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Global Tax Network (GTN)-Canada: Changes to the Non-Resident withholding Relief Process

February 2016 Newsletter

18 February 2016

Further to the changes proposed in 2015, on January 12, 2016 the Canada Revenue Agency (CRA) released information on the process for providing ‘qualifying non-resident employers’ relief from the Canadian income tax withholding requirements on remuneration paid to ‘qualifying non-resident employee’ for services performed in Canada.

The employer must ensure the following actions are taken for all qualifying employees once the application is approved:

  • Track and record the number of days each qualifying non-resident employee is working or present in Canada and the income attributable to their Canadian work days;
  • Determine if employees are resident in a country with which Canada has a treaty;
  • Evaluate and determine whether the employees meet ‘qualifying non-resident employee’ criteria;
  • Obtain a Canadian Business Number;
  • File annual T4 slips and summary along with information returns for those employees who provide employment services in Canada, either if qualified for the withholding exemption or non-qualified (no T4 reporting is required if exempt qualifying non-resident employee’s Canadian source income is under $10,000);
  • Make its books and records available to the CRA for inspection as requested.

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