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Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Full Document:  

Act current to 2021-12-23 and last amended on 2021-12-17. Previous Versions

PART XIIITax on Income from Canada of Non-resident Persons (continued)

Marginal note:Withholding and remittance of tax

  •  (1) When a person pays, credits or provides, or is deemed to have paid, credited or provided, an amount on which an income tax is payable under this Part, or would be so payable if this Act were read without reference to subparagraph 94(3)(a)(viii) and to subsection 216.1(1), the person shall, notwithstanding any agreement or law to the contrary, deduct or withhold from it the amount of the tax and forthwith remit that amount to the Receiver General on behalf of the non-resident person on account of the tax and shall submit with the remittance a statement in prescribed form.

  • Marginal note:Exception - corporate immigration

    (1.1) Subsection (1) does not apply in respect of a dividend deemed to be paid under paragraph 128.1(1)(c.1) by a corporation to a non-resident corporation with which the corporation was dealing at arm’s length.

  • Marginal note:Idem

    (2) Where an amount on which an income tax is payable under this Part is paid or credited by an agent or other person on behalf of the debtor either by way of redemption of bearer coupons or warrants or otherwise, the agent or other person by whom the amount was paid or credited shall, notwithstanding any agreement or law to the contrary, deduct or withhold and remit the amount of the tax and shall submit therewith a statement in prescribed form as required by subsection 215(1) and shall thereupon, for purposes of accounting to or obtaining reimbursement from the debtor, be deemed to have paid or credited the full amount to the person otherwise entitled to payment.

  • Marginal note:Idem

    (3) Where an amount on which an income tax is payable under this Part was paid or credited to an agent or other person for or on behalf of the person entitled to payment without the tax having been deducted or withheld under subsection 215(1), the agent or other person shall, notwithstanding any agreement or law to the contrary, deduct or withhold therefrom the amount of the tax and forthwith remit that amount to the Receiver General on behalf of the person entitled to payment in payment of the tax and shall submit therewith a statement in prescribed form, and the agent or other person shall thereupon, for purposes of accounting to the person entitled to payment, be deemed to have paid or credited that amount to that person.

  • Marginal note:Regulations creating exceptions

    (4) The Governor in Council may make regulations with reference to any non-resident person or class of non-resident persons who carries or carry on business in Canada, providing that subsections 215(1) to 215(3) are not applicable to amounts paid to or credited to that person or those persons and requiring the person or persons to file an annual return on a prescribed form and to pay the tax imposed by this Part within a time limited in the regulations.

  • Marginal note:Regulations reducing deduction or withholding

    (5) The Governor in Council may make regulations in respect of any non-resident person or class of non-resident persons to whom any amount is paid or credited as, on account of, in lieu of payment of or in satisfaction of, any amount described in any of paragraphs 212(1)(h), (j) to (m) and (q) reducing the amount otherwise required by any of subsections (1) to (3) to be deducted or withheld from the amount so paid or credited.

  • Marginal note:Liability for tax

    (6) Where a person has failed to deduct or withhold any amount as required by this section from an amount paid or credited or deemed to have been paid or credited to a non-resident person, that person is liable to pay as tax under this Part on behalf of the non-resident person the whole of the amount that should have been deducted or withheld, and is entitled to deduct or withhold from any amount paid or credited by that person to the non-resident person or otherwise recover from the non-resident person any amount paid by that person as tax under this Part on behalf thereof.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 215
  • 1994, c. 7, Sch. II, s. 177
  • 1999, c. 22, s. 77
  • 2001, c. 17, s. 174
  • 2013, c. 34, s. 19

Marginal note:Alternatives re rents and timber royalties

  •  (1) If an amount has been paid during a taxation year to a non-resident person or to a partnership of which that person was a member as, on account of, in lieu of payment of or in satisfaction of, rent on real or immovable property in Canada or a timber royalty, that person may, within two years (or, if that person has filed an undertaking described in subsection (4) in respect of the year, within six months) after the end of the year, file a return of income under Part I for that year in prescribed form. On so filing and without affecting the liability of the non-resident person for tax otherwise payable under Part I, the non-resident person is, in lieu of paying tax under this Part on that amount, liable to pay tax under Part I for the year as though

