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

Payment of Tax

Marginal note:Withholding

• 153 (1) Every person paying at any time in a taxation year

  • (a) salary, wages or other remuneration, other than

    • (i) amounts described in subsection 212(5.1), and

    • (ii) amounts paid at any time by an employer to an employee if, at that time, the employer is a qualifying non-resident employer and the employee is a qualifying non-resident employee,

  • (b) a superannuation or pension benefit,

  • (c) a retiring allowance,

  • (d) a death benefit,

  • (d.1) an amount described in subparagraph 56(1)(a)(iv), (vii) or (viii),

  • (d.2) an amount described in paragraph 56(1)(a.3),

  • (e) an amount as a benefit under a supplementary unemployment benefit plan,

  • (f) an annuity payment or a payment in full or partial commutation of an annuity,

  • (g) fees, commissions or other amounts for services, other than amounts described in subsection 115(2.3) or 212(5.1),

  • (h) a payment under a deferred profit sharing plan or a plan referred to in section 147 as a revoked plan,

  • (i) a payment from a registered disability savings plan,

  • (j) a payment out of or under a registered retirement savings plan or a plan referred to in subsection 146(12) as an “amended plan”,

  • (k) an amount as, on account or in lieu of payment of, or in satisfaction of, proceeds of the surrender, cancellation or redemption of an income-averaging annuity contract,

  • (l) a payment out of or under a registered retirement income fund or a fund referred to in subsection 146.3(11) as an “amended fund”,

  • (m) a prescribed benefit under a government assistance program,

  • (m.1) [Repealed, 1994, c. 21, s. 77(1)]

  • (n) one or more amounts to an individual who has elected for the year in prescribed form in respect of all such amounts,

  • (o) an amount described in paragraph 115(2)(c.1),

  • (p) a contribution under a retirement compensation arrangement,

  • (q) an amount as a distribution to one or more persons out of or under a retirement compensation arrangement,

  • (r) an amount on account of the purchase price of an interest in a retirement compensation arrangement,

  • (s) an amount described in paragraph 56(1)(r), (z.2) or (z.4),

  • (t) a payment made under a plan that was a registered education savings plan,

  • (u) a payment out of or under an advanced life deferred annuity, or

  • (v) a payment out of or under a FHSA, if the amount is required by section 146.6 to be included in computing a taxpayer’s income

  must deduct or withhold from the payment the amount determined in accordance with prescribed rules and must, at the prescribed time, remit that amount to the Receiver General on account of the payee’s tax for the year under this Part or Part XI.3, as the case may be, and, where at that prescribed time the person is a prescribed person, the remittance must be made to the account of the Receiver General at or through a designated financial institution.

• Marginal note:Withholding — stock option benefits

  (1.01) An amount that is deemed to have been received by a taxpayer as a benefit under or because of any of paragraphs 7(1)(a) to (d.1) is remuneration paid as a bonus for the purposes of paragraph (1)(a), except the portion, if any, of the amount that is

  • (a) deductible by the taxpayer under paragraph 110(1)(d) in computing the taxpayer’s taxable income for a taxation year;

  • (b) deemed to have been received in a taxation year as a benefit because of a disposition of securities to which subsection 7(1.1) applies; or

  • (c) determined under paragraph 110(2.1)(b) to be deductible by the taxpayer under paragraph 110(1)(d.01) in computing the taxpayer’s taxable income for a taxation year.

• Marginal note:COVID-19 — deemed remittance

  (1.02) For the purposes of this Act, if an eligible employer pays, at a particular time that is within the eligible period, eligible remuneration in respect of which a particular amount is required to be deducted or withheld under subsection (1), then the eligible employer is deemed to have remitted to the Receiver General at the particular time in respect of the particular amount, an amount equal to the least of

  • (a) the amount determined by the formula

    A − B

    where

    A

    is the prescribed amount, and

    B

    is the total of all amounts, each of which is an amount deemed to have been remitted by the eligible employer under this subsection prior to the particular time (and, if more than one such payment is made at the particular time, the eligible employer may designate the order in which the amounts are considered to have been paid),

  • (b) the amount determined by the formula

    C × D

    where

    C

    is the prescribed percentage, and

    D

    is the amount of the eligible remuneration, and

  • (c) the amount determined by the formula

    E × F

    where

    E

    is the prescribed amount, and

    F

    is the total number of eligible employees employed by the eligible employer during the eligible period.

