Non-Resident Income Tax

IC

SUBJECT: NON-RESIDENT INCOME TAX

No: 77-16R4

DATE: May 11, 1992

This circular cancels and replaces Information Circular 77-16R3 dated February 19, 1988. Changes are indicated by vertical lines. The comments that follow are based on the applicable provisions of the Income Tax Act, Income Tax Regulations, the Income Tax Application Rules, 1971 (ITAR) and the Income Tax Conventions Interpretation Act in force on the date of issuance of this circular, but are subject to any overriding provisions of bilateral income tax agreements between Canada and other countries. Draft legislation to amend the Income Tax Act and related statutes as released by the Minister of Finance on December 20, 1991 is not reflected in this circular.

1. The purpose of this circular is to provide a general description of the provisions of Part XIII of the Income Tax Act that impose a withholding tax on certain amounts paid or credited to persons not resident in Canada. It is for the use and guidance of persons who pay or credit such amounts and the non-resident payees of these amounts. The references quoted generally relate to provisions of the Income Tax Act (the Act) unless otherwise specified by the notation Regulations (Income Tax Regulations) or ITAR (Income Tax Application Rules, 1971).

2. To separate the technical and the administrative provisions relating to Part XIII tax, this circular is divided into two parts: Part I (paragraphs 3 to 53) - Non-Resident Tax Liability Part II (paragraphs 54 to 86) - Payment, Reporting and Refund of Non-Resident Tax Withheld and Other Administrative Comments. PAGE 2

PART I - NON-RESIDENT TAX LIABILITY

3. This part will provide a general description of the provisions of the law. In addition, references will be given to any interpretation bulletin that the Department has issued on a particular provision of Part XIII. If no such bulletin has been issued, a brief explanatory comment may be provided in the circular. Since this circular does not contain a detailed explanation of Part XIII, reference should be made to the appropriate statutory provisions. If further information is required, questions should be directed to the taxation office in that area of Canada where the amount in question was, or will be, paid or credited.

4. The Department has issued the following interpretation bulletins dealing with specific types of Part XIII payments:

IT-155R3 - Exemption from Non-Resident Tax on Interest Payable on Certain Bonds, Debentures, Notes, Hypothecs or Similar Obligations - 212(1)(b)(ii) IT-360R2 - Interest Payable in a Foreign Currency - 212(1)(b)(iii) IT-361R2 - Exemption From Tax on Interest Payments to Non-Residents - 212(1)(b)(vii) IT-303 & SR - Know-How and Similar Payments to Non-Residents - 212(1)(d) IT-76R2 - Exempt Portion of Pension When Employee Has Been a Non-Resident - 212(1)(h) IT-163R2 - Election by Non-Resident Individuals on Certain Canadian Source Income - 212(1)(f), (h), (j) to (m) and (q), 217 IT-393R - Election re Tax on Rents and Timber Royalties - Non-Residents - 216 IT-465R - Non-Resident Beneficiaries of Trusts - 212(1)(c) IT-468R - Management or Administration Fees Paid to Non-Residents - 212(1)(a) and 212(4) IT-489 & SR - Non-Arm's Length Sale of Shares to a Corporation - 212.1 IT-494 - Hire of Ships and Aircraft from Non-Residents - 212(1)(d)

The following bulletins include comments on certain Part XIII type payments as indicated below: PAGE 3

Bulletin Paragraphs Part XIII Reference IT-77R 10 to 12 212(1), 214(4), 215 IT-320R2 9 212(1)(b)(ii)(C) IT-342R 6 212(1)(c) IT-434R 16 212(1)(d), 216 IT-438R 11 212(1)(d), 214(1) IT-118R3 22 and 23 212(1)(f) IT-362R 18 212(1)(g) IT-397R 15 212(1)(h) IT-451R 10 212(1)(h), 212(1)(j) to (q) IT-337R2 15 212(1)(j.1), 217 IT-500 39 to 45 212(1)(l), 214(3)(c) IT-230R2 2 212(1)(n) IT-308R 9 212(1)(r) IT-66R6 1 212(2) IT-88R2 15 and 25 212(2), 215 IT-96R5 2 212(2), 214(3)(a) IT-421R 21 212(2), 214(3)(a) IT-258R2 25 212(12) IT-260R 17 212(12) IT-369R 10 212(12) IT-440R 6 212(12) IT-510 23 212(12) IT-511 28 212(12) IT-81R 5 to 10 212(13.1)(b), 216 IT-502 & SR 14 and 40 212(17) IT-463R 7 212.1 IT-474R 51 and 58 212.1, 212(1)(b)(vii) IT-265R3 13 and 14 212(1)(b), 214(2) IT-119R3 9 to 11 214(3) IT-432R 4 214(3)(a) IT-410R 8 and 9 214(6), (7.1), (8)(a), (9) and (10) IT-120R3 42 216 IT-121R3 16 216 IT-171R2 25 217 IT-193SR 15 217 IT-401R2 12 217 IT-270R2 29 218(3)

The references above and throughout this circular to interpretation bulletins and to other information circulars are made using the version number of the particular publication that was current at the time this circular was sent to printing. ("SR" means a Special Release which has been issued to update a publication.) Readers are reminded that (a) these publications are subject to revision from time to time, (b) a later revision of a particular publication will have a higher version number, and (c) a paragraph number to which reference is made in relation to a particular publication may also be revised in a later version of the publication. PAGE 4

5. The words "credits" and "credited" cover any situation where a resident of Canada or, in certain cases, a non-resident (see 8 below) has set aside and made unconditionally available to the non-resident creditor an amount due to the non-resident such as where (a) a tenant or agent deposits rents in a bank account on behalf of a non-resident landlord; (b) a bank credits interest to the savings account of a non-resident; (c) an insurance or trust company deposits a pension or annuity payment in the bank account of a non-resident; or (d) the amount due is applied by the resident (or deemed resident) against an amount owing by the non-resident. When an amount is subject to tax under section 212, subsection 214(1) provides that the tax is payable on the full amount paid or credited without any deduction from the amount.

Summary of Payments Subject to Tax

6. A non-resident is subject to Part XIII tax when a resident of Canada pays or credits, or is deemed by Part I to pay or credit, an amount to the non-resident as, on account or in lieu of payment of, or in satisfaction of (a) a management or administration fee or charge - 212(1)(a) and 212(4) (see 15 and 16 below); (b) interest - 212(1)(b) and 214 (see 17 to 33 below); (c) estate or trust income - 212(1)(c), 212(9) to (11), 214(3)(f) and (f.1) (see 34 to 37 below); (d) certain rents, royalties and similar payments - 212(1)(d), 212(5) and 212(16) (see 38 to 44 below); (e) certain timber royalties - 212(1)(e) (see 42 to 44 below); (f) alimony or other support payments - 212(1)(f) (see IT-118R3 and 53(h) below); (g) a patronage dividend - 212(1)(g); (h) certain pension benefits (other than the Old Age Security Pension or supplement or similar provincial payments, Canada or Quebec Pension Plan benefits, payments exempt under subsection 81(1) and certain other exceptions described in 53(g) below) - 212(1)(h) (see IT-76R2 and IT-397R); (i) a death benefit, unemployment insurance benefit, certain benefits PAGE 5

payable to persons employed in the automotive industry or in industries designated under the Labour Adjustment Benefits Act, or certain amounts paid or credited after March 27, 1987 out of or under a retirement compensation arrangement or received or receivable after March 27, 1987 as proceeds from the disposition of an interest in a retirement compensation arrangement - 212(1)(j), 214(3)(b.1); (j) a retiring allowance, other than a retiring allowance out of or under an employee benefit plan, a retirement compensation arrangement (see, however, 6(i) above), or a salary deferral arrangement. Part XIII tax does not apply, however, to any portion of a retiring allowance payment attributable to services rendered in taxation years throughout which the person rendering the services was neither resident in Canada nor employed (unless only occasionally employed) in Canada. Part XIII tax also does not apply to retiring allowance payments to the extent that they were transferred by the payer pursuant to an authorization in prescribed form to a registered pension plan or to a registered retirement savings plan under which the non-resident is the annuitant provided that, if the non-resident had been resident in Canada throughout the year in which the payment was transferred, the payment would have been deductible in computing income by virtue of paragraph 60(j.1) of the Act - 212(1)(j.1); (k) a payment by a trustee under a registered supplementary unemployment benefit plan - 212(1)(k); (l) a payment or deemed payment out of or under a registered retirement savings plan or an amended plan that would be included under section 146 in the income of a full-year resident of Canada, other than any portion that is transferred by the payer (i) to a registered retirement savings plan, (ii) to acquire an annuity, or (iii) after June 27, 1990, as consideration for a registered retirement income fund, for the non-resident, subject to the limitations in paragraph 60(l) - 212(1)(l) and 214(3)(c); (m) a payment or deemed payment under a deferred profit sharing plan or a revoked plan, other than the portion transferred by the payer to a registered pension plan or registered retirement savings plan for the non-resident in accordance with the rules (for residents) in subsection 147(19) or in paragraph 60(j.2) (paragraph 60(j) for a PAGE 6

