Determine the province of employment (POE)
Content has been updated to include the new Canada Revenue Agency (CRA) administrative policy. This change is effective on January 1, 2024 and is identified with the tag New CRA administrative policy.
When you pay employment income such as salaries, wages or commissions, the employee's province or territory of employment (POE) must be determined so that the proper deductions are withheld. This depends on whether your employee “reports for work” at any of your establishments.
The POE is determined by:
- the type of income
- the residency status of the employee
- the establishment of the employer where the employee reports for work
For income tax, CPP and EI withholding purposes, an establishment of the employer is any place or premises in Canada that is owned, leased or rented by this employer where employees report to work or from which employees are paid. For purposes of the POE, this does not need to be a permanent physical location.
Examples of temporary physical locations
| Description | Establishment |
|---|---|
| Construction company with one or more construction sites | Where the field office is located |
| Carnival at a shopping mall parking lot | Where the shopping mall is located |
Generally, an employee's home office is not considered an establishment of the employer.
The following provides the same information in 2 different formats:
- Interactive questions to get specific POE results
- Full-text to determine the POE
Answer interactive questions
Answer a few interactive questions to determine the POE
Make a selection and scroll down for further questions or results
Read full-text
Full-text to determine the POE
The following is the alternate format to the above questions or results, and provides the same information in full-text.
Where the income is from employment, you need to consider the employee’s residency status
If you don't know the residency status of the employee
The employee may be uncertain of their residency status.
The residency status is determined on a case-by-case basis and an employee's whole situation. If you or your employee want the CRA's opinion on your residency status, fill out one of the following:
- Form NR74, Determination of Residency Status (Entering Canada)
- Form NR73, Determination of Residency Status (Leaving Canada)
Learn more: Individuals – Leaving or entering Canada and non-residents.
Ask the CRA for a binding determination on residency status
Individuals may ask the Income Tax Rulings Directorate (ITRD) to issue a binding advance income tax ruling about their residency status. You may have to pay a fee for ITRD to issue the ruling.
Learn more on how to ask for an advance income tax ruling: Income tax rulings and technical interpretations.
POE for employment income: Employee is a resident of Canada
The employee is considered to be reporting for work at an establishment of the employer if one of the following applies:
New CRA administrative policy
Where a full-time remote work agreement was made, the employee can be reasonably considered "attached to an establishment of the employer"
-
The employee reports for work physically at the establishment.
There is no minimum amount of time the employee has to report to that place.
The CRA administrative policy only applies for determining the POE for the purpose of CPP/QPP, EI, QPIP and income tax deductions.
Determine if the employee is reasonably considered to be "attached to an establishment of the employer"
All of the facts relevant to the employee's situation must be considered to determine if the employee can be reasonably considered "attached to an establishment of the employer".
It is not considered reasonable to attach the employee to an establishment of the employer to avoid source deductions or payroll contributions in any province or territory.
Determine if a full-time remote work agreement was made
Generally, the CRA considers a full-time remote work agreement to exist between the employer and the employee when the following arrangements are made:
- the agreement is either temporary or permanent
- the employer directs or allows employees to perform their employment duties full-time (100%) remotely
- the employment duties are to be performed at one or more locations that are not establishments of the employer
The employer and the employee must be able to justify that a full-time remote work agreement was made.
For the purposes of this policy, the term “employee” refers to an employee who does not have to report for work at an establishment of their employer, such as a full-time teleworker or a travelling representative.
If you determine that a full-time remote work agreement was made, the new CRA administrative policy applies.
Continue to: Step 2 – Determine if the employee is reasonably considered to be "attached to an establishment of the employer".
- If you determine that a full-time remote work agreement was not made, the new CRA administrative policy does not apply.
Determine if the employee is reasonably considered to be "attached to an establishment of the employer"
Once you have determined that a full-time remote work agreement was made, you need to determine whether the employee is reasonably considered to be "attached to an establishment of the employer".
This determination must be done based on a thorough review of the facts in each specific case.
