Introduction
Generally, employment has to take place in Canada to be pensionable or insurable under the Canada Pension Plan or the Employment Insurance Act. However, in certain situations employment outside Canada may be pensionable or insurable. This is the case if a person is working outside Canada for a Canadian company or the Canadian government.
Requesting a ruling
If a worker or payer is not sure of the worker's employment status, either party can request a ruling to have the status determined for purposes of the Canada Pension Plan and the Employment Insurance Act. More information on the ruling process is available in How to obtain a ruling for Canada Pension Plan and Employment Insurance purposes.
Canada Pension Plan
Canada has social security agreements with many countries that allow for employment outside Canada to be pensionable when certain conditions are met. These agreements are intended to eliminate cases where a worker may have to contribute to the Canada Pension Plan (CPP) and to the social security system of the other country for the same work. They also guarantee that a worker's CPP coverage is properly maintained when he or she is seconded to another country, or when itinerant workers live or work in each country.
Even if employment takes place in a country that has not signed a social security agreement with Canada, that employment may still be pensionable. This may be the case, for example, of employment that would have been pensionable, had it taken place in Canada.
This document does not provide information about self-employed workers for the purposes of the Canada Pension Plan.
Employment in a country where a social security agreement has been signed with Canada
If there is a social security agreement between Canada and the country where the worker is performing services, that agreement must be considered to determine whether the employment is pensionable. Unless it is excluded under subsection 6(2) of the Canada Pension Plan, an employment is considered pensionable if the following two conditions are met:
Where either of the two conditions above are not met, the employment could still be pensionable if the worker complies with the following conditions:
A certificate of coverage may be requested to confirm that the employment is pensionable in Canada. This request must be sent to the following address:
Ottawa Tax Services Office
CPP/EI Eligibility Rulings
333 Laurier Avenue West, 11th floor
Ottawa ON K1A 0L9
Guide T4001, Employers' Guide - Payroll Deductions and Remittances, lists the countries that have social security agreements with Canada.
Employment in a country where no social security agreement has been signed with Canada
1. When there is no social security agreement between Canada and the country where the employment is taking place, it must be determined whether the employment meets the conditions set out in subsection 16(1) of the Canada Pension Plan Regulations to be pensionable.
First, it must be determined if the employment outside Canada would be pensionable if it were in Canada. Then, it must be determined if the employee meets one of the following conditions:
If the worker does not meet any of these conditions, the employment is not pensionable.
There are no procedures (forms to complete) for employment covered by subsection 16(1) of the Canada Pension Plan Regulations. When the employment meets the conditions outlined, it is pensionable as if it were in Canada.
2. When employment outside Canada is not considered pensionable under subsection 16(1) of the Canada Pension Plan Regulations and there is no social security agreement, the employer or worker still has the option of including the employment in pensionable employment. However, this option is subject to certain conditions.
The employer may exercise this option provided that:
The employer must complete Form CPT-8 Application and Undertaking for Coverage of Employment in a Country other than Canada under the Canada Pension Plan.
If the employer does not choose to include the employee in pensionable employment, the worker may exercise this option if the following conditions are met:
The worker must complete CPT-20 Election to Pay Canada Pension Plan Contributions. The employer and employee must pay the required Canada Pension Plan contributions and send the completed forms to the tax services office in their region.
The employer and employee must pay the required Canada Pension Plan contributions and send the completed forms to the tax services office in their region.
Employment Insurance
Employment outside Canada is insurable if:
Even if the preceding conditions are met, an employment outside Canada is not insurable when:
The meaning of "ordinarily resident" in Canada
The concept of residence is an important element in determining whether employment outside Canada is insurable and/or pensionable. The basic principle is that a person is "ordinarily resident" in Canada if Canada is the place where the individual, in the settled routine of his or her life, regularly, normally, or customarily lives. In making a determination of a person's residence status, all of the relevant facts must be considered, including residential ties with Canada and length of time, object, intention, and continuity with respect to stays in Canada and abroad.
Interpretation Bulletin IT-221R3 Determination of an Individual's Residence Status, explains the factors considered in determining an individual's residence status.
Determination of residence status
A worker may request a determination of residence status by completing Form NR73, Determination of Residency Status (Leaving Canada), and sending it to the following address:
International Tax Services Office
2204 Walkley Road
Ottawa ON K1A 1A8
The determination of residence status made by the International Tax Services Office will be used for the purposes of the Income Tax Act and will also be considered for the purposes of the Canada Pension Plan and Employment Insurance Act.
For more information
To get more information, call 1-800-959-5525.