Final answer:
When an employee works remotely or is not on the employer's premises, their tax rate is typically determined by the province or territory of their residence, not the location of the employer. Employers are responsible for withholding taxes based on these criteria and remitting them to the appropriate tax authority.
Step-by-step explanation:
If an employee does not work on the employer's premises, the provincial/territorial tax rate that applies to the employee's income is usually determined by the province or territory of the employee's residence. For example, in Canada, an individual is generally taxed by the province or territory where they reside as of December 31 of the tax year. Businesses and corporations are expected to withhold taxes from employees' wages, which are considered advance payment of income tax, as well as contributions to social security and other insurance programs. The exact taxes can include federal, provincial or territorial, and in some regions, municipal taxes.
When an employee works remotely or outside of the employer's location, it does not alter their tax obligations as an individual. Their income tax rate is dependent on residency status rather than the location of the employer's premises. Businesses must remain aware of these requirements and ensure they are deducting the correct amounts and remitting to the correct provincial or territorial authority.