Principal Issues: Is there a reporting obligation with respect to amounts paid or credited by a person resident in Canada to a non-resident person, if the amount is not subject to withholding under Part XIII?
Position: Yes.
Reasons: The reporting requirement under subsection 202(1) of the Regulations is independent from the withholding and remitting requirement under Parts XIII and XIII.2. Where a resident of Canada pays or credits, or is so deemed, to a non-resident person on account or in lieu of payment of, or in satisfaction of, any amount described in paragraphs 202(1)(a) to (h) of the Regulations, there is a requirement to file an information return (i.e. NR4) even though the amount paid was not subject to withholding tax under Part XIII or XIII.2 of the Act.
2017 International Fiscal Association Conference
CRA Roundtable
Question 8 – NR4 reporting for non-taxable amounts
In prior years, CRA Guide T4061, NR4 – Non-Resident Tax Withholding, Remitting, and Reporting commented that an information return is required with respect to amounts paid or credited under Part XIII that are subject to withholding under Part XIII. However, more recent versions of this publication appear to suggest that an information return is required with respect to amounts paid or credited by a resident of Canada to a non-resident person and identified in subsection 202(1) of the Income Tax Regulations (the “Regulations”), regardless of whether the payment was subject to Part XIII withholding.
Can the CRA clarify the reporting obligations with respect to amounts paid or credited by a person resident in Canada to a non-resident person? For example, is a person resident in Canada required to file an information return with respect to interest paid or credited by that person to an arm’s length non-resident person if the interest is not subject to Part XIII tax?
CRA Response
The reporting requirement under subsection 202(1) of the Regulations is independent from the withholding and remitting requirements under Parts XIII and XIII.2. Where a person resident in Canada pays or credits, or is deemed under Part I, XIII or XIII.2 to pay or credit, to a non-resident person on account or in lieu of payment of, or in satisfaction of, any of the amounts described in paragraphs 202(1)(a) to (h) of the Regulations, it is the CRA’s view that there is a requirement to file an information return (i.e. NR4) even if the amount paid was not subject to tax under Part XIII or XIII.2 of the Act. Accordingly, in the example described above, there is a reporting obligation with respect to an amount paid or credited on account of interest by a resident of Canada to an arm’s length non-resident person, regardless of the fact that the interest was not subject to Part XIII withholding. In the CRA’s view, similar reasoning would apply to other similar payments referred to in section 202 of the Regulations.
It is important to note that the filing requirements under section 202 of the Regulations have not been waived by the Minister under subsection 220(2.1) of the Act.
Gillian Godson
Bob Naufal
2017-069114
April 26, 2017
Response prepared in collaboration with:
Phil Kerwin
Collections and Verification Branch
Daryl Rutz
Assessment, Benefit and Service Branch