What, if any, tax issues do U.S. companies need to be concerned with when the vendors and receiving facilities are both in Canada? What are the timeframes?


It depends on what you are paying for, whom you are paying, and the source of the income. The particulars of the transaction determine what is required.

What are you paying for? If you are paying for merchandise, then there is no reporting required. If you are paying for services, rent or royalties, then payment may be subject to withholding and reporting, depending on the “source” of the income.

With regard to services, a payment is U.S.-source income subject to 1042-S reporting and withholding if the services were performed in the U.S. Canada does have a tax treaty with the U.S., and so the vendor can claim exemption from withholding under the tax treaty—individuals claim the treaty on form 8233; entities claim it on the W-8BEN-E.  But it appears from your question that the work was done in Canada, in which case the payment is non-U.S. source income, and therefore not subject to reporting and withholding.

On The Accounts Payable Network, under AP Compliance Suite >> 1099/1042-S/W-9/W-8 >> see the section entitled 1042-S Reporting. Here you will find articles addressing foreign payments. We suggest you start with:

Error-free Payments to Non-U.S. Persons
Guide to Foreign Payments

There is also information on tax treaties in the section. Also see the Forms W-9 and W-8 section.

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