6 October 2017 APFF Roundtable Q. 8, 2017-0719491C6 F - Production of NR4 forms
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 ITA?
Position: Yes.
Reasons: The reporting requirement under 202(1) ITR is independent from the withholding requirement under Part XIII or XIII.2 ITA. 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 202(1) ITR, there is a requirement to file an information return (i.e. NR4) even though the amount paid was not subject to withholding under Part XIII or XIII.2 ITA.
APFF FEDERAL TAX ROUNDTABLE 6 OCTOBER 2017
APFF CONFERENCE 2017
Question 8
Form NR4 filing obligation
In the past, the CRA Guide T4061 NR4 - Non-Resident Tax Withholding, Remitting and Reporting stated that an information return was required for amounts paid or credited under Part XIII if they were subject to withholding under that Part. However, more recent versions of this Guide appear to suggest that an information return must be filed in respect of the amounts described in subsection 202(1) that are paid or credited by a resident of Canada to a non-resident person whether or not they are subject to Part XIII tax.
Question to the CRA
Can the CRA clarify the filing requirements for amounts paid or credited by Canadian residents to non-residents?
For example, does a person resident in Canada have an obligation to file an information return in respect of interest payments to a person with whom it is dealing at arm's length if that interest is not subject to Part XIII tax?
CRA response
As stated by the CRA at the IFA 2017 International Taxation Conference, the filing requirement under ITR subsection 202(1) is independent of the obligations to withhold and remit Part XIII and XIII.2 tax. Where a person resident in Canada pays or credits, or is deemed under Part I, XIII or XIII.2 of the Act to pay or credit, to a non-resident person an amount as, on account or in lieu of payment in whole or in part of an amount described in paragraphs 202(1)(a) to (h) of the ITR, the CRA is of the view that the resident person has an obligation to file an information return (i.e., an NR4 slip) in respect of that amount, whether or not the amount is subject to tax under Parts XIII or XIII.2 of the Act. Thus, in the above example, the resident of Canada who has paid or credited an amount as interest to a non-resident person with whom the resident is not dealing at arm's length would have an obligation to file an information return, regardless of whether or not that amount is subject to Part XIII tax. The CRA is also of the view that this position applies to any other amount described in ITR subsection 202(1).
It is also important to note that the Minister of National Revenue has not waived this filing requirement pursuant to the authority to do so conferred under ITA subsection 220(2.1).
Hugo Gravel
Nicolas Bilodeau
October 6, 2017
2017-071949
Response prepared in collaboration with:
Phil Kerwin
Collection and Audit Branch
Daryl Rutz
Assessment, Benefit and Service Branch