Who We Help · Home Care Agencies · Cross-Border Tax
Home care cross-border tax: usually one file — the cheque to your US franchisor
An independent home-care agency with local caregivers and local clients has, honestly, no cross-border tax file — and we will not invent one. The exception is structural: several of the big home-care brands franchising across Ontario are US-headquartered, and the moment a royalty crosses the border you become a Canadian withholding agent with monthly deadlines and an HST cost most franchisees never budgeted.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
Most agencies have an empty border file — franchisees are the exception
Care happens in the client's living room, staff live within driving distance, and revenue comes from Ontario Health atHome contracts and local private-pay families — none of that touches the US. What crosses the border, when anything does, is the franchise relationship: Home Instead and Right at Home, for example, are US-headquartered systems with Ontario territories, and franchise fees flowing south create real Canadian obligations for the franchisee who pays them.
The first move is reading the agreement to confirm who you actually pay. Some brands operate through a Canadian master franchisee, and royalties paid to a Canadian entity carry no withholding at all. Royalties paid to the US parent do — and the duties are yours, not the franchisor's.
Royalties to a US franchisor: withhold 10 percent, remit monthly, slip annually
Franchise royalties paid to a US resident face Part XIII withholding — 25 percent under Canadian law, reduced to 10 percent by the Canada-US treaty once you hold a completed Form NR301 from the franchisor. You deduct the tax from each payment, remit it by the 15th of the following month, and report the year on NR4 slips due at the end of March. Skip any step and CRA assesses the tax against you as payer, with penalties and interest, whether or not the franchisor ever settles up.
Then read for the gross-up clause. Many US agreements entitle the franchisor to receive its royalty free and clear of Canadian tax, which quietly shifts the withholding cost onto you — a 5 percent royalty with a gross-up is not a 5 percent royalty, and the difference belongs in your pricing model from day one.
The HST nobody budgets: self-assessment inside an exempt business
Government-funded home care is generally HST-exempt, and exempt revenue earns no input tax credits. That combination bites twice at the border: you cannot recover HST on what you buy, and imported services and rights — the royalty itself, the brand licence, a US scheduling platform — require you to self-assess HST to the extent they serve exempt activities. An agency with a real private-pay taxable stream recovers a slice; a mostly-funded agency recovers almost nothing, so every US fee should be budgeted gross.
| What you pay the US system | Income-tax withholding | HST reality |
|---|---|---|
| Ongoing royalty on gross revenue | Part XIII — 10 percent with NR301 on file, 25 without | Self-assess to the extent of exempt use; nothing comes back |
| Brand or ad-fund contribution | Often treated like the royalty — the agreement wording decides | Same self-assessment logic applies |
| Franchisor trainer on site for launch or audits | Regulation 105 — 15 percent from the service fee, T4A-NR slip | A holdback on income account, not a sales-tax event |
| US scheduling or care-management software | Treaty takes software payments to nil — keep the paperwork | Self-assessed HST still applies to the subscription |
| Remote support billed from the US | None — no services performed in Canada | Self-assessment again, to the extent it serves exempt care |
Where the real money questions live
Worker classification, not the border, is the exposure that can sink a home-care agency: PSWs paid as contractors on T4A who work set shifts under your scheduling and supervision look like employees to CRA and WSIB, and a reclassification bill covers back CPP, EI and premiums at agency scale. That file — plus the wage grids, statutory holiday math and ROE discipline of a payroll-heavy business — lives in our home care payroll page. When a franchise agreement lands on your desk, we price the withholding and the self-assessed HST before you sign, alongside the full toolkit at cross-border tax services. Boutique, cloud-first, fees fixed after a discovery call.
Source: CRA — T4061, NR4 Non-Resident Tax Withholding, Remitting, and Reporting.
Common questions.
What do we withhold on royalties to our US franchisor?
Ten percent under the Canada-US treaty, provided you hold a completed Form NR301 from the franchisor — 25 percent without it. Remit by the 15th of the month after each payment and file NR4 slips after year-end; CRA collects shortfalls from you, not the franchisor.
Our franchise agreement has a gross-up clause. What does that cost us?
It means the franchisor receives its royalty free of Canadian tax and you absorb the withholding on top. Price the true rate — royalty plus the grossed-up tax plus unrecoverable HST — into your margins before signing, not after.
Do we really owe HST on a royalty paid to a US company?
Usually yes, by self-assessment. Because government-funded home care is exempt, the agency is not using the licence in commercial activities, so it must self-assess HST on the imported right and cannot recover it as an input tax credit.
Related reading
One border payment, handled properly.
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