Principal Issues: Does Reg. 202 apply in respect of amounts computed on a cash basis or on an accrual basis?
Position: Generally, amounts paid or credited.
Reasons: Wording of the Reg.
Financial Strategies and Financial Instruments Roundtable, 11 October 2013
2013 APFF Conference
Question 6
Form NR4
Section 202 ITR provides for the filing of Form NR4 for certain amounts paid to or credited to a non-resident of Canada.
The preamble to subsection 202(1) ITR states exactly:
“In addition to any other return required by the Act or these Regulations, every person resident in Canada shall make an information return in prescribed form in respect of any amount that the person 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 as, on account or in lieu of payment of, or in satisfaction of:” (our emphasis)
Question to the CRA
Is the CRA of the view that the amounts covered by section 202 ITR are those received by the non-resident on a cash basis (amount paid) or on an accrual basis (accrued amount)? In the case, for example, of interest on a guaranteed investment certificate, what should be reported on Form NR4: only interest paid or accrued interest as well?
CRA response
Any information return required to be filed in prescribed form under section 202 ITR relates to any amount referred to in the applicable provision that is paid or credited, or is deemed under Part I, XIII or XIII.2 of the ITA to have been paid or credited to, or for the benefit of, a person. The filing requirements under these provisions are not based on the accounting method used by the recipient for the amount for which the information return is made.
Yannick Roulier
(613) 957-2134
2013-049370