transfer made after 1988 and before June 28, 1990) - 212(1)(m) and 214(3)(d); (n) a payment under an income-averaging annuity contract including proceeds of any disposition or deemed proceeds of disposition of that contract - 212(1)(n) and 214(3)(b); (o) an annuity payment that would, if received by a resident of Canada, be taxable in Canada (other than an amount paid or credited under an annuity issued in the course of carrying on a life insurance business outside of Canada) - 212(1)(o); (p) a payment or deemed payment out of or under a fund, plan or trust that was a registered home ownership savings plan at the end of 1985 except any refund made on or before April 30, 1986 of excess contributions. If the payment represents income earned by a trust after 1985 that was a registered home ownership savings plan at the end of 1985, it is subject to withholding tax under paragraph 212(1)(c). A payment that represents income earned after 1985 by any other fund or plan that was a registered home ownership savings plan at the end of 1985 is subject to withholding tax under paragraph 212(1)(b). Any other payment from such a fund or plan is taxable under paragraph 212(1)(p) - 212(1)(b), 212(1)(c), 212(1)(p) and 214(3)(g); (q) a payment or deemed payment out of or under a registered retirement income fund that would be included under section 146.3 in the income of a full-year resident of Canada, other than any portion that is transferred after June 27, 1990 by the payer (i) to a registered retirement savings plan, (ii) to acquire an annuity, or (iii) as consideration for a registered retirement income fund, for the non-resident, subject to the limitations in paragraph 60(l) - 212(1)(q) and 214(3)(i); (r) a payment or deemed payment out of a registered education savings plan - 212(1)(r) and 214(3)(j); (s) a grant under a prescribed program of the Government of Canada relating to home insulation or energy conversion - 212(1)(s); or (t) certain dividends and deemed dividends as described in 45 to 49 below - 212(2) and 214(3)(a). Reference should be made to 53(e) below regarding the possibility of reduced tax and withholding on payments described in (f), PAGE 7

(h) to (m) and (q) above. Payments described in (f), (l), (m), (o), (q) and (r) above are subject to Part XIII tax only to the extent such payments would be taxable under Part I of the Act if they were paid to a resident of Canada.

Responsibility for Withholding Part XIII Tax

7. The responsibility for withholding Part XIII tax is on (a) the Canadian resident paying or crediting Part XIII amounts to a non-resident; (b) an agent (e.g., a bank, trust company or credit union) or other person who, on behalf of the debtor, pays or credits such amounts by way of redemption of bearer coupons, warrants or otherwise; (c) an agent or other person who receives Part XIII amounts on behalf of a non-resident to the extent that the tax was not previously withheld; or (d) any other payer (including a non-resident) who pays or credits amounts that are subject to Part XIII tax (see 8 to 13 below).

8. The liability for Part XIII tax normally arises for amounts paid or credited by a person resident in Canada to a non-resident person. However, the Act extends these provisions, in certain circumstances, to cover payments by one non-resident person to another non-resident person as well as payments where either the payer or payee is a partnership. These provisions are discussed in 9 to 13 below.

9. Paragraph 212(13.1)(b) provides that Part XIII tax applies on amounts paid or credited to any partnership that is not a "Canadian partnership" as defined in section 102. The latter term refers to a partnership of which all the members are resident in Canada (see IT-81R).

10. Any non-resident person who pays or credits any of the following amounts to another non-resident must withhold Part XIII tax from the amount: (a) rent for the use of property in Canada (other than railway rolling stock); (b) a timber royalty on a timber resource property or timber limit in Canada; (c) a superannuation or pension benefit under a registered plan and, after March 27, 1987, a distribution out of or under a retirement compensation arrangement; PAGE 8

(d) a retiring allowance or a death benefit to the extent it is deductible by the payer in computing taxable income earned in Canada; (e) a payment described in 6(k) to (n) or 6(q) above; or (f) interest paid or credited on a mortgage or other indebtedness issued (or modified) after March 31, 1977 and secured by real property in Canada to the extent such interest is deductible in computing the amount on which the non-resident is taxable under Part I - 212(13).

11. A non-resident person who (a) carries on a business principally in Canada, (b) manufactures or processes goods in Canada, (c) operates an oil or gas well in Canada or extracts petroleum or natural gas from a natural accumulation thereof in Canada, or (d) extracts minerals from a mineral resource in Canada, and who pays or credits an amount to another non-resident, is deemed to be a person resident in Canada for the purposes of Part XIII to the extent that any amount so paid or credited was deductible by the payer in computing taxable income earned in Canada - 212(13.2).

12. Any partnership that pays or credits an amount to a non-resident person is deemed to be a person resident in Canada for the purposes of Part XIII (except section 216) to the extent that the amount paid or credited is deductible, or would be but for section 21, in computing the income or loss of the partnership from a Canadian source - 212(13.1)(a). The provisions of paragraph 212(13.1)(a) and subsection 212(13.2) do not apply to amounts paid or credited pursuant to a written agreement entered into before May 7, 1974.

13. Subsection 214(4) provides that when a non-resident receives a security in satisfaction of an income debt, that amount shall be deemed to have been paid to the non-resident for purposes of Part XIII. (See IT-77R.)

Rates of Tax and Tax Treaties

14. Subject to certain exceptions specified in the law, the rate of Part XIII tax is generally 25 per cent. However, the provisions of an income tax convention or agreement between Canada and another country may provide for either complete exemption from, or a reduced rate of, Part XIII PAGE 9

tax on certain payments. When there is any inconsistency between the provisions of the Act and those of a tax treaty, the latter shall prevail. Reference should be made to Information Circular 76-12R4, Applicable Rate of Part XIII Tax on Amounts Paid or Credited to Persons in Treaty Countries, and to "Appendix A" of that circular which contains a listing of treaty countries and the treaty rates of tax on various types of Part XIII payments.

Management or Administration Fees or Charges

15. Management or administration fees or charges paid or credited (or deemed by Part I of the Act to be paid or credited) by a resident of Canada to a non-resident person are subject to Part XIII tax under paragraph 212(1)(a). However, the Act specifies that, for purposes of that provision, certain amounts paid or credited to a non-resident are not considered "management or administration fees or charges," provided that they are reasonable in the circumstances. The following amounts are so excluded: (a) an amount for a service performed by the non-resident in the ordinary course of carrying on a business that includes the performance of such a service for a fee, provided that the non-resident person was dealing at arm's length with the payer - 212(4), and (b) an amount relating to a specific expense incurred by the non-resident person for performance of a service that was for the payer's benefit - 212(4).

It should also be noted that management or administration fees are not specifically covered in most of the tax treaties negotiated between Canada and other countries. Where Canada has a treaty with another country but it contains no specific article on management or administration fees, any such fees paid to a resident of that country will, to the extent they are reasonable, be considered to be covered by the treaty article dealing with business (industrial or commercial) profits. Under such articles, business profits of a non-resident enterprise are exempt from Canadian tax unless they are attributable to a permanent establishment in Canada through which the non-resident carries on business in Canada, in which case the profits are taxable under Part I of the Act. Where, on the other hand, a tax treaty does contain an article on management or administration fees, such fees will be taxed under either Part I or Part XIII, depending on the circumstances of the case. For a full discussion on this topic, see IT-468R and Information Circulars 76-12R4 and 87-2. PAGE 10

16. Subparagraph 212(1)(d)(iii) refers to payments for services of an industrial, commercial or scientific character. For comments concerning the difference between this type of payment and a management fee or administration charge, refer to paragraph 24 of IT-303. (See also IT-468R.)

