September 10, 2015 – The performing arts tax working group spearheaded by CAPACOA submitted comments in response to a consultation on proposed changes to non-resident taxation.
In July, the Department of Finance announced a consultation on draft legislative proposals that would implement certain tax measures from the 2015 federal budget. These include a measure intended at streamlining withholding requirements for non-resident employers, such as ballet companies whose performers are paid staff rather than contractual workers.
The working group had adressed a letter to the Minister of Revenue on this matter, and welcomed the opportunity to provide input on the legislative proposals:
“We are truly appreciative of the amendment. An exclusion from the requirement to file T4-type returns is precisely the kind of administrative relief that non-resident companies need,” stated the comments letter.
The proposed changes will however only apply to companies based in the United States, because artists from other countries are subject to an exclusion based on Article 17 of the OECD Model Tax Convention. In spite of this limitation the consultation gave our working group the opportunity to make the case for several amendments that could reduce the administrative burdens associated with Regulation 102 and Regulation 105 withholding.
When the federal election is over and a new government is formed, the working group will to continue to stress upon the new ministers of Finance and Revenue the need to implement changes to international taxation legislation and regulations.
Other Development of Note: Enforcement of Penalties
Over the last year, there have been a number of cases where non-resident artists and companies were assessed penalties for failure to file a T1 or T2 tax return. Such penalties are bound to create an added layer of complexity should the non-resident artist or company have additional Canadian engagements in the future. Canadian presenters are therefore advised to inform any non-resident they hire of their filing requirements.
Read more about international taxation.
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