New CRA Non-Resident Forms starting January 1st, 2012.

Well, look how time flies!

The new CRA Non-resident treaty-rate requirements take effect on January 1st, 2012.

Non-residents of Canada who are eligible for benefits under a tax treaty entered into between Canada and another country will now have to complete a declaration or provide equivalent information to avail themselves of any reduced rate of tax or exemption provided under the relevant tax treaty instead of relying on their domicile.

The Canada Revenue Agency (CRA) recently released three declaration forms to be used by non-residents of Canada for this purpose, namely;

Form NR301 – Declaration of eligibility for benefits under a tax treaty for a non-resident taxpayer.
http://www.cra-arc.gc.ca/E/pbg/tf/nr301/nr301-10e.pdf

Form NR302 – Declaration of eligibility for benefits under a tax treaty for a partnership with non-resident partners
http://www.cra-arc.gc.ca/E/pbg/tf/nr302/nr302-10e.pdf

Form NR303 – Declaration of eligibility for benefits under a tax treaty for a hybrid entity.
http://www.cra-arc.gc.ca/E/pbg/tf/nr303/nr303-10e.pdf

What information is the CRA now looking for?

Non-residents of Canada must disclose on these forms the following information:
(i) Legal name of non-resident
(ii) Mailing address of non-resident
(iii) Confirmation of type of non-resident (i.e., individual, corporation or trust)
(iv) Foreign and Canadian tax identification numbers if any
(v) Country of residence for treaty purposes
(vi) Type of income for which the non-resident is eligible for treaty benefits (e.g., interest, dividends, royalties, trust income, income from business carried on in Canada or gains from disposition of taxable Canadian property).

Where does the form go?

The non-resident must immediately notify the payer of any such income, or partnership or hybrid entity through which the income is derived, so they can be given the treaty rate.

Does this form expire?

Yes, These forms expire on the earlier of any change in the non-resident’s eligibility for treaty benefits or three years from the end of the calendar year in which this form is signed and dated.

What onus is now on the payor?

For its part, a Canadian resident payer is instructed NOT to apply a reduced Canadian withholding tax rate under Part XIII where:
(i) The non-resident has not provided the Form or equivalent information and such payer is not sure if the reduced rate applies,
(ii) The Form is not complete
(iii) A tax treaty is not in effect between Canada and the non-resident’s country of residence; or
(iv) Such payer has reason to believe that the information provided in the non-resident’s declaration is incorrect of misleading.

Who is liable?

If the non-resident does not complete the form and the treaty rate is given, the payor is held liable by the CRA for the difference between the treaty rate and the non-treaty rate, so usually 10%.

Big changes!

How are you preparing for them?

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Author: Warren Orlans

Welcome to inTAXicating. My name is Warren Orlans and this is my blog. With over 17-years experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and the rest working in the private sector at large financial institutions responsible for resolving tax issues for corporations and individuals and the Canadian lead for a large US bank on FATCA implementation. My tax career began pretty much out of university at the CRA, in Collections, where I moved up, across, over and up again through their division with stops in Enforcement, Taxpayer Relief (then Fairness), Audit, Directors Liability, Training, Mentoring, GST, GST/HST, Payroll, Corporate Tax, Personal tax, and probably much more. If you have a collections, compliance or audit issue with the CRA, MRQ, IRS or with the CRTC, WSIB or any aspect of those agencies, inTAXicating is the place you need to contact. inTAXicating has entered into a strategic partnership with Goldhar and Associates, to create Goldhar Tax Solutions. This partnership allows my team to include amazing tax lawyers, insolvency practitioners, mortgage brokers, debt counselling experts and much more. When dealing with governments, knowledge is power. We possess strong understanding of government so we know what the next step is before the government does. When you have a collections problem with the CRA, do you hire a graphic artist? No, you get a former collector who trained the staff, and who worked as a resource officer for 5 years. Then you know you are on the right track to resolving your tax problem(s). Others offer suggestions. We offer solutions! tax@goldhar.ca

6 thoughts on “New CRA Non-Resident Forms starting January 1st, 2012.”

  1. It’s the ambiguity of this system that is causing confusion and the lack of definitive details. The US QI regime is overly strict and detailed but at least you know where you stand.
    Does the sole beneficiary of a flow through entity (a life interest trust) have to complete both forms NR301 and NR303, or can the (non-beneficiary) trustee complete the forms or would the NR303 on it’s own suffice?
    The accompanying worksheets with the NR303 could also be clearer, in the above example do both have to be completed?

    Like

  2. My spouse and I absolutely love your blog and find nearly all of your post’s to be exactly I’m looking for.
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    Like

  3. I have read so many articles on this topic and I cannot believe how it fizzled when it came in. I was expecting discussions, and a huge uproar but I guess as Canadians we take it and move on.

    Did you see this being so small?

    Like

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