January 13, 2016, No. 2016-02.Non-Canadian resident employers who have non-resident employees working in Canada can now apply to be eligible for the new exception from the withholding tax requirements under Regulation 102 of the Income Tax Act. This exception takes effect January 1, 2016.
The CRA does not anticipate giving retroactive approvals but as a transitional measure, all applications for employer eligibility the CRA receives by February 1, 2016 will be considered for a retroactive effective date of January 1, 2016. As such, employers who want to apply the exception to their eligible employees from January 1, 2016 must act quickly to meet the February 1 deadline to submit their applications.
The Regulation 102 rules require employers to withhold Canadian tax on income earned in Canada by their non-resident employees. The new exception to these rules will be available for qualifying employers and employees. Employers can now apply for eligibility for the exception using Form RC 473, Application for Non-Resident Employer Certification, which the CRA released on January 12, 2016. The CRA also released new guidance on the application process.
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Information is current to January 12, 2016. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.