Canada: Withholding tax relief, foreign employers of cross-border workers

Canada provides tax relief for foreign employers

Non-Canadian resident employers with non-resident employees working in Canada can now apply to be eligible for a new exception from the withholding tax requirements under Regulation 102 of the Income Tax Act. This exception is effective 1 January 2016.

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The Canada Revenue Agency (CRA) does not anticipate providing retroactive approvals, but as a transitional measure, all applications for employer eligibility received by the CRA, by 1 February 2016, will be considered for a retroactive effective date of 1 January 2016.

Employers that want to apply the exception to their eligible employees from 1 January 2016 must act quickly to meet the 1 February deadline to submit their applications.

The rules under Regulation 102 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 12 January 2016. The CRA also released new guidance on the application process. 


Read a January 2016 report [PDF 72 KB] prepared by the KPMG member firm in Canada: Foreign Employers of Cross-Border Employees — Apply Now for Canadian Tax Relief

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