    • (a) the non-resident person were a person resident in Canada and not exempt from tax under section 149;

    • (b) the non-resident person’s income from the non-resident person’s interest in real property, or real right in immovables, in Canada and interest in, or for civil law right in, timber resource properties and timber limits in Canada, and the non-resident person’s share of the income of a partnership of which the non-resident person was a member from its interest in real property, or real right in immovables, in Canada and interest in, or for civil law right in, timber resource properties and timber limits in Canada, were the non-resident person’s only income;

    • (c) the non-resident person were entitled to no deductions from income for the purpose of computing the non-resident person’s taxable income; and

    • (d) the non-resident person were entitled to no deductions under sections 118 to 118.9 in computing the non-resident person’s tax payable under Part I for the year.

  • Marginal note:Idem

    (2) Where a non-resident person has filed a return of income under Part I as permitted by this section, the amount deducted under this Part from

    • (a) rent on real or immovable property or from timber royalties paid to the person, and

    • (b) the person’s share of the rent on real or immovable property or from timber royalties paid to a partnership of which the person is a member

    and remitted to the Receiver General shall be deemed to have been paid on account of tax under this section and any portion of the amount so remitted to the Receiver General in a taxation year on the person’s behalf in excess of the person’s liability for tax under this Act for the year shall be refunded to the person.

  • Marginal note:Idem

    (3) Part I is applicable, with such modifications as the circumstances require, to payment of tax under this section.

  • Marginal note:Optional method of payment

    (4) If a non-resident person or, in the case of a partnership, each non-resident person who is a member of the partnership files with the Minister an undertaking in prescribed form to file within six months after the end of a taxation year a return of income under Part I for the year as permitted by this section, a person who is otherwise required by subsection 215(3) to remit in the year, in respect of the non-resident person or the partnership, an amount to the Receiver General in payment of tax on rent on real or immovable property or on a timber royalty may elect under this section not to remit under that subsection, and if that election is made, the elector shall,

    • (a) when any amount is available out of the rent or royalty received for remittance to the non-resident person or the partnership, as the case may be, deduct 25% of the amount available and remit the amount deducted to the Receiver General on behalf of the non-resident person or the partnership on account of the tax under this Part; and

    • (b) if the non-resident person or, in the case of a partnership, a non-resident person who is a member of the partnership

      • (i) does not file a return for the year in accordance with the undertaking, or

      • (ii) does not pay under this section the tax the non-resident person or member is liable to pay for the year within the time provided for payment,

      pay to the Receiver General, on account of the non-resident person’s or the partnership’s tax under this Part, on the expiration of the time for filing or payment, as the case may be, the full amount that the elector would otherwise have been required to remit in the year in respect of the rent or royalty minus the that the elector has remitted in the year under paragraph 216(4)(a) in respect of the rent or royalty.

  • Marginal note:Optional method of payment

    (4.1) If a trust is deemed by subsection 94(3) to be resident in Canada for a taxation year for the purpose of computing the trust’s income for the year, a person who is otherwise required by subsection 215(3) to remit in the year, in respect of the trust, an amount to the Receiver General in payment of tax on rent on real or immovable property or on a timber royalty may elect in prescribed form filed with the Minister under this subsection not to remit under subsection 215(3) in respect of amounts received after the election is made, and if that election is made, the elector shall,

    • (a) when any amount is available out of the rent or royalty received for remittance to the trust, deduct 25% of the amount available and remit the amount deducted to the Receiver General on behalf of the trust on account of the trust’s tax under Part I; and

    • (b) if the trust does not file a return for the year as required by section 150, or does not pay the tax that the trust is liable to pay under Part I for the year within the time required by that Part, on the expiration of the time for filing or payment, as the case may be, pay to the Receiver General, on account of the trust’s tax under Part I, the amount by which the full amount that the elector would otherwise have been required to remit in the year in respect of the rent or royalty exceeds the amounts that the elector has remitted in the year under paragraph (a) in respect of the rent or royalty.

