| October 24, 1990 | |
| Non-Resident Taxation Division | Resource Industries |
| K. Hillier, Director | Section |
| J. Shaw | |
| Attention: R.F. Power | 957-8968 |
| Their File HDB9142-4-1 | |
| Our File 7-902901 |
SUBJECT: 24(1) Non-resident information package
This is in reply to your October 8, 1990 memorandum requesting our comments on the information package you are preparing to assist non-resident and resident taxpayers making payments to non-residents in complying with our tax laws.
We have little concern with the technical content of the package, but had, nonetheless, a few comments, which are:
1. It seems prudent to add the standard disclaimer that the comments in the package are an explanation of various provisions of the tax law, have no legal authority, and are not a substitute for the revelant statutory provisions.
2. A package of this nature must be somewhat general, but we would have thought it likely that a good deal of 24(1) activity being conducted by non-residents would be by large multi-national companies which would have tax advisors both outside and within to assist in their compliance efforts. As such, the material will probably be most beneficial to individuals and owners or managers of smaller corporations. It might be easier for such parties to find out what they have to do to comply with our laws by asking a series of questions less broad-based than "who is taxable" such as who they are (non-resident or resident, corporation, partnership, or natural person), what they will be doing (paying salaries, carrying on a business activity, being an employee, paying amounts to non-residents) and then discussing the implications of the party's status and activity. This may require some repetitions of information, but would not require the reader to read the entire booklet item by item to find out what must be done.
3. 21(1)(a)
4. It may be advisable to elaborate on the word "person" in the first paragraph under the heading "Who is Taxable" on page 2. Person has a broader meaning in the tax law than it does to a layman. While a layman might anticipate that a corporation carrying on business here would be taxed by us, it seems preferable to avoid the possibility the reader may be "misled".
5. We would be inclined to add a short paragraph on the "Branch Tax", as this is apt to be something an unsophisticated corporate taxpayer has not experienced and may not anticipate.
6. Perhaps the requirement to individuals to obtain a social insurance number in the circumstances set out in subsection 237(1) of the Income Tax Act should be noted if we are to discuss deemed residents and individuals employed in Canada. The employer's responsibility in this regard, and Information Circular 82-2R could also be noted. The comments regarding the TD1 at page 2 may not be sufficiently direct on this point and would not apply in any event to a situation in which the individual was self-employed.
7. Paragraph 4 on page 3 states that certain payments "will be reported". It could say by whom.
8. The reference to "section 4 above" in paragraph 5 under "Withholding Requirements" is confusing. It may cause the reader to reread paragraph 4 of the same discussion, to no particular end.
Acting/DirectorBilingual Services and Resource Industries DivisionRulings Directorate