Interest

17. The provisions of paragraph 212(1)(b) that tax non-residents on interest paid or credited to them are subject to a number of exceptions which exempt certain interest payments from Part XIII tax. The Act makes certain other payments to non-residents subject to Part XIII tax by deeming them to be payments of interest. These exceptions and deeming provisions are discussed in 18 to 33 below.

18. The following interest amounts are specifically exempted from Part XIII tax: (a) interest payable by a non-resident-owned investment corporation (see exception in 28 below) - 212(1)(b)(i); (b) interest payable on bonds of, or guaranteed by, the Government of Canada, issued on or before December 20, 1960 - 212(1)(b)(ii)(A), and interest payable on certain obligations of, or guaranteed by, the Government of Canada, and on certain obligations of other levels of government in Canada or their agencies, issued after April 15, 1966 - 212(1)(b)(ii)(C). Interest on an obligation insured by the Canada Deposit Insurance Corporation does not qualify after November 18, 1974 as interest on an obligation guaranteed by the Government of Canada - 212(15) (see IT-155R3); (c) interest payable in a foreign currency to a person dealing at arm's length with the payer, on certain debts and obligations. For purposes of this exemption, interest expressed to be computed by reference to Canadian currency is deemed to be payable in Canadian currency - 212(1)(b)(iii) (see also IT-360R2); (d) interest on certain obligations issued after June 13, 1963 payable to a person who has been issued a certificate of exemption under subsection 212(14) that is in force at the time the interest is paid or credited (see 32 and 33 below) - 212(1)(b)(iv); (e) interest payable on any arm's length obligation entered into in the PAGE 11

course of carrying on a life insurance business in a country other than Canada - 212(1)(b)(v); (f) interest payable by a corporation resident in Canada to a person with whom it is dealing at arm's length on any obligation, provided that the evidence of indebtedness was issued after June 23, 1975, and provided the obligation satisfies the requirements of the Act concerning the repayment of principal - 212(1)(b)(vii) (see IT-361R2); (g) interest payable on certain obligations secured by, or on an agreement for sale or similar obligation relating to, real property (or an interest in real property) situated outside Canada. However, this exemption does not apply to such interest if it is deductible by the payer in computing income from a business carried on in Canada or in computing income from property other than real property outside Canada - 212(1)(b)(viii); (h) interest paid or credited in an arm's length transaction by a branch or office of certain Canadian financial institutions situated outside Canada, when the interest and the deposited amount are in Canadian currency - 212(1)(b)(ix); (i) interest paid or credited to the Bank of International Settlements - 212(1)(b)(x); (j) interest payable, for any period in a taxation year commencing after December 17, 1987, on eligible deposits (as defined in section 33.1 of the Act) with certain Canadian financial institutions, as prescribed by section 7900 of the Regulations, that carry on an international banking centre business - 212(1)(b)(xi); and (k) in certain circumstances described in section 218, interest paid by a wholly-owned subsidiary corporation resident in Canada to its non-resident parent is not subject to Part XIII tax. This exemption is restricted to certain situations where the parent company borrows money from sources in Canada (creditor) and loans all or a part of the money either to a wholly-owned subsidiary resident in Canada whose principal business is the making of loans, or to any other wholly-owned subsidiary resident in Canada if the latter re-loans the money to a subsidiary wholly-owned by it and resident in Canada whose principal business is the making of loans. To qualify for the exemption, an election must be filed with the Minister in prescribed form by the parent company and the creditor (form T2023), and the terms of the borrowing arrangement with the creditor must require the parent company to pay interest in Canadian currency. PAGE 12

It should be noted that any exceptions provided in subparagraphs 212(1) (b)(ii) to (v), (vii) and (ix) of the Act, as described in (b) to (f)and (h) above, are not applicable to interest on obligations, other than aprescribed obligation, issued or extended after February 25, 1986 when allor any portion of the interest is contingent or dependent upon the use ofor production from property in Canada or is computed by reference torevenue, profit, cash flow, commodity price or similar criterion or byreference to dividends payable to shareholders. (The aforementioned exceptions are also not applicable to interest on obligations entered into after November 12, 1981 and before February 26, 1986 if any of the interest payable is contingent or dependent upon use of or production from property in Canada.)

19. Under the following provisions, the normal rate of Part XIII tax on interest is reduced. (a) Subsections 212(6) and (7) provide for a Part XIII tax rate of five per cent on interest on certain bonds or other obligations of, or guaranteed by, a province provided that the obligation was either issued on or before December 20, 1960, or issued after December 20, 1960 pursuant to written arrangements made on or before that date. Subsection 212(8) extends this reduced rate to certain bonds issued after December 20, 1960 in exchange for such bonds issued on or before that date. (b) ITAR 10(4) provides that, in certain circumstances, when a resident of Canada has issued an obligation before 1976 to a non-resident person who is resident in a prescribed country listed in Part XVI of the Regulations, the rate of withholding tax on interest paid or credited on that obligation will be 15 per cent rather than 25 per cent.

Blended Payments

20. A blended payment is a payment that can reasonably be regarded as being in part interest or other amount of an income nature and in part an amount of a capital nature. For purposes of Part XIII tax, any part of a blended payment to a non-resident that can reasonably be regarded as being interest is deemed to be interest on a debt obligation. Where part of a blended payment made or payable to a non-resident after June 1988 can reasonably be regarded as an amount of an income nature, other than interest, which would be included in the non-resident's income under paragraph 16(1)(b) if Part I were applicable, such amount is deemed, for purposes of Part XIII, to have been paid or credited to the non-resident in respect of property, services or otherwise, depending on its nature. (See also IT-265R3.) - 16(1), 212(1)(b) and 214(2). PAGE 13

Guarantee Fees and Standby Charges

21. Any amount paid or credited to a non-resident in consideration for the non-resident's agreeing to guarantee, in whole or in part, the principal amount of an obligation of a resident of Canada is deemed to be a payment of interest on that obligation. When a non-resident has entered into an agreement to lend money or make money available to a resident of Canada, any amount paid or credited to the non-resident in consideration for such agreement is deemed to be a payment of interest provided that, on the date such agreement was entered into, Part XIII tax would have applied to interest payable on any obligation issued pursuant to that agreement - 214(15). A payment by a guarantor resident in Canada to a non-resident on account of or in lieu of payment of, or in satisfaction of interest that was on an obligation of a person in default, retains the character of interest in the hands of the non-resident. This interest payment is subject to Part XIII tax unless specifically exempted by one of the provisions discussed in this circular.

Mortgage Investment Corporation Dividends

22. Under paragraph 214(3)(e), any amount paid by a mortgage investment corporation to a shareholder of the corporation as or on account of a taxable dividend (other than a capital gains dividend) is deemed to have been paid as interest on a bond issued after 1971 for the purpose of Part XIII. Such an amount will not also be taxed as a taxable dividend under subsection 212(2).

Deemed Interest on Transfer or Assignment

23. Subsection 214(6) deals with accrued interest on certain obligations issued by a person resident in Canada where the obligation has been assigned or otherwise transferred by a non-resident to a person resident in Canada. The subsection provides that any interest accrued to the time of the transfer that would be required by subsection 20(14) to be included in the transferor's income, if Part I were applicable, shall be deemed for the purposes of Part XIII to be a payment of interest on the obligation made by the transferee to the transferor at the time the transfer occurred. Subsection 214(6) does not apply to some of the obligations that fall within the subsection 214(8) definition of an "excluded obligation". Subsection 214(6) also does not apply if the transfer is a "subsequent transfer" as described in 25 below. Further comments concerning subsection 214(6) and related provisions are included in paragraphs 8 and 9 of IT-410R.

24. When a non-resident has assigned or otherwise transferred to a resident of Canada one of certain obligations, issued by a person resident in PAGE 14

Canada, for an amount that is in excess of its issue price, subsection 214(7) deems that excess for the purposes of Part XIII to be a payment of interest on the obligation made by the transferee to the transferor at the time the transfer occurred. Subsection 214(7) does not apply to any of the obligations that fall within the subsection 214(8) definition of an "excluded obligation", nor does it apply if the transfer is a "subsequent transfer" as described in 25 below.

