Canco pays management or administration fees (“Reimbursement Payment”) to its foreign parent ("Forco") as a reimbursement of expenses incurred by Forco on Canco’s behalf. The Reimbursement Payment satisfies s. 212(4)(b), so that no witholding applies. What reporting is required? CRA stated:
[D]espite the fact that the Reimbursement Payment is exempt from Part XIII tax by virtue of paragraph 212(4)(b) of the Act, a payment to a non-resident for a management or administration fee or charge would require the filing of information returns, specifically:
- Form NR4 “Statement of Amounts Paid or Credited to Non-Residents of Canada”;
- Form NR4SUM “Summary of Amounts Paid or Credited to Non-Residents of Canada”; and
- Schedule 29 “Payments to Non-Residents”.
Information return T106 “Information Return of Non-Arm’s Length Transactions with Non-Residents” must also be filed by a “reporting person” in respect of a “reportable transaction” in which a reporting person and a non-resident non-arm’s length person participated in the year, pursuant to subsection 233.1(2)