Living in Canada, Working Remotely for a Chinese or Hong Kong Company: How Is It Taxed?

Where employment income is sourced, the tax treaties, and how to handle tax deducted on both sides

Scott Tang, CPAUpdated 2026-11-052026 rules6 min read

You live in Toronto and work from home every day for a company in Shanghai, Shenzhen or Hong Kong, and your salary is paid into a bank account in China — this salary is mainly taxed in Canada. The treaty principle is that employment income follows where the work is done. Ordinary employment income for work done in Canada can generally be taxed only by Canada (pay for serving as a director, or in a top-level management position such as general manager, of a Chinese company is different: China can also tax it, and Canada gives a credit).

Canada taxes it

Pay for work a Canadian resident does in Canada is generally taxed only in Canada

Check the employer

A foreign employer without a company in Canada is not automatically free of Canadian withholding and reporting obligations

No direct credit

Tax that shouldn't have been paid in China generally has to be reclaimed from China; it can't be used to reduce your Canadian tax

Quarterly instalments

If you have to pay instalments, interest runs from March 15, June 15, September 15 and December 15 on any shortfall; pay the year's balance by April 30

Where you do the work is where you pay the tax

Situation	Canada Does it tax?	Mainland China or Hong Kong Can it tax?	Key point
In Canada, working remotely for a Chinese company	✓Yes	✕Generally no	—Chinese individual income tax withheld generally has to be reclaimed from China; if you are a director or senior manager of the Chinese company, China can tax it and Canada gives a credit
In Canada, working remotely for a Hong Kong company	✓Yes	✕Hong Kong salaries tax generally doesn't apply to services rendered outside Hong Kong	—If the Hong Kong employer has reported the income, explain where the work was done
Spending part of the year on business trips to China	✓Worldwide income has to be reported	◐China may be able to tax the part earned while working in China	—Apportion by days; tax paid in China can be credited
Genuinely self-employed (not judged by the contract alone)	✓Report as self-employment income	◐Depends on the treaty and the source rules	—Pay both shares of CPP; HST is a separate question

In Canada, working remotely for a Chinese company

🍁 Canada: ✓Yes
🏮 Mainland China or Hong Kong: ✕Generally no
💡 Key point: —Chinese individual income tax withheld generally has to be reclaimed from China; if you are a director or senior manager of the Chinese company, China can tax it and Canada gives a credit

In Canada, working remotely for a Hong Kong company

🍁 Canada: ✓Yes
🏮 Mainland China or Hong Kong: ✕Hong Kong salaries tax generally doesn't apply to services rendered outside Hong Kong
💡 Key point: —If the Hong Kong employer has reported the income, explain where the work was done

Spending part of the year on business trips to China

🍁 Canada: ✓Worldwide income has to be reported
🏮 Mainland China or Hong Kong: ◐China may be able to tax the part earned while working in China
💡 Key point: —Apportion by days; tax paid in China can be credited

Genuinely self-employed (not judged by the contract alone)

🍁 Canada: ✓Report as self-employment income
🏮 Mainland China or Hong Kong: ◐Depends on the treaty and the source rules
💡 Key point: —Pay both shares of CPP; HST is a separate question

What if tax was withheld in China?

Many companies in China withhold individual income tax from salaries as usual. The problem is that when the work is done in Canada and, under the treaty, China shouldn't have taxed it, Canada generally won't let you claim a credit for that tax.

Tax that shouldn't be paid in China

Pay for work done in Canada

China withheld individual income tax anyway

Canada generally doesn't recognize this foreign tax

Apply to China for a refund under the treaty, or have the company adjust its withholding

Tax that is properly paid in China

The days you worked in China on business trips

China taxes it under its rules

Canada allows a credit

Apportion the salary by days worked, and keep records of your trips

Paying tax on the Canadian side

1
Employee or self-employed?
Look at control, tools, risk and opportunity for profit
2
Employees: check employer duties
Payroll withholding, T4 slips, CPP and EI — confirm these with your employer
3
Instalments if required
If your net tax owing is more than $3,000 this year and was also more than that in either of the previous two years, the CRA generally requires quarterly instalments
4
Keep evidence
Contracts, where you work, and entry and exit records

Freelancer or employee? You can't go by what the contract says alone; it depends on the actual facts, such as control, tools, risk and opportunity for profit. If you are genuinely self-employed, you report the income on Form T2125 and pay both the employer and employee shares of CPP. If your revenue is over $30,000, you also need to look at GST/HST (many services to clients outside Canada can be zero-rated).

Points to watch

Don't wait until you file to pay
If your employer doesn't actually withhold tax, you may owe a large amount by the end of the year; if you meet the conditions, you have to pay quarterly instalments. This only covers your side as an individual and doesn't replace the withholding the employer is legally required to do.
State the work location in the contract
Have the employment contract and work arrangements state that you work remotely from Canada, so you have support when explaining your situation on either side later.
It affects the company too
When an employee works in Canada for the company long term, the company may have Canadian payroll withholding and reporting obligations, or may even have a business presence or a permanent establishment in Canada. The company needs to confirm this too.

How Sheng Qian CPA can help

Which side taxes what
Based on your workdays and work locations, we work out the part Canada can tax and the part China can tax.
Instalments worked out
We estimate quarterly instalments from your expected income to reduce the risk of interest.
Support for a refund in China
We provide documents on your Canadian residency and tax filings; the refund in China is handled by a local adviser. For fees, see "What Sheng Qian CPA Can Do for Cross-Border Families: From Tax Returns to Foreign Asset Reporting" in this series.

Sources

CRA: Employers' guide (T4001; non-resident employers may also have obligations) · Required tax instalments for individuals · Employee or self-employed? (RC4110)
China's Ministry of Foreign Affairs: Canada–China agreement for the avoidance of double taxation (English text) · Department of Justice Canada: Canada–Hong Kong Tax Agreement Act
CRA: Income Tax Folio S5-F2-C1, Foreign Tax Credit

Disclaimer

This article is general information only and is not tax advice. Everyone's situation is different; please consult a CPA about your specific arrangements, and a qualified local adviser about tax matters in mainland China or Hong Kong. Service fees are as set out in our written quote.