25. Subsection 214(7.1) provides special rules for the situation where a person resident in Canada has assigned or otherwise transferred an obligation to a non-resident (the "first transfer") and that non-resident has later transferred the obligation back to the person resident in Canada (the "subsequent transfer"). If either subsection 214(6) or (7), as described above, would otherwise apply to the subsequent transfer, subsection 214(7.1) instead provides that the amount, if any, by which the price at which the subsequent transfer was made exceeds the price at which the first transfer was made shall be deemed to have been a payment of interest on the obligation made by the resident of Canada (i.e., the transferee in the subsequent transfer) to the non-resident (i.e., the transferor in the subsequent transfer) at the time of the subsequent transfer.

26. Subsections 214(6), (7) and (7.1) normally have application only if an obligation held by a non-resident is transferred to a person resident in Canada. However, subsection 214(9) extends the scope of those subsections by deeming certain non-resident transferees, who are carrying on business in Canada, to be resident in Canada for the purposes of Part XIII. As a result, a transfer between two non-resident persons may be subject to those provisions.

27. If a non-resident has been subject to tax under subsection 214(6) or (7) on deemed interest on the assignment of an obligation to a resident of Canada, the non-resident may be entitled to a partial refund of that tax if the obligation was previously acquired by the non-resident from a resident of Canada. The refund is based on the total tax withheld less the tax payable that relates to interest accrued from the date the non-resident last acquired the obligation from a resident of Canada to the date of its final transfer by the non-resident to a resident - 214(10) (see 69 below).

28. Under subparagraph 212(1)(b)(i), interest paid by a non-resident-owned investment corporation (NRO) is exempt from Part XIII tax. However, this exemption does not apply to amounts deemed by subsection 214(6), (7) or PAGE 15

(7.1) to be interest paid or credited by an NRO - 214(11).

29. Where there is a payment to a non-resident under an obligation for which the non-resident is liable to pay Part XIII tax by virtue of subsection 214(7) or (7.1), subsection 214(12) provides that such payment cannot also be subject to the blended payment rule in subsection 214(2) discussed in 20 above.

30. Under subsection 214(14), any transaction or event by which an obligation held by a non-resident is redeemed in whole, or in part, or is cancelled is deemed to be an "assignment" for the purpose of section 214.

31. The discussions in 23 to 30 above apply to obligations issued after July 27, 1973. For obligations issued between June 18, 1971 and July 27, 1973, reference should be made to those sections of the Act referred to in the aforementioned paragraphs.

Certificates of Exemption re Interest

32. Subsection 212(14) provides that the Minister may, upon application, issue a certificate of exemption to certain non-resident persons. Before a certificate can be issued, the non-resident must satisfy the Minister that an income tax is imposed under the laws of the country of residence and that those laws exempt the non-resident from the payment of income tax to the government of that country. In addition, the person must be: (a) a person who is or would be, if resident in Canada, exempt from tax under section 149; (b) a trust or corporation established or incorporated principally in connection with, or the principal purpose of which is to administer or provide benefits under, one or more superannuation, pension or retirement funds or plans or any funds or plans established to provide employee benefits; or (c) a trust, corporation or other organization constituted and operated exclusively for charitable purposes, no part of the income of which is payable to, or is otherwise available for, the personal benefit of any proprietor, member, shareholder, trustee or settlor of that trust, corporation or other organization. A certificate of exemption issued to a non-resident person is effective only for the purposes of the interest exemption in subparagraph 212(1)(b)(iv). (See 18(d) above and 79 to 82 below.) PAGE 16

33. ITAR 10(5) provides that certificates of exemption issued under subsection 106(9) of the former Act shall, for purposes of subparagraph 212(1)(b)(iv), be deemed to have been issued under subsection 212(14) of the present Act. Such certificates are generally extended indefinitely for interest on obligations described in subparagraph 212(1)(b)(iv) acquired on or before December 31, 1971 by the person to whom the certificate was issued. However, if the certificate holder loses the exempt status in the country of residence at any time when the certificate would otherwise still be in force, the certificate ceases to be in force on the date such exempt status is lost. Confirmation as to the status of the certificate holder may therefore be required in order to determine whether the foregoing exemption applies.

Estate and Trust Income

34. Income of or from a trust (a "trust" includes an estate) paid or credited to a non-resident beneficiary is generally subject to Part XIII tax under paragraph 212(1)(c), except to the extent that the amount is deemed, by means of a designation by a mutual fund trust under subsection 104(21), to be a taxable capital gain of the beneficiary. Any part of an amount that becomes payable by a trust in its taxation year to a non-resident beneficiary and that would be included in the beneficiary's income under subsection 104(13) if Part I were applicable, is deemed by paragraph 214(3)(f) to be trust income paid or credited to that beneficiary on the earlier of the day on which it was actually paid or credited and 90 days after the end of that year. After 1988, a designation described in subsection 132.1(1) by a mutual fund trust to a non-resident beneficiary is deemed by paragraph 214(3)(f.1) to be trust income paid or credited to that beneficiary on the day of the designation.

35. For amounts distributed by a trust prior to its 1988 taxation year, subsections 212(11.1) and (11.2) served to exempt a non-resident beneficiary from Part XIII tax on that portion of trust income paid or credited to the beneficiary which had already been subject to tax in the trust. For distributions by a trust in its 1988 and subsequent taxation years the above-mentioned subsections have been repealed and a non-resident beneficiary is instead subject to Part XIII tax under paragraph 212(1)(c) only on amounts that would be taxable under Part I if that beneficiary were a person resident in Canada to whom Part I were applicable, less taxable capital gains pursuant to subsection 104(21). Effective for the 1988 and subsequent taxation years, Part XII.2 introduces a special tax on the designated income of certain trusts. (Similar taxation was previously PAGE 17

provided for under Part I - see IT-465R. The rules in Part XII.2 provide that a "designated beneficiary" includes a non-resident person (unless that person's trust income is taxed under Part I) and also provide that "designated income" generally includes income from carrying on business in Canada, from Canadian real estate, resource properties and timber resource properties and from dispositions of taxable Canadian property.)

36. Where a trust has paid or credited an amount, other than on a distribution or payment of capital before July 14, 1990, to a non-resident beneficiary or other person beneficially interested in the trust, subsection 212(11) deems the amount for purposes of paragraph 212(1)(c) to have been paid or credited as income of the trust regardless of the source from which the trust derived it. The amount may then be subject to Part XIII tax in accordance with the rules discussed in 34 and 35 above. Where an amount paid or credited (or deemed so) after July 13, 1990 by a trust to a non-resident beneficiary may reasonably be considered to be a distribution of, or derived from, a "dividend that is not a taxable dividend" (e.g. a capital dividend) received by the trust on a share of the capital stock of a corporation resident in Canada, it is subject to Part XIII tax under paragraph 212(1)(c). (It should be noted that a distribution or payment of capital by a trust to a non-resident beneficiary that is made after July 13, 1990 but is not a distribution described in the immediately preceding sentence is not taxable under paragraph 212(1)(c).)

37. Paragraph 212(1)(c) does not apply to amounts paid or credited by a trust to a non-resident beneficiary in a particular taxation year if either (a) the trust was established before 1949, and in the particular year all the beneficiaries of the trust were resident in one foreign country and all of the income of the trust for that year was received from persons resident in that country (see also IT-465R) - 212(10), or (b) the amount paid or credited can reasonably be considered as derived (i) from dividends or interest received by the trust from a non-resident-owned investment corporation, or PAGE 18

(ii) from copyright royalties received by the trust relating to the production or reproduction of any literary, dramatic, musical or artistic work provided that no Part XIII tax would have been payable by the non-resident beneficiary if these amounts had been paid directly to the non-resident rather than through a trust - 212(9). See 18(a) above and 38(c) and 45(a) below concerning the exemptions applicable to the amounts described in (b) above.