Primary indicator
The primary indicator to determine if an employee can reasonably be considered "attached to an establishment of the employer" is whether the employee would physically come to work to carry out the functions related to their employment duties at that establishment, if it was not for the full-time remote work agreement.
For employees who physically reported to an establishment of the employer immediately before entering a full-time remote work agreement, that establishment is the one to which they would be reasonably considered to be attached, unless the employee's circumstances or the nature of their duties have changed.
Secondary indicators
The following secondary indicators can assist you to determine the establishment of the employer where the employee, if it was not for the full-time remote work agreement, would physically come to work to carry out the functions related to their employment duties:
- The establishment where the employee attends or would attend in-person meetings, through any type of communication
- The establishment where the employee receives or would receive work-related material or equipment or associated instructions and assistance
- The establishment where the employee comes or would come in-person to receive instructions from their employer regarding their duties, through any type of communication
- The establishment that is responsible for or supervises the employee, as indicated in the contractual agreements between the employer and the employee
- The establishment to which the employee would report based on the nature of the duties performed by the employee
Generally, all the indicators need to be reviewed together in order to determine whether the employee is reasonably considered to be "attached to an establishment of the employer".
What is considered a reasonable attachment determination
To be considered “reasonable” by the CRA, your determination that the employee is attached to an establishment based on the indicators above must be supported by the facts of your employee’s employment situation. This determination cannot be used to avoid source deductions or employer contributions in a province or territory.
More than 1 establishment of the employer
If your employee can be reasonably considered attached to more than 1 establishment of the employer, the same indicators should be used to determine to which establishment of the employer the employee can be reasonably considered as more closely attached to.
Examples of scenarios by indicators
The examples below illustrate the application of the indicators by looking at a single factor in each. Generally, more than one indicator will indicate that the employee can be reasonably considered to be attached to the establishment of the employer.
Scenario
Employee A works in the company's IT department as a systems analyst. Their contract includes a remote work agreement allowing them to work from their home office in Manitoba 100% of the time.
Indicator Situation Establishment POE Primary indicator If they were required to report to an establishment of the employer, they would report alongside their IT colleagues at the company's Winnipeg office. Winnipeg office Manitoba Indicator 1 If they were required to attend meetings in person, they would be required to attend at the company's Winnipeg office. Winnipeg office Manitoba Indicator 2 When they require computer hardware or to collaborate with more experienced analysts, they would report to the company's Winnipeg office. Winnipeg office Manitoba Indicator 3 If they were required to report in person to receive instructions about a change to their employment duties, they would report to the company's Winnipeg office. Winnipeg office Manitoba Indicator 4 In their employment contract, they are listed as being under the authority of the Winnipeg office. They are factually supervised from the Winnipeg office. Winnipeg office Manitoba Indicator 5 Their employment duties only involve serving employees reporting in person at the Winnipeg office of their company. Winnipeg office Manitoba
Determine the POE based on the situation
Situation: Employee reports for work (physically or is considered attached) to only 1 establishment of the employer in Canada New CRA administrative policy
The POE is where the employee physically reports for work or is considered attached.
Where the employee reports in person, there is no minimum amount of time the employee has to report to that place.
Use:
POE different from province of residence: If the employee's POE is not the same as their province or territory of residence, they may have not enough tax deducted or too much tax deducted.
Learn more: Increase or reduce income tax deducted at source.
POE in Quebec: If you have employees whose province of employment is Quebec, regardless of your employee's province or territory of residence, you have to deduct QPP contributions instead of CPP contributions as well as QPIP contributions.
Learn more: Source Deductions and Employer Contributions | Revenu Québec.
Situation: Employee reports for work (physically) to more than 1 establishment of the employer in Canada during a pay period
The POE is the province in which the establishment of the employer is located where the employee had either:
- spent the most time
- worked last, if the employee reported to each establishment for the same amount of time
Use:
POE different from province of residence: If the employee's POE is not the same as their province or territory of residence, they may have not enough tax deducted or too much tax deducted.
Learn more: Increase or reduce income tax deducted at source.