  • Marginal note:Disposition by non-resident

    (5) If a person or a trust under which a person is a beneficiary has filed a return of income under Part I for a taxation year as permitted by this section or as required by section 150 and, in computing the amount of the person’s income under Part I an amount has been deducted under paragraph 20(1)(a), or is deemed by subsection 107(2) to have been allowed under that paragraph, in respect of property that is real property in Canada — or an interest therein — or an immovable in Canada — or a real right therein —, a timber resource property or a timber limit in Canada, the person shall file a return of income under Part I in prescribed form on or before the person’s filing-due date for any subsequent taxation year in which the person is non-resident and in which the person, or a partnership of which the person is a member, disposes of that property or any interest, or for civil law any right, in it. On so filing and without affecting the person’s liability for tax otherwise payable under Part I, the person is, in lieu of paying tax under this Part on any amount paid, or deemed by this Part to have been paid, in that subsequent taxation year in respect of any interest in, or for civil law any right in, that property to the person or to a partnership of which the person is a member, liable to pay tax under Part I for that subsequent taxation year as though

    • (a) the person were a person resident in Canada and not exempt from tax under section 149;

    • (b) the person’s income from the person’s interest in real property, or real right in immovables, in Canada or interest in, or for civil law right in, timber resource properties and timber limits in Canada, and the person’s share of the income of a partnership of which the person was a member from its interest in real property, or real right in immovables, in Canada or interest in, or for civil law right in, timber resource properties and timber limits in Canada, were the person’s only income;

    • (c) the person were entitled to no deductions from income for the purpose of computing the person’s taxable income; and

    • (d) the person were entitled to no deductions under sections 118 to 118.9 in computing the person’s tax payable under Part I for the year.

  • Marginal note:Saving provision

    (6) Subsection 216(5) does not apply to require a non-resident person

    • (a) to file a return of income under Part I for a taxation year unless, by filing that return, there would be included in computing the non-resident person’s income under Part I for that year an amount by virtue of section 13; or

    • (b) to include in computing the non-resident person’s income for a taxation year any amount to the extent that that amount has been included in computing the non-resident person’s taxable income earned in Canada for that taxation year by virtue of any provision of this Act other than subsection 216(5).

  • (7) [Repealed, 2013, c. 34, s. 349]

  • Marginal note:Restriction on deduction

    (8) For greater certainty, in determining the amount of tax payable by a non-resident person under Part I for a taxation year by reason of subsection 216(1) or 216(5), no deduction in computing the non-resident person’s income or tax payable under Part I for the year shall be made to the extent that such a deduction by non-resident persons is not permitted under Part I.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 216
  • 1994, c. 7, Sch. II, s. 178
  • 1998, c. 19, s. 217
  • 2013, c. 34, ss. 20, 158, 349

Marginal note:Alternative re: acting services

  •  (1) No tax is payable under this Part on any amount described in subsection 212(5.1) that is paid, credited or provided to a non-resident person in a taxation year if the person

    • (a) files with the Minister, on or before the person’s filing-due date for the year, a return of income under Part I for the year; and

    • (b) elects in the return to have this section apply for the year.

  • Marginal note:Deemed Part I payment

    (2) If in respect of a particular amount paid, credited or provided in a taxation year, a non-resident person has complied with paragraphs (1)(a) and (b), any amount deducted or withheld and remitted to the Receiver General on behalf of the person on account of tax under subsection 212(5.1) in respect of the particular amount is deemed to have been paid on account of the person’s tax under Part I.