Rents, Royalties and Other Payments

38. Non-residents are subject to Part XIII tax under paragraph 212(1)(d) on rents, royalties and similar amounts paid or credited including certain specific payments described in that paragraph. However, paragraph 212(1)(d) does not apply to amounts paid or credited (a) as an instalment on the sale price of agricultural land; (b) for services performed in connection with the sale of property or negotiation of contracts; (c) as copyright royalties or similar payments relating to the production or reproduction of any literary, dramatic, musical or artistic work; (d) for use of railway rolling stock by a railway company or by a person whose principal business is that of a common carrier, subject to the conditions in subparagraph 212(1)(d)(vii) and subsection 212(16); (e) under a bona fide cost-sharing agreement whereby the Canadian resident payer shares, on a reasonable basis, research and development expenses in exchange for an interest in any or all property or other thing of value that may result from the research and development; (f) as rental for the use of or the right to use any corporeal property outside Canada; and (g) from a payer with whom the non-resident is dealing at arm's length to the extent that the amount is deductible in computing the income of the payer under Part I of the Act from a business carried on in a country other than Canada. Reference should be made to IT-303 (and the September 19, 1985 Special Release to that bulletin) as well as to the provisions of the Act noted above.

39. The exclusion described in 38(c) above applies to copyright royalties or similar payments for the right to produce or reproduce computer programs. PAGE 19

40. Subsection 212(5) provides for Part XIII tax on an amount paid or credited to a non-resident by a person resident in Canada for a right in or to the use of (a) a motion picture film, or (b) a film or video tape for use in connection with television or, where the amount is paid or credited after 1988, any other means of reproduction for use in connection with television that has been or is to be used or reproduced in Canada. However, for (b) above, subsection 212(5) does not apply to an amount paid or credited after 1985 for a right in or to the use of a film or video tape or after 1988 for the right in or to the use of any other means of reproduction where that film, video tape or other means of reproduction was or is for use solely in connection with and as part of a news program produced in Canada.

41. A royalty payment which is subject to Part XIII tax and which is made to a U.S. resident as the beneficial owner of the royalty is generally subject to a reduced withholding rate of 10% by virtue of Article XII(2) of the 1980 Canada-United States Tax Convention. However, Article XII(3) of that Convention provides for complete exemption from Canadian withholding tax if the payment is a copyright royalty or like payment relating to the production or reproduction of any literary, dramatic, musical or artistic work. The Article XII(3) exemption does not apply to royalties on motion pictures and works on film, videotape or other means of reproduction for use in connection with television.

42. Where a non-resident person would otherwise be subject to Part XIII tax on rent from real property in Canada or on a timber royalty on a timber resource property or timber limit in Canada, the non-resident may elect under section 216 to pay Part I tax on income from such rents or royalties rather than Part XIII tax on the gross payments. This election is made by filing an income tax return at any time within two years from the end of the taxation year in which such rents or royalties were paid to the non-resident. For further discussion of this election, refer to IT-393R.

43. If the non-resident has undertaken to file a Part I return under a section 216 election, an agent or other person to whom the rents or timber royalties are paid or credited on behalf of the non-resident and who is otherwise required by subsection 215(3) to remit the withholding PAGE 20

tax on such amounts, may elect under subsection 216(4) to remit 25 per cent of the amount available for payment to the non-resident. Thus, for example, a resident agent or other person (such a person could possibly also be a tenant), who on behalf of a non-resident landlord has received gross rents and paid property taxes, repairs or other expenses, would be required to remit tax only on the balance remaining after paying such outlays. The undertaking by the non-resident and the election under subsection 216(4) by the agent or other person must be made on form NR6 filed jointly by them (see 60(d) below). It should be noted that where a subsection 216(4) undertaking is made, the non-resident must file a return under Part I as discussed in 42 above within six months (rather than two years) from the end of the taxation year in which the payments were made. Should the non-resident fail to file the return on time or pay the tax on time, see 60 below.

44. When the rents or royalties described in 42 and 43 above are paid to a partnership, a non-resident partner may make a subsection 216(1) election on that partner's share of the partnership income from the rents or royalties. However, the election under subsection 216(4) to withhold tax on the net amount is available only if all non-resident partners of the partnership have undertaken on form NR6 to file a return under Part I.

Dividends Paid or Credited to Non-residents

45. Under subsection 212(2), (a) a taxable dividend (other than a capital gains dividend paid by a non-resident-owned investment corporation, a mortgage investment corporation or a mutual fund corporation pursuant to subsections 133(7.1), 130.1(4) or 131(1) respectively) (see 22 above), or (b) a capital dividend paid or credited, or deemed under Part I or Part XIV to have been paid or credited, to a non-resident is subject to Part XIII tax.

46. For the meaning of "dividend", "taxable dividend" and "capital dividend", see subsection 248(1) of the Act.

47. Where a non-resident would, if resident in Canada, be required to include an amount in income by virtue of section 15 or subsection 56(2), PAGE 21

that amount is deemed by paragraph 214(3)(a) to have been paid to the non-resident as a dividend from a corporation resident in Canada. Subsection 15(2) and paragraph 214(3)(a) are discussed in IT-119R3. When an amount to which section 15 or subsection 56(2) would apply is deemed by paragraph 214(3)(a) to have been paid as a dividend to a non-resident, the amount is deemed to have been paid at the time of the event or transaction that would, if Part I were applicable, have required the amount to be included in the taxpayer's income. Furthermore, a benefit conferred by a person on a non-resident may, to the extent it is not otherwise included in the income earned in Canada by the non-resident, be deemed by paragraph 246(1)(b) to be a payment in respect of property, services or otherwise for purposes of Part XIII tax.

48. Section 212.1 applies to deem a dividend to have been paid to and received by a non-resident person, in certain cases, if that non-resident has transferred shares of one Canadian corporation to another Canadian corporation with which the non-resident does not deal at arm's length (otherwise than by reason of a right referred to in paragraph 251(5)(b)). The dividend that is deemed to be paid to the non-resident is equal to the amount by which the fair market value of consideration (other than shares of the purchaser corporation) received exceeds the paid-up capital of the shares transferred. Subsection 212.1(3) contains rules for determining whether or not a non-resident deals at arm's length with a purchaser corporation. Section 212.1 is discussed in detail in paragraphs 17 to 27 of IT-489 and in the June 7, 1985 Special Release to that interpretation bulletin. It should be noted that the application of section 212.1 has been extended to situations in which shares of a Canadian corporation are disposed of (as discussed above) after February 9, 1988 by a non-resident-owned investment corporation. The dividend (calculated in the manner discussed above) is deemed to have been paid to and received by the non-resident-owned investment corporation and thus it is subject to tax under Part I of the Act.

49. In certain circumstances dividends paid to a non-resident by a corporation that qualifies as a "foreign business corporation" as defined in the Act as it applied in the 1971 taxation year may be exempt from Part XIII tax by virtue of section 213. PAGE 22

Other Part XIII Tax Exceptions and Alternatives

Sovereign Immunity

50. Under the Doctrine of Sovereign Immunity, the Government of Canada may grant exemption from tax on certain Canadian-source investment income paid or credited to the government or central bank of a foreign country. Written authorization not to withhold tax is given to the Canadian resident payer upon request after substantiation that such investment income (other than that already exempt under the Act and Regulations) is the property of the government or central bank of a foreign country. The written authorization will have an expiry date at which time the Canadian payer would be required to re-apply for further authorization not to withhold. A request for authorization not to withhold should be forwarded to: Revenue Canada, Taxation 875 Heron Road Ottawa, Ontario K1A 0L8 Attention: Provincial and International Relations Division Investment income of a foreign government or its agency is exempt only if (a) the other country would provide a reciprocal exemption to the Canadian Government or its agencies; (b) the income is derived by the foreign government or agency in the course of exercising a function of a governmental nature and is not income arising in the course of an industrial or commercial activity carried on by the foreign authority; and (c) it is interest on an arm's length debt or portfolio dividends on listed company shares. Income such as rentals, royalties or direct dividends from a company in which the foreign government has a substantial or controlling equity interest does not qualify for exemption.

