NR4 Obligation In The Absence Of Amounts Withheld

A non-resident earning certain types of income in Canada is generally subject to Part XIII tax, which is withheld at source by a Canadian resident payer or agent.

A Canadian payer or agent is responsible for withholding, remitting and reporting Part XIII tax on Form NR4 Statement of Amounts Paid or Credited to Non-Residents of Canada (information return). 

CRA’s previous position regarding Form NR4 (made public in its NR4 guide) was that the information returns were not required with respect to payments made to non-residents not subject to withholding taxes.

CRA has now changed this longstanding position that waived the NR4 filing requirement. This shift in policy stems from a CRA Technical Interpretation (2015-0608201E5) addressing capital distributions from trusts. In this Technical Interpretation, CRA determined that an estate or trust must file an NR4 information return to report any capital distribution made to a non-resident beneficiary even if  the amounts are not subject to Part XIII tax.

Consequently, pursuant to this Technical Interpretation and new policy position, Canadian resident payers must prepare NR4 slips to report all payments to non-residents, including those not subject to withholding tax.

These information returns are due no later than 90 days from the end of the taxation year in which the amounts are paid or credited.

About the Author:

Eric Svoboda, B.C.L., LL.B., Attorney, is an Indirect Tax Specialist at Crowe BGK.

Connect with him: [email protected]