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?

Advertisements

Author: Warren Orlans

Welcome to inTAXicating. My name is Warren Orlans and this is my blog. I have been writing this blog since 2008 to provide clarity around taxation issues which I feel should have been explained somewhere - preferably by the CRA. I have over 20-year's experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and 5-years working in the private sector Managing the tax departments for large financial institutions. It was at that point when I realized that people were coming to my blog seeking advice, and asking me to assist them with their tax issues, so I opened up my own business and started helping people deal with issues relating to the CRA. 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, inTAXicating is the place you need to contact. inTAXicating works in strategic partnership with amazing tax lawyers, insolvency practitioners, mortgage brokers, debt counselling experts and much more. If you have a tax question, feel free to ask in the comments, or email me at either info@intaxicating.ca, or intaxicatingtaxservices@gmail.com.

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.
    Would you offer guest writers to write content
    available for you? I wouldn’t mind composing a post or elaborating on many of the subjects you write with regards to here. Again, awesome website!

    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

Leave a Reply to CA/CGA/CMA Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s