Canada-United States Income Tax Convention

51. There is an exemption from Part XIII tax on certain amounts paid or credited to a United States organization to which a letter of exemption under Article XXI of the Canada-United States Tax Convention has been issued and remains in force at the time the amount is paid or credited. (See 78 below for details concerning qualifying organizations, evidence of exemption, and procedures for obtaining and maintaining exemption.) PAGE 23

Payments to Non-Resident Insurers

52. No Part XIII tax is to be withheld from amounts paid or credited to a non-resident insurance company or fraternal benefit society registered to carry on business in Canada under the Canadian and British Insurance Companies Act or under the Foreign Insurance Companies Act. A complete listing of companies or societies that hold Certificates of Registry from the Office of the Superintendent of Financial Institutions is provided quarterly as a supplement to the Canada Gazette, Part I, in the months of January, April, July and October. This listing or evidence of registry supplied by the Office of the Superintendent of Financial Institutions will be adequate authority for the payment of interest and dividends by cheque without tax being withheld. The taxes are paid by the companies and societies on filing of form T2016. (See 83 below) - 215(4).

Miscellaneous

53. (a) The government or central bank of a country other than Canada and the following international organizations are exempt from non-resident tax on interest payable on bonds of, or guaranteed by, the Government of Canada issued after December 20, 1960, and before April 16, 1966 - (212(1)(b)(ii)(B); Reg. 806): Bank for International Settlements European Fund International Bank for Reconstruction and Development International Development Association International Finance Corporation International Monetary Fund (b) The Bank for International Settlements is exempt from non-resident tax on interest paid or credited after May 23, 1985 - (212(1)(b)(x); Reg. 806.1). (c) If any of the payments referred to in Part XIII are made to a non-resident person who carries on business in Canada and the payments may reasonably be attributed to the business carried on by that person through a permanent establishment in Canada, the non-resident person will not be subject to tax on such payments under Part XIII of the Act but rather under Part I - (subsection 805(1) of the Regulations). However, unless the person making the payments is authorized by the Minister (under subsection 805(2) of the Regulations) to make such payments without any deduction under section 215, the payer will be held personally liable for the tax if the non-resident recipient is PAGE 24

found not to have been carrying on business in Canada through a permanent establishment in Canada. Prior to March 16, 1988, these rules did not require that the business carried on in Canada be through a permanent establishment in Canada. (d) Subsection 212(12) exempts a non-resident from Part XIII tax on amounts paid or credited to the non-resident in a year if the amounts in question are included in computing the income of a taxpayer under Part I by virtue of subsections 56(4) or (4.1) or sections 74 to 75. As subsection 56(4.1) does not apply to income relating to any period ending before 1989, the reference to that subsection in subsection 212(12) applies for the 1989 and subsequent taxation years. (e) Where an amount paid or credited to a non-resident would otherwise be subject to Part XIII tax under any one of paragraphs 212(1)(f), (h), (j) to (m) or (q) of the Act, it may be more beneficial for the non-resident to instead elect under section 217 to file a return of income for the year under Part I of the Act and report the amount on that return. Tax is still required by Part XIII to be deducted or withheld from the amount; however, since the non-resident's Part I tax liability under the section 217 election will usually be less than the Part XIII tax otherwise payable, subsection 215(5) of the Act and section 809 of the Regulations may permit a reduction in the tax to be deducted or withheld if the amount is described in any one of the above-mentioned paragraphs (if the amount is described in paragraph 212(1)(j.1), it must have been paid or credited after July 13, 1990). The difference between the Part I liability under the section 217 election and the tax that has been deducted or withheld can result in a refund to or amount owing by the non-resident. Further discussion of the section 217 election and the reduction in the amount of tax to be deducted or withheld may be found in IT-163R2 (also, see 85 below). (f) As discussed in 42 to 44 above, a taxpayer may elect under section 216 to pay tax under Part I on certain rents and timber royalties. (g) Part XIII tax under paragraph 212(1)(h) does not apply to that portion of any superannuation or pension benefit paid to a non-resident person that can reasonably be attributed to services rendered by a person in a taxation year during which that person was at no time resident in Canada and throughout which that person was not employed, or only occasionally employed, in Canada. Paragraph 212(1)(h) also does not apply to any superannuation PAGE 25

or pension benefit that is transferred (using prescribed form NRTA1) by the payer on behalf of the non-resident to a registered pension plan, or to a registered retirement savings plan, where (i) if the transfer was made before June 28, 1990, the non-resident was the annuitant under the plan to which the transfer was made; or (ii) if the transfer has been made after June 27, 1990, it has been in accordance with the rules (for residents) in section 147.3 or in paragraph 60(j) or (j.2). Also excluded from Part XIII tax under paragraph 212(1)(h) is any superannuation or pension benefit which would be deductible in computing taxable income under paragraph 110(1)(f) if the non-resident had been resident in Canada throughout the taxation year. See also 53(e) above concerning elections under section 217. (h) Paragraph 212(1)(f) provides for Part XIII tax on alimony or maintenance payments for the support or maintenance of a non-resident spouse or former spouse (including a party to a common-law relationship) and/or children when such payments would have been taxable if the recipient had been resident in Canada. PAGE 26

PART II - PAYMENT, REPORTING AND REFUND OF NON-RESIDENT PART XIII TAX WITHHELD AND OTHER ADMINISTRATIVE COMMENTS

PAYMENT AND REPORTING

General Comments

54. Payers must remit the tax due or withheld on all payments made to non-residents. When the amount has been paid to an agent or other person without the Part XIII tax having been deducted, the agent or other person must deduct and remit the tax due. Effective after 1987, Part XIII tax due or withheld must be "received by" either a District Office/Taxation Centre or a Canadian financial institution on or before the 15th day of the month following the month the amount was paid or credited to the non-resident. If payers already have non-resident accounts with the Department and are in possession of PD7AR-NR, Remittance Form, the tax withheld may be remitted through any institution where they bank. In any other case, the tax may be remitted to the nearest Taxation office. Payment should be made by cheque or money order payable to the Receiver General in the same currency as was paid to the non-resident or the equivalent Canadian currency at the rate of exchange on the day on which the non-resident was paid. Persons remitting tax for the first time should include with the payment their name and address, or the name and address of their firm, the type of payment (e.g., dividends, interest, rentals, royalties or other income) and should specify the month during which tax was withheld on the payment made to the non-resident. The Department will mail a form PD7AR-NR receipt and statement to the remitter each month. The top portion of this form may be torn off and used when remitting tax from a future payment. If the remittance form accompanies the remittance, no further identification of the payment is necessary. Instructions for the use of the PD7AR-NR are provided on the back of the form.

55. Except as otherwise specified in 56 to 63 below, persons who have paid or credited interest, dividends, pensions, annuities and other amounts (including non-taxable amounts) to non-residents in a calendar year are required to complete an Information Return entitled Return of Amounts Paid or Credited to Non-Residents of Canada. For pre-1991 Information Returns, forms NR4/NR4A Summary and NR4, NR4A Supplementaries were used. Commencing with 1991, forms NR4B Summary and Supplementaries must be used. See NR4B Guide for complete details. In particular, payers must: PAGE 27

(a) prepare form NR4B Summary reporting all amounts in paragraphs 212(1)(a) to (s) and subsections 212(2) and (5) of the Act; (b) prepare related Supplementary form NR4B (amounts in paragraphs 212(1)(a) to (s) and subsections 212(2) and (5) of the Act) for every non-resident to whom amounts were paid or credited in the year; (c) file copies 1 and 2 of the Summary, and copies 1 and 2 of the Supplementaries with Revenue Canada Taxation Centre, 875 Heron Road, Ottawa, Ontario, K1A 1G9, "Information Processing," not later than March 31 of the following year; (d) send copies 3 and 4 of the Supplementaries to the non-resident not later than March 31 of the following year; and (e) retain copy 3 of the Summary and copy 5 of the Supplementary for record purposes.

56. Notwithstanding 55 above, when the aggregate of taxable amounts paid or credited in a year to a particular non-resident totals less than $10, the Department does not require withholding of tax or reporting of these amounts in annual information Return of Amounts Paid or Credited to Non-Residents of Canada.

57. Payments to a non-resident from an estate or trust will be reported by the trustee on forms NR4B Summary and NR4B Supplementary filed concurrently with the T3 Return of the trust. The T3, accompanied by the NR4B Summary and Supplementaries, must be filed within 90 days from the end of the taxation year of the trust.

58. Dividend warrants and interest coupons cashed by encashing agents during the year with forms NR601 and NR602 are required to be reported on the "Amounts not reported on NR4B Supplementary" space of the form NR4B Summary. This information is derived from copy 3 of form NR601 or NR602, which was retained by the encashing agent.

