| 24(1) | 901731 |
| R.S. Biscaro | |
| (613) 957-2122 |
19(1)
October 1, 1990
Dear Sirs:
This is in response to your letter of July 25, 1990 in which you request our comments concerning the withholding requirements of 24(1) As it is a question of fact as to whether an individual is a resident of the Philippines and a non-resident of Canada (refer to IT-221R2) we have assumed, for purposes of our reply, that the individual in question is a resident of the Philippines and a non-resident of Canada. You describe the facts as follows:
24(1)
24(1)
You have concluded that the payments in question, given that they are taxable pursuant to paragraph 6(1)(f) of the Act, are also taxable under Article XV of the Canada-Philippines Income Tax Convention (the Convention). In this respect you questioned whether the Company being the insurer and not the employer as referred to in Regulation 102 in respect of the payments made to the individual, is required to withhold tax from the disability payments.
Paragraph 153(1)(a) of the Act refers to every person paying at any time in a taxation year salaries or wages or other remuneration and that person shall deduct or withhold there from such amount as determined in accordance with prescribed rules and shall remit that amount to the Receiver General. Section 101 of the Regulations refers to every person who makes a payment described in subsection 153(1) and that reason shall deduct or withhold there from and remit to the Receiver General. In this respect Regulation 100(1) defines employer for purposes of Part I of the Regulations to mean any person paying remuneration. From the foregoing, we conclude that the Act imposes withholding requirements on any person paying remuneration and that the Company being a person as defined in subsection 248(1) for purposes of subsection 153(1) and Regulation 101 is also an employer for purposes of Regulation 102 which determines the amount to be withheld from any payment of remuneration to an employee.
It is our view that the non-resident individual in question is taxable in Canada pursuant to the provisions of subsection 2(3), paragraphs 115(1)(a)(v), 115(2)(c), (d) and (e) of the Act. In regard to the Convention, it is our opinion that the exemption from Canadian taxation provided therein pursuant to paragraph 2 of Article XV thereof does not apply.
In conclusion we confirm that the Company is required to withhold taxes pursuant to Regulation 101 and subsection 153(1) of the Act from the payments in question and is required to file the forms prescribed by Regulation 200. In respect of the deductions required, the exempting provisions of Regulation 104(2) are not applicable due to the provisions of paragraph (a) thereof. In addition, paragraph 2 of Article XV of the Convention does not apply to exempt the disability payments to the non- resident individual from taxation in Canada.
We trust that our comments will be of assistance to you.
Yours truly,
for DirectorReorganization and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch