used to working long hours and going to great lengths to meet their business goals. But when the results aren’t proportional to the time and energy you’ve invested, it can be hard to keep up the pace. Once that happens, you need to ramp up efforts to recover your strength.

Your reactions—including fatigue, exhaustion and the need to talk about it—are perfectly normal. Bottling it all in instead of reaching out for help will have long-term consequences. In short, it’s bad for you and for your company.

Check your blind spot: your own wellbeing

As an entrepreneur, you’re used to inspiring others, finding solutions, developing ideas and transforming plans into projects. But first you’ve got to pay attention to the harmful effects of stress and schedule some self-care. Issues that aren’t addressed today can take root and negatively impact your physical or mental health down the road. Before you can find a solution, you have to admit there’s a problem. Talk about how you’re feeling and seek out support, like you would for any other aspect impacting your company.

Québec’s top entrepreneurs all have one thing in common: they’ve dared to ask for help and make use of available resources to build their businesses and keep them afloat. So why not do the same for yourself?

Being humble shows that you’re a positive leader who’s self-aware and open-minded. You’re not a robot. Be transparent about your experiences, worries, doubts and range of emotions. A genuine approach inspires confidence.

Finding balance is the key

What’s the key to restoring your health? It starts with establishing your priorities and striking a balance between six important areas.

Personal life

Managing your priorities is largely based on finding balance in your personal life. You want work effort to be offset with rest. That means mentally checking out and taking time for yourself.

Some people will choose to increase their sports activities, while others prefer reading, meditating or walking through a forest. Or maybe you’d rather recharge by reconnecting with friends and family. Choose whatever works for you, and then add a healthy and balanced diet to go with it.

Family life

It’s important to plan quality family time, in which you’re fully present both physically and mentally. Turn off your cell phone and decide that you’re unavailable for anything outside your family bubble during these moments.

Social life

Keeping in touch with friends is also essential. Make a point of hanging out with your buddies and if you need a hand, be open about it. You should never be too proud to ask for help.

Spiritual life

Accept that you’re not perfect. Recognize your strengths and weaknesses. Identify and welcome your emotions and fears. You’re only human, after all. Take a minute each day to reflect on your achievements. Cultivate gratitude and go easy on yourself.

Professional life

Identify your business’ internal and external contributors, empower your team members and delegate. Cultivate positive business relationships, grow your network and create alliances.

Financial balance

Identify your weaknesses, assess your liquidity management and move forward with concrete action plans. If you need assistance, be sure to call on business groups or expert consultants. They may be able to offer some much-needed support and tips for balancing your personal and business finances.

Take the first step toward better overall health. These are challenging times. Don’t be afraid to admit it and ask for help when you need it.

You’ve always been able to bounce back, find solutions and leverage helpful resources for your business. Now it’s time to do the same for yourself.

Our multidisciplinary team works with organizations of all sizes and across all industries in Quebec. We’ve got your business and personal needs at heart. Ask about our approach to promoting health among entrepreneurs.

15 Dec 2020  |  Written by :

Marie-Eve Proulx is an expert in Business Transformation consulting. Contact her today!

See the profile

Next article

The growing popularity of digital platforms for short­term rental accommodations has prompted the Federal government to issue rules to govern these new business activities.

The recent Fall 2020 Economic Statement updates the application of GST/HST on short-term rental accommodation.

The Government is proposing to apply the GST/HST to all supplies short-term rental accommodation effective July 1, 2021. These supplies are short-term accommodation, that is, a rental of a residential complex, a residential unit, or part of a unit to a person for a period of less than one month where the price is more than $20 per day. The applicable tax rate would depend on the province where the short­term accommodation is situated.

Accordingly, the applicable GST rate will be 5% for short-term accommodation in situated in Quebec, Manitoba, British Columbia, Saskatchewan, Alberta, Yukon, the Northwest Territories or Nunavut. The applicable HST will be 13% for short-term accommodation situated in Ontario and 15% for short­term accommodation situated in Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland and Labrador.

Download this document to find out more.

[class^="wpforms-"]
[class^="wpforms-"]