Final answer:
Even if an employee is not working on an employer's premises and is paid from outside Canada, they must pay federal tax obligations including Social Security and Medicare taxes. Independent contractors carry the full burden of these taxes, whereas normally these are split between an employer and an employee. Owners of a corporation pay corporate income tax, individual income tax, and payroll tax on wages.
Step-by-step explanation:
If an employee does not work on an employer's premises and is paid from the employer's business located outside Canada, the employee may not pay provincial tax, but they are still responsible for federal tax obligations. In the context of the United States, an independent contractor who does not work on an employer's premises and instead may receive a 1099 tax statement would have to pay both the employee and employer portions of payroll taxes, which include Social Security at 6.2% and Medicare at 1.45%. These payroll taxes are usually split between employers and employees, but for independent contractors, the responsibility falls entirely on them.
Furthermore, if the individual also owns a corporation and is the sole employee, different types of federal tax that have to be paid include corporate income tax on the corporation's profits, individual income tax on personal salary, and payroll tax on the wages. It's important to note that while federal tax requirements are consistent, actual tax rates and specific obligations may vary depending on country-specific laws and regulations.