59. A bank, trust company or credit union, when cashing dividend warrants or interest coupons that are owned by a non-resident or are being cashed by a non-resident or the non-resident's agent, must issue to such non-resident or agent (a) form NR601 when tax is withheld. These forms must be forwarded to PAGE 28

the Department monthly with the PD7AR-NR remittance form as indicated in 54 above, or (b) form NR602 for non-resident persons when no tax is withheld. Forms NR602 must be forwarded monthly to: Revenue Canada, Taxation International Taxation Office 875 Heron Road Ottawa, Ontario K1A 1A8

60. In the case of rent from real property in Canada or a royalty from a timber resource property or timber limit in Canada, if there is an election under subsection 216(4) as described in 43 above, the following rules apply: (a) the Return of Income (form T1, T2 or T3) for the taxation year must be filed within six months from the end of the taxation year for which the election was made; (b) all rents on real property or timber royalties from a timber resource property or timber limit in Canada must be reported on the return; (c) the tax reported on the return must be remitted by the due date; (d) form NR6 should be filed on or before January 1 of the taxation year to which the election applies, or, on or before the date the first rental payment is due, as applicable; (e) the payer may be entitled to withhold tax on the net amount available to the non-resident; and (f) tax withheld must be remitted along with form PD7AR-NR. If an election has been made under subsection 216(4) but a Return of Income for the taxation year is not filed within the time specified in (a) above, or the tax reported on the return is not remitted by the due date, the tenant or agent will be notified accordingly as a co-signer of form NR6. The tenant or agent must then pay the assessed tax under Part XIII and may retain from future rentals or timber royalties the difference between the tax remitted on the net and that applicable on the gross rentals or timber royalties to date. Annual income tax returns (form T1, T2 or T3), if applicable, are to be filed with: Revenue Canada, Taxation International Taxation Office 875 Heron Road Ottawa, Ontario K1A 1A8 PAGE 29

Trust Companies

61. Trust companies or other financial institutions may remit non-resident tax on behalf of (a) corporations, as payers or transfer agents, (b) individuals or corporations, as agents, nominees or custodians, or (c) estates or trusts, as executors or trustees. Because of the diversified accounts administered by such institutions, arrangements should be made initially with the International Taxation Office or appropriate taxation office for (i) proper designation of accounts, and (ii) proper allocation of remittances by year, for trusts that are operated on a fiscal year basis. Reconciliation of NR4B returns to the various accounts for each taxation year can thus be facilitated.

When an amount becomes payable by a trust resident in Canada to a non-resident beneficiary and the amount is deductible in computing the income of the trust for a taxation year, for the purposes of paragraph 212(1)(c) of the Act the amount shall be deemed to have been paid to the non-resident as income of or from the trust on the earlier of (i) the day on which the amount was paid or credited, and (ii) the 90th day after the end of the taxation year of the trust.

Income Received from Sources Within the United States on Behalf of Other Persons and the Withholding of Additional United States Tax

62. Every person in Canada who receives income from sources within the United States for the benefit or credit of a person whose address is outside Canada is required to report such income on form NR1 and, in some cases, to deduct additional United States tax. Income from United States sources includes dividends, interest, rents, royalties, annuities, or other fixed or determinable annual or periodic income from which a tax was deducted at the source. The attached Appendix 2 schedule shows the reporting and withholding requirements that are applicable to income from sources within the United States. The nominee, agent, or custodian must file the respective T5 Return with the appropriate Taxation Centre by the last day of February and NR1 Return with the International Taxation Office by the 15th of March, relating to such income for the preceding calendar year. The additional United States tax is to be remitted in United States PAGE 30

currency, together with United States form 1042, to the Internal Revenue Service (at the address indicated on form NR1) on or before March 15 of the year following the calendar year in which the income was received.

Payees in Certain Countries

63. A wholly-owned Canadian corporation paying or crediting tax-free dividends to its parent in Ireland shall report such dividends when filing the NR4B Return for the calendar year and substantiate such exemption under the Canada-Ireland Income Tax Agreement, Article VI(2) by an affidavit attached to the return.

Interest, Penalties and Fines (Reflects rates in effect since September 13, 1988)

64. A person who fails (a) to withhold non-resident tax on behalf of a non-resident is liable for: (i) the amount of tax that should have been withheld plus interest on such amount at the prescribed rate per annum, and (ii) a penalty of 10 per cent of the amount that should have been withheld plus interest on such penalty at the prescribed rate per annum and, where the failure to withhold is a second or subsequent failure in the year that has occurred after the person has been assessed such a penalty for the first such failure in the year, a penalty of 20 per cent of the amount that should have been withheld plus interest on such penalty at the prescribed rate per annum; Note: The liability discussed under (i) above may be assessed against the payer or the non-resident payee or against both until one of the assessments is paid. The liability discussed under (ii) above may be assessed only against the payer. (b) to remit, by the date it is due, non-resident tax withheld is liable for: (i) the amount withheld and not remitted plus interest on such amount at the prescribed rate per annum, and (ii) a penalty of 10 per cent of the amount withheld and not remitted plus interest on such penalty at the prescribed rate per annum and, where the failure to remit the amount withheld is a second or subsequent failure in the year that has PAGE 31

occurred after the person has been assessed such a penalty for the first such failure in the year, a penalty of 20 per cent of the amount withheld and not remitted plus interest on such penalty at the prescribed rate per annum; or (c) to file form NR4B Return (i) for the calendar year on or before March 31 of the following year generally, and (ii) for the taxation year of an estate or trust, within ninety days from the end of that taxation year in which the amount was paid or credited is liable for a penalty which is equal to the greater of $100 and $25 per day of default to a maximum of $2,500 for that year. A person who fails to distribute copies of form NR4B Supplementary to non-residents at the times specified in (i) and (ii) above is also liable to a penalty equal to the greater of $100 and $25 per day of default to a maximum of $2,500 for that year. Note: The prescribed rate of interest referred to in (a) and (b) above is set quarterly by Part XLIII of the Regulations. Effective January 1, 1987, interest is compounded daily.

65. A penalty of $50 may be imposed upon (a) the person presenting coupons or dividend warrants for encashment who fails to complete properly forms NR601 or NR602; (b) the encashing agent who fails to obtain a completed form NR601 or NR602 at the time coupons or dividend warrants are redeemed, and (c) the encashing agent who fails to deliver the forms to the Department by the 15th day of the month following the month in which they were received.

66. A person convicted of evading or attempting to evade payment of taxes imposed by the Act or of committing any other offence described in subsection 239(1) is subject to a fine of not less than 50 per cent and not more than 200 per cent of the amount of tax that was sought to be evaded, or both the fine and imprisonment for a term not exceeding two years. PAGE 32

REFUND OF TAX WITHHELD (Note: Amounts of less than $1 are not refundable.)

67. The procedures for obtaining refunds of non-resident tax when a payee is entitled to a refund of all or part of the tax withheld under Part XIII are set out in 68 to 77 below. Note: Any statement in this information circular to the effect that the Minister shall or may pay a refund of Part XIII tax is subject to the provisions of subsection 227(6) of the Act which permits the Minister to first apply the refund against any amount that the non-resident payee is otherwise liable for under the Act.

Who May Claim a Refund

68. The following are some examples of persons who may be entitled to claim a refund: (a) United States resident organizations exempt from tax under Article XXI of the 1980 Canada-United States Tax Convention; (b) organizations and trusts outside Canada that hold a certificate of exemption issued by the Department exempting them from tax on interest from bonds, debentures or similar obligations issued after June 13, 1963; Note: Subject to the comments in 81 below, tax is withheld on income from securities beneficially owned by tax-exempt organizations when registered in the name of nominees (for information on the correct withholding rate, see Information Circular 76-12R4). (c) non-resident persons who have paid non-resident withholding tax (i) at 25 per cent when a lower rate applies under a bilateral tax convention or agreement between Canada and the country where the non-resident resides. See Appendix A attached to Information Circular 76-12R4 for a list of treaty countries and rates of tax; (ii) at 25 per cent on the gross or net rentals from real property or a timber royalty during the taxation year, and who had filed a T1, T2 or T3 return for that year under section 216 of the Act; (iii) at 25 per cent on alimony, pensions, annuities, or similar payments pursuant to paragraphs 212(1)(f), (h), (j) to (m) and (q) of the Act, and elect to file a T1 Individual Income Tax Return pursuant to section 217; PAGE 33

(iv) on income of non-resident insurance companies and fraternal benefit societies registered to carry on business in Canada under the Canadian and British Insurance Companies Act or under the Foreign Insurance Companies Act; (v) while deemed or ordinarily resident in Canada for the period (A) as an individual under subsections 250(1) and (3) of the Act, or (B) as a corporation under subsection 250(4); and (d) a person resident in Canada who is a member of a partnership (other than a Canadian partnership as described in 9 above) that was subject to Part XIII tax by virtue of paragraph 212(13.1)(b) of the Act. The proportionate share of the profits of the partnership for the taxation year applicable to a partner resident in Canada will establish the proportionate share of Part XIII tax withheld that may be claimed as a credit against Part I tax determined on the income for the taxation year.

