July 10, 2018 – Last month, the Canada Revenue Agency announced a new simplified taxation process for non-resident artists. As we pointed out, this simplified process is a step in the right direction, but more streamlining is still needed.
Getting Simplified Taxation Right
The simplified Regulation 105 is a direct outcome of policy development discussions conducted by the Performing Arts Tax Working Group, but it only partially responds to the recommendations of the Working Group and there remains much streamlining to achieve. Moreover, aspects of the policy require clarification:
- Does it apply to non-resident payers?
- Does it apply to unincorporated groups?
- What about non-performing personnel?
The Performing Arts Tax Working Group captured these questions and several other observations into a Feedback Brief that was submitted to the Canada Revenue Agency yesterday. This Feedback Brief also makes the case for exempting deposits from the withholding obligation. This is a long-standing request of the Working Group.
With the summer vacation, it may take a few months for the CRA to prepare answers. We will keep you informed as they come in.
Aligning Export Investments with International Taxation
Our policy development efforts from the last three years enabled us to acquire a better understanding of the scope – and limitations – of Canada Revenue Agency’s mandate. Through our work with the Canada Revenue Agency, we have become acutely aware that the source of the problems with non-resident taxation is to be found and remedied in Canada’s tax treaties.
CAPACOA therefore developed on behalf of the Performing Arts Tax Working Group a White Paper on International Taxation of Entertainers. This White Paper highlights options and exclusions that should be considered by the government of Canada and its trade partners in the negotiation of new tax treaties or in the renegotiation of existing treaties.
This White Paper was submitted to the Minister of Finance and the Minister of Canadian Heritage. It was accompanied by a letter stressing the need to align the non-resident taxation regime and the Creative Export Strategy:
“An effective, efficient and smart non-resident taxation regime is needed to adequately support rather than hinder the federal government’s Creative Export Strategy.”
This is the beginning of a new chapter for the Performing Arts Tax Working Group (and likely not a short one).
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