Subsection 102(1)
Cases
Paquet v. Canada (AG), 2013 DTC 5096 [at 6006], 201 FC 158
The taxpayer's T4 slip from a taxation year was missing from CRA's systems. Boivin J found that the Minister acted reasonably in refusing to credit the taxpayer for deductions allegedly reflected in the missing T4 slip. To establish her right to be credited for these amounts, she had to show that such amounts had actually been deducted - for example, a bank statement would readily have established that her payments were reduced by the appropriate withholding amounts. It was reasonable for the Minister to require such corroborating evidence.
Administrative Policy
16 June 2014 T.I. 2013-0515431E5 - International traffic and airline enterprise
During peak season, Canco, which transports passengers to destinations inside and outside Canada, is supplied planes and non-resident pilots and crew by an arm's length U.K. resident ("Forco") to transport Canco's passengers. Forco is a U.K. resident under the Canada- U.K. Convention as well as being effectively managed and controlled there, and does not have a permanent establishment in Canada. The pilots and crew are employed by Forco and are not present in Canada for more than 183 days in any 12 month period.
Notwithstanding that the U.K.-resident employees may be exempt from Canadian tax under Art. 15, para. 2, the withholding obligation under s. 153(1)(a) and Reg. 102 "extends to non-residents of Canada employing non-residents for services performed in Canada, and therefore to Forco's crew members in such circumstances." However, here all of the conditions provided in Art. 15, para. 2 appear to be met so that Forco's crew members will generally be entitled to obtain a waiver under Reg. 102 (Form R102-J).
22 March 2012 Memorandum 2012-0436311I7
Respecting a query as to whether 2010-0338561I7 applied to an employer who does not directly or indirectly do business in Canada, the Directorate stated:
It is clear that a non-resident employer which has hired a Canadian resident individual to render services only in the US, has an obligation to withhold the Canadian payroll deductions pursuant to paragraph 153(1)(a) of the Act (regardless of whether or not the non-resident employer directly or indirectly carries on business in Canada)....Paragraph 102(1)(a) of the Regulations states that an employer must deduct and withhold Canadian income tax from any payment of remuneration made to an employee where the latter reports for work at an establishment of the employer, including an establishment locted outside Canada...The non-resident employer is not relieved of its obligation to withhold Canadian payroll deductions by the fact that it has withheld US payroll deducitons from the wages it pays the Employee.
1999 TEI Roundtable Q. , 1999-0007810
Although directors fees are salaries and wages for tax purposes and, therefore, are subject to Article XV of the Canada-U.S. Convention rather than Article XIV, it is RC's administrative practice to permit fees paid to a non-resident director for services rendered in Canada to be withheld at the flat rate of 15% specified in Regulation 105.
IC75-6R2 "Required Withholding from Amounts Paid to Non-Resident Persons Performing Services in Canada"
Articles
Anu Nijhawan, "Source Withholdings: Non Resident Employees 'Visiting' Canada", Taxation of Executive Compensation and Retirement, Vol. 15, No. 9, May 2004, p. 412.
Forms
R102-J "Regulation 102 Treaty Based Waiver Application - Joint Employer/Employee"
Use this form if you are a non-resident employee seeking treaty-based tax relief from Regulation 102 withholding while providing employment services in Canada during the calendar year and you are a resident of:
- the United States and are expected to earn no more than CAN $10,000;
- or another country that has a tax treaty with Canada and are expected to earn no more than CAN $5,000.