The rules seem to work exactly the same both ways. A Canadian pilot licence holder cannot fly a US registered aircraft in US airspace, and a US licence holder cannot fly a Canadian registered aircraft in Canadian airspace (but each can fly a plane registered in their home country in the other's airspace).
However, the US and Canada have a reciprocal system of
Foreign Based Licence Validation. This means the holder of a licence in one country can apply to have their licence validated in the other to allow them to exercise the same (non-commercial, non-paying) flight privileges - eg. Private, multi, seaplane, whatever. It means one does not need to write any exams or take another medical, as long as your home country licence, medical, etc. stays current, with the FBLV you are good to go to fly planes registered in the other country in their airspace.
Both countries have the same bureaucratic fill out the forms thing to get the FBLV though. Your best bet is to call Transport Canada's Civil Aviation Communications Centre at 1-800-305-2059. Give yourself a reasonable amount of time to get this done. Remember when they get an application for an FBLV the FAA checks with Transport Canada, and Transport Canada checks with the FAA for verification of home country licence status - so no matter which way you are going here you are dealing with TWO bureaucracies.
The Canadian regulations that cover this are in 401.7 of the CARs:
Validation of Foreign Licences
- 401.07 (1) Subject to section 6.71 of the Act, if the holder of a foreign flight crew licence issued by a contracting state other than Canada meets the applicable requirements set out in the personnel licensing standards and does not reside in Canada, the Minister shall, on receipt of an application submitted in the form and manner set out in those standards, issue a foreign licence validation certificate to the holder of the licence.
- (2) The Minister shall, in accordance with the personnel licensing standards, specify in a foreign licence validation certificate the privileges that may be exercised by the holder of the certificate.