• Marginal note:Definitions — subsection (1.02)

  (1.03) The following definitions apply for the purposes of this subsection and subsection (1.02).

  eligible employee

  eligible employee means an individual who is employed in Canada. (employé admissible)

  eligible employer

  eligible employer means a person or partnership that

  • (a) employs one or more eligible employees;

  • (b) has, on March 18, 2020, a business number in respect of which the person or partnership is registered with the Minister to make remittances required under this section; and

  • (c) is any of

    • (i) a Canadian-controlled private corporation for the purposes of section 125 that

      • (A) would have a business limit for its last taxation year that ended before the start of the eligible period greater than nil, if the amount determined for paragraph 125(5.1)(b) were deemed to be nil, or

      • (B) if the corporation does not have a taxation year that ended before the start of the eligible period, would meet the condition in clause (A) if its taxation year ended immediately before the start of the eligible period,

    • (ii) an individual (other than a trust),

    • (iii) a partnership, all of the members of which are described in subparagraphs (i) to (iii) or (v),

    • (iv) a person exempt from tax under Part I because of paragraph 149(1)(l), and

    • (v) a registered charity. (employeur admissible)

  eligible period

  eligible period means the period beginning on March 18, 2020 and that ends on June 19, 2020. (période d’admissibilité)

  eligible remuneration

  eligible remuneration means salary, wages or other remuneration paid to an eligible employee during the eligible period. (rémunération admissible)

• Marginal note:Deemed remittances under subsection (1.02)

  (1.04) For greater certainty, amounts deemed under subsection (1.02) to have been remitted to the Receiver General are deemed to not be held in trust under subsections 227(4) and (4.1).

• Marginal note:Canada Emergency Wage Subsidy claimed

  (1.05) Despite subsection (1.02), an amount is not deemed to have been remitted to the Receiver General if

  • (a) the eligible employer made an application in respect of section 125.7 for a qualifying period in respect of which the eligible employer was, without reference to this subsection, deemed under subsection (1.02) to have remitted the amount to the Receiver General; and

  • (b) the amount was not included under the description of B in subsection 125.7(2) for the eligible employer.

• Marginal note:Undue hardship

  (1.1) Where the Minister is satisfied that the deducting or withholding of the amount otherwise required to be deducted or withheld under subsection 153(1) from a payment would cause undue hardship, the Minister may determine a lesser amount and that amount shall be deemed to be the amount determined under that subsection as the amount to be deducted or withheld from that payment.

• Marginal note:Election to increase withholding

  (1.2) Where a taxpayer so elects in prescribed manner and prescribed form, the amount required to be deducted or withheld under subsection 153(1) from any payment to the taxpayer shall be deemed to be the total of

  • (a) the amount, if any, otherwise required to be deducted or withheld under that subsection from that payment, and

  • (b) the amount specified by the taxpayer in that election with respect to that payment or with respect to a class of payments that includes that payment.

• Marginal note:Reduction not permitted

  (1.3) A joint election made or expected to be made under section 60.03 is not to be considered a basis on which the Minister may determine a lesser amount under subsection (1.1).

• Marginal note:Non-cash stock option benefit

  (1.31) An amount deemed to have been received as a benefit under or because of any of paragraphs 7(1)(a) to (d.1) shall not be considered a basis on which the Minister may determine a lesser amount under subsection (1.1) solely because it is received as a non-cash benefit.

• Marginal note:Exception — remittance to designated financial institution

  (1.4) For the purpose of subsection (1), a prescribed person referred to in that subsection is deemed to have remitted an amount to the account of the Receiver General at or through a designated financial institution if the prescribed person has remitted the amount to the Receiver General at least one day before the day upon which the amount is due.

• Marginal note:Deemed withholding

  (2) If a pensioner and a pension transferee (as those terms are defined in section 60.03) make a joint election under section 60.03 in respect of a split-pension amount (as defined in that section) for a taxation year, the portion of the amount deducted or withheld under subsection (1) that may be reasonably considered to be in respect of the split-pension amount is deemed to have been deducted or withheld on account of the pension transferee’s tax for the taxation year under this Part and not on account of the pensioner’s tax for the taxation year under this Part.

• Marginal note:Deemed effect of deduction

  (3) When an amount has been deducted or withheld under subsection 153(1), it shall, for all the purposes of this Act, be deemed to have been received at that time by the person to whom the remuneration, benefit, payment, fees, commissions or other amounts were paid.

