Canada Audits Employers Using New Exemption Certifications

The global solution for payroll professionals, combines custom research, strategic white papers, country primers, webinars, and the expert guidance you’ve come...

By Jared Mondschein

Oct. 5—Nonresident employers are being audited by the Canadian Revenue Agency to certify that they are exempt from income withholding taxes on qualifying nonresident employees, the Canadian Revenue Agency said Oct. 4.

The audits target nonresident employers who received certification using Form RC473, which was issued in January 2016. The form addressed a long-standing complaint by nonresident employers about being required to withhold and remit taxes on nonresident employee income regardless of whether treaty provisions would allow an exemption from Canadian taxes.

Nonresident employers who were certified but “found not to meet the conditions may have their certification status revoked,” the agency said in a statement to Bloomberg BNA.

Conditions to receive and maintain employer certification most notably include tracking and recording the number of days a qualifying employee either works in Canada or lives in Canada, as well as the income attributable to these days to confirm that an employee either works in Canada for less than 45 days in the year of payment or is present in Canada for less than 90 days during a 12-month payment period.

The audits were discussed Sept. 30 in an advisory on the website of the accounting firm Ernst & Young.

To contact the reporter on this story: Jared Mondschein at jmondschein@bna.com

To contact the editor responsible for this story: Michael Trimarchi at mtrimarchi@bna.com

For More Information

Canadian Revenue Agency guidelines on non-resident employer certification is available at http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rndr/mplyrcrtfctn-eng.html.

More information on payroll issues in Canada can be found in the Canada country primer.

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.