  • Marginal note:Deemed election and restriction

    (3) Where a corporation payment (within the meaning assigned by subsection 212(5.2)) has been made to a non-resident corporation in respect of an actor and at any time the corporation makes an actor payment (within the meaning assigned by subsection 212(5.2)) to or for the benefit of the actor, if the corporation makes an election under subsection (1) for the taxation year in which the corporation payment is made, the actor is deemed to make an election under subsection (1) for the taxation year of the actor in which the corporation makes the actor payment.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2001, c. 17, s. 175

Marginal note:Alternative re Canadian benefits

  •  (1) In this section, a non-resident person’s “Canadian benefits” for a taxation year is the total of all amounts each of which is an amount paid or credited in the year and in respect of which tax under this Part would, but for this section, be payable by the person because of any of paragraphs 212(1)(h), (j) to (m) and (q).

  • Marginal note:Part I return

    (2) No tax is payable under this Part in respect of a non-resident person’s Canadian benefits for a taxation year if the person

    • (a) files with the Minister, within 6 months after the end of the year, a return of income under Part I for the year; and

    • (b) elects in the return to have this section apply for the year.

  • Marginal note:Taxable income earned in Canada

    (3) Where a non-resident person elects under paragraph (2)(b) for a taxation year, for the purposes of Part I

    • (a) the person is deemed to have been employed in Canada in the year; and

    • (b) the person’s taxable income earned in Canada for the year is deemed to be the greater of

      • (i) the amount that would, but for subparagraph (ii), be the person’s taxable income earned in Canada for the year if

        • (A) paragraph 115(1)(a) included the following subparagraph after subparagraph (i):

          • “(i.1) the non-resident person’s Canadian benefits for the year, within the meaning assigned by subsection 217(1),”, and

        • (B) paragraph 115(1)(f) were read as follows:

          • “(f) such of the other deductions permitted for the purpose of computing taxable income as can reasonably be considered wholly applicable to the amounts described in subparagraphs (a)(i) to (vi).”; and

      • (ii) the person’s income (computed without reference to subsection 56(8)) for the year minus the total of such of the deductions permitted for the purpose of computing taxable income as can reasonably be considered wholly applicable to the amounts described in subparagraphs 115(1)(a)(i) to (vi).

  • Marginal note:Tax credits — limitation

    (4) Sections 118 to 118.91 and 118.94 do not apply in computing the tax payable under Part I for a taxation year by a non-resident person who elects under paragraph (2)(b) for the year, unless

    • (a) where section 114 applies to the person for the year, all or substantially all of the person’s income for the year is included in computing the person’s taxable income for the year; or

    • (b) in any other case, all or substantially all of the person’s income for the year is included in computing the amount determined under subparagraph (3)(b)(i) in respect of the person for the year.

  • Marginal note:Tax credits allowed

    (5) In computing the tax payable under Part I for a taxation year by a non-resident person to whom neither paragraph (4)(a) nor paragraph (4)(b) applies for the year there may, notwithstanding section 118.94 and subsection (4), be deducted the lesser of

    • (a) the total of

      • (i) such of the amounts that would have been deductible under any of section 118.2, subsections 118.3(2) and (3) and sections 118.8 and 118.9 in computing the person’s tax payable under Part I for the year if the person had been resident in Canada throughout the year, as can reasonably be considered wholly applicable, and

      • (ii) the amounts that would have been deductible under any of sections 118 and 118.1, subsection 118.3(1) and sections 118.5 and 118.7 in computing the person’s tax payable under Part I for the year if the person had been resident in Canada throughout the year, and

    • (b) the appropriate percentage for the year of the person’s Canadian benefits for the year.

  • Marginal note:Special credit

    (6) In computing the tax payable under Part I for a taxation year by a non-resident who elects under paragraph (2)(b) for the year, there may be deducted the amount determined by the formula

    A × [(B - C) / B]

    where

    A
    is the amount of tax under Part I that would, but for this subsection, be payable by the person for the year;
    B
    is the amount determined under subparagraph (3)(b)(ii) in respect of the person for the year; and
    C
    is the amount determined under subparagraph (3)(b)(i) in respect of the person for the year.
  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 217
  • 1994, c. 7, Sch. II, s. 179
  • 1996, c. 21, s. 56
  • 1997, c. 25, s. 64
  • 1998, c. 19, s. 64
  • 2016, c. 7, s. 45
 
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