• Marginal note:Amounts paid in error

  (3.1) For the purposes of this Act, an amount (referred to in this subsection as the “excess amount”) is deemed to not have been deducted or withheld under subsection (1) by a person if

  • (a) the excess amount was, absent the application of this subsection, deducted or withheld by the person under subsection (1);

  • (b) the excess amount is in respect of an excess payment (referred to in this subsection as the “total excess payment”) of an individual’s salary, wages or other remuneration by the person to the individual in a particular year, that was paid as a result of a clerical, administrative or system error;

  • (c) before the end of the third year after the calendar year in which the excess amount is deducted or withheld,

    • (i) the person elects in prescribed manner to have this subsection apply in respect of the excess amount, and

    • (ii) the individual has repaid, or made an arrangement to repay, the total excess payment less the excess amount;

  • (d) an information return correcting for the total excess payment has not been issued by the person to the individual prior to the making of the election in subparagraph (c)(i); and

  • (e) any additional criteria specified by the Minister have been met.

• Marginal note:Unclaimed dividends, interest and proceeds

  (4) Where at the end of a taxpayer’s taxation year the person beneficially entitled to an amount received by the taxpayer after 1984 and before the year as or in respect of dividends, interest or proceeds of disposition of property is unknown to the taxpayer, the taxpayer shall remit to the Receiver General on or before the day that is 60 days after the end of the year on account of the tax payable under this Act by that person an amount equal to

  • (a) in the case of dividends, 33 1/3% of the total amount of the dividends,

  • (b) in the case of interest, 50% of the total amount of the interest, and

  • (c) in the case of proceeds of disposition of property, 50% of the total of all amounts each of which is the amount, if any, by which the proceeds of disposition of a property exceed the total of any outlays and expenses made or incurred by the taxpayer for the purpose of disposing of the property (to the extent that those outlays and expenses were not deducted in computing the taxpayer’s income for any taxation year or attributable to any other property),

  except that no remittance under this subsection shall be required in respect of an amount that was included in computing the taxpayer’s income for the year or a preceding taxation year or in respect of an amount on which the tax under this subsection was previously remitted.

• Marginal note:Deemed effect of remittance

  (5) An amount remitted by a taxpayer under subsection 153(4) in respect of dividends, interest or proceeds of disposition of property shall be deemed

  • (a) to have been received by the person beneficially entitled thereto; and

  • (b) to have been deducted or withheld from the amount otherwise payable by the taxpayer to the person beneficially entitled thereto.

• Marginal note:Definitions

  (6) The following definitions apply in this section.

  designated financial institution

  designated financial institution means a corporation that

  • (a) is a bank, other than an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2) of the Bank Act;

  • (b) is authorized under the laws of Canada or a province to carry on the business of offering its services as a trustee to the public; or

  • (c) is authorized under the laws of Canada or a province to accept deposits from the public and carries on the business of lending money on the security of real property or immovables or investing in indebtedness on the security of mortgages on real property or of hypothecs on immovables. (institution financière désignée)

  qualifying non-resident employee

  qualifying non-resident employee, at any time in respect of a payment referred to in paragraph (1)(a), means an employee who

  • (a) is, at that time, resident in a country with which Canada has a tax treaty;

  • (b) is not liable to tax under this Part in respect of the payment because of that treaty; and

  • (c) works in Canada for less than 45 days in the calendar year that includes that time or is present in Canada for less than 90 days in any 12-month period that includes that time. (employé non-résident admissible)

  qualifying non-resident employer

  qualifying non-resident employer, at any time, means an employer

  • (a) that at that time

    • (i) in the case of an employer that is not a partnership,

      • (A) is a resident of a country with which Canada has a tax treaty, or

      • (B) is a corporation that does not satisfy the condition in clause (A), but would be a resident of a country with which Canada has a tax treaty if the corporation were treated, for the purpose of income taxation in that country, as a body corporate, and

    • (ii) in the case of an employer that is a partnership, is a partnership in respect of which the total of all amounts, each of which is a share of the partnership’s income or loss for the fiscal period that includes that time of a member that, at that time, is a resident of a country with which Canada has a tax treaty (or is a corporation that satisfies the condition in clause (i)(B)), is not less than 90% of the income or loss of the partnership for the period (for the purposes of this subparagraph, where the income and loss of the partnership are nil for the period, the income of the partnership for the period is deemed to be $1,000,000); and

  • (b) that is at that time certified by the Minister under subsection (7). (employeur non-résident admissible)

• Marginal note:Certification by Minister

  (7) The Minister may

  • (a) certify an employer for a specified period of time if the employer has applied in prescribed form containing prescribed information and the Minister is satisfied that the employer

    • (i) meets the conditions in paragraph (a) of the definition qualifying non-resident employer in subsection (6), and

    • (ii) meets the conditions established by the Minister; and

  • (b) revoke an employer’s certification if the Minister is no longer satisfied that the employer meets the conditions referred to in subparagraph (a)(i) or (ii).