POE in Quebec: If you have employees whose province of employment is Quebec, regardless of your employee's province or territory of residence, you have to deduct QPP contributions instead of CPP contributions as well as QPIP contributions.
Learn more: Source Deductions and Employer Contributions | Revenu Québec.
Situation: Employee works in Canada but does not report for work (never physically and not considered attached under the new CRA administrative policy) at an establishment of the employer
The POE is the province or territory where the establishment of the employer from which the employee's salary is paid is located.
Generally, this is one of the following:
- the location of the employer's payroll department or payroll records
- the establishment which actually incurs the expense for T2 reporting purposes
Use:
POE different from province of residence: If the employee's POE is not the same as their province or territory of residence, they may have not enough tax deducted or too much tax deducted.
Learn more: Increase or reduce income tax deducted at source.
POE in Quebec: If you have employees whose province of employment is Quebec, regardless of your employee's province or territory of residence, you have to deduct QPP contributions instead of CPP contributions as well as QPIP contributions.
Learn more: Source Deductions and Employer Contributions | Revenu Québec.
Situation: Employee works in Canada but employer does not have an establishment in Canada
The employment is considered in Canada but beyond the limits of any province or territory.
Use:
- TD1 federal form
- Payroll deductions tables for In Canada beyond the limits of any province/territory or outside Canada
Do not use:
- TD1 provincial and territorial form
POE for employment income: Employee is not a resident of Canada for the full year
Where the employee is not a Canadian resident for the whole year, the POE will change depending on their specific residency status.
Determine the POE based on the situation
Situation: Employee is a non-resident, including a commuter
The POE is where employment duties are performed if one of the following situations applies:
- Employee reports for work at an establishment of the employer in Canada
- Employee works in Canada, but does not report for work at an establishment of the employer
- Employee works in Canada, but employer does not have an establishment in Canada
Use:
Learn more: Deemed residents of Canada.
POE in Quebec: If you have employees whose province of employment is Quebec, regardless of your employee's province or territory of residence, you have to deduct QPP contributions instead of CPP contributions as well as QPIP contributions.
Learn more: Source Deductions and Employer Contributions | Revenu Québec.
Situation: Employee is a part-year resident
For the part of the year that the employee is either:
- a resident of Canada, continue to: Employee is a resident of Canada
- not a resident of Canada, continue to: Employee is a non-resident, including a commuter
Situation: Employee is a deemed resident or sojourner
The employment is considered in Canada but beyond the limits of any province or territory if one of the following situations applies:
- Employee reports for work at an establishment of the employer in Canada
- Employee works in Canada, but does not report for work at an establishment of the employer
- Employee works in Canada, but employer does not have an establishment in Canada
Use:
- TD1 federal form
- Payroll deductions tables for In Canada beyond the limits of any province/territory or outside Canada
Do not use:
- TD1 provincial and territorial form
Learn more: Deemed residents of Canada.
POE in Quebec: If you have employees whose province of employment is Quebec, regardless of your employee's province or territory of residence, you have to deduct QPP contributions instead of CPP contributions as well as QPIP contributions.
Learn more: Source Deductions and Employer Contributions | Revenu Québec.
POE for non-employment income
for example, pension income, retiring allowances, RRSP and CPP/QPP
The POE is the recipient's province or territory of residence if you pay amounts other than employment income, such as pension income, retiring allowance or RRSP.
Use:
References
Legislation
- ITA: 115(1)(a)(i)
- Non-resident's taxable income in Canada
- ITA: 153(1)(a)
- Withholding source deductions
- ITR: 100(4)(a)
- Province of employment where an employee is not required to report for work at any establishment of the employer for salary, wages and commissions
- ITR: 100(4)(b)
- Province of employment where an employee is not required to report for work at any establishment of the employer for other than salary, wages or commissions
- ITR: 102(1)
- Province of employment where an employee reports for work at an establishment of the employer
- ITR: 104(2)
- Deductions not required
- ITR: 105
- Non-residents
- ITR: 200(1)
- Remuneration and benefits
- CPP: 4(4)
- Province in which person deemed employed
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