When to Claim a Refund

69. A person on whose behalf an amount has been paid to the Receiver General under Part XIII of the Act, and who, after having tax deducted or withheld under that part (a) was not liable to pay any tax, or (b) has had deducted an amount that was in excess of the tax that was required to be paid may make application in writing within two years from the end of the calendar year in which the amount was paid, and in such case, the Minister shall refund the excess tax paid. For example, Part XIII tax withheld on a December 1989 payment to a non-resident and remitted to the Department in January 1990 may be refunded if a written refund application is received by December 31, 1992. Tax withheld on a November 1989 payment that was remitted to the Department in December 1989, however, can be refunded only if a written refund application was received by December 31, 1991. Note: For purposes of an election under section 217 of the Act on alimony, pensions or similar payments, the T1 Individual Income Tax Return is required to be filed within six months from the end of the taxation year in which such amounts were paid or credited. PAGE 34

How to Claim a Refund

70. A non-resident of Canada may claim a refund by (a) forwarding a letter signed by either the resident payer or the non-resident taxpayer; (b) forwarding an Application for Refund of Non-Resident Tax (form NR7-R) (e.g., tax withheld from pension income exempt under a tax agreement with another country); (c) filing form T1 Individual Income Tax Return as an individual for the purposes of (i) rental income from real property or a timber royalty (section 216 election), and (ii) alimony, pensions and similar payments (paragraphs 212(1)(f), (h), (j) to (m) and (q)) when an election is filed pursuant to section 217, or (d) filing form T2 Corporation Income Tax Return or T3 Estate Trust Return for the purposes of rental income from real property or a timber royalty (section 216). Note: When written notification is received by the Department under (a), a form NR7-R, T1 Individual Income Tax Return, T2 Corporation Income Tax Return or T3 Estate Trust Return, as applicable, is made available to the claimant. Refund claims under (b), (c) or (d) should not be combined, as processing procedures for each are different.

71. A non-resident insurance company or a fraternal benefit society registered to carry on business in Canada under the Canadian and British Insurance Companies Act or under the Foreign Insurance Companies Act may claim a credit refund, if applicable, by attaching (a) a written notification, (b) form NR4B Supplementary, or (c) a form NR7-R Application for Refund of Non-Resident Tax to its Corporation Income Tax Return (form T2) or its Insurance Companies Non-Resident Tax Return (form T2016) for a taxation year which is due by the filing date set out in 83 below. NR7-R refund claims amending the prior year's T2016 filed must be noted accordingly. PAGE 35

72. A resident of Canada may claim a refund by attaching (a) a signed letter requesting the refund, (b) a form NR4B Supplementary, or (c) a form NR7-R Application for Refund of Non-Resident Tax to the T1 Individual Income Tax Return or T2 Corporation Income Tax Return or T3 Trust Income Tax Return and Trust Information Return for the taxation year.

How to Complete and File a Claim for Refund on Form NR7-R, Application for Refund of Non-Resident Tax, or by Filing an Income Tax Return

73. A non-resident payee (a) who has received a form NR4B Supplementary issued by a payer, completes form NR7-R including "Certification" and attaches copy 3 of form NR4B Supplementary; (b) who has not received a form NR4B Supplementary, completes a form NR7-R including "Certification" and forwards it to the payer or disbursing agent for completion of the "Certificate of Tax Withheld" portion; (c) who has received a form NR4B Supplementary and who elects to file an income tax return under Section 217 of the Act, attaches copy 3 of that form to the return; or (d) who has received a form NR4B Supplementary and who elects to file an income tax return under Section 216, attaches copy 3 of that form to the return.

74. A non-resident who, as beneficial owner of securities registered in the name of a nominee, has received a form NR4B Supplementary (issued by payer) in the name of the nominee (a) completes form NR7-R including "Certification", (b) completes an affidavit as to the beneficial ownership of the securities (a separate affidavit must be completed each time the income flows through more than one nominee), and (c) attaches the form NR4B Supplementary and affidavit to a form NR7-R. Note: The non-residents described in 73 and 74 above file the NR7-R application or the income tax return with: PAGE 36

Revenue Canada, Taxation International Taxation Office 875 Heron Road Ottawa, Ontario K1A 1A8

75. A resident of Canada who received various types of income at an address outside Canada and has not received a form NR4B Supplementary (a) completes form NR7-R including "Certification", (b) forwards form NR7-R to the payer or disbursing agent for completion of the "Certificate of Tax Withheld" portion, and (c) attaches form NR7-R to the T1 return or T2 return for the taxation year and claims a credit for the non-resident tax against the tax payable in the return.

76. A resident of Canada who received income at an address outside Canada and has received a form NR4B Supplementary attaches copy 3 of the Supplementary to the T1 Individual Income Tax Return or T2 Corporation Income Tax Return.

Exceptions

77. When an application is made, within a two year period, by or on behalf of a non-resident person for refund of an amount remitted to the Receiver General that was withheld under Part XIII, and the Minister is not satisfied (a) that the person was not liable to pay tax, or (b) that the amount was in excess of the tax payable, the Minister will assess that person for any amount payable under Part XIII and send a Notice of Assessment. Divisions I and J of Part I of the Act are then applicable to the extent provided by subsection 227(7). The person who receives an assessment and who wishes to appeal must file a Notice of Objection to the assessment within 90 days from the date of that assessment.

OTHER ADMINISTRATIVE COMMENTS

Exemptions

78. Canada-U.S. Tax Convention, 1980 - Article XXI. (a) Income derived by an organization resident in the United States that is religious, scientific, literary, educational, or charitable in character may be exempt from Canadian taxation under article XXI, paragraph 1 of the Canada-United States Tax PAGE 37

Convention to the extent that such income is exempt from tax in the United States. (b) A trust, company or other organization resident in the United States which is generally exempt in a taxation year from U.S. income tax and is constituted and operated exclusively to administer or provide employee benefits or benefits for the self-employed under one or more funds or plans established to provide pension or retirement benefits or other employee benefits may obtain exemption in that year from Canadian taxation on its dividend and interest income under article XXI, subparagraph 2(a) of the Canada-United States Tax Convention. A trust, company or other organization resident in the United States which is not taxed in the United States in a taxation year and is constituted and operated exclusively to earn income for the benefit of an organization described in the preceding sentence may obtain exemption in that year from Canadian taxation on its dividend and interest income under Article XXI, subparagraph 2(b) of the Canada-United States Tax Convention. (c) Application under Paragraph 1 of Article XXI should be made by letter, accompanied by a certified copy or a photocopy of (i) the Charter, Articles of Incorporation or similar instrument setting out the purposes of the organization, and (ii) a letter of determination by the Internal Revenue Service of the United States Treasury Department as to the status of the organization under the Internal Revenue Code. (d) Application under Paragraph 2 of Article XXI should be made by letter, accompanied by a certified copy or a photocopy of (i) the Trust Indenture or similar instrument setting out the purposes of the organization, and (ii) a letter of determination by the Internal Revenue Service of the United States Treasury Department as to the status of the trust under the Internal Revenue Code. (e) The applications under Article XXI should be forwarded to Revenue Canada, Taxation Registration Directorate Non-Resident Unit PAGE 38

Program Services Section Ottawa, Ontario K1A 0L8 (f) A person paying amounts to organizations recognized under Paragraph 1 of Article XXI is not required to withhold non-resident tax if the security is registered in the name of the organization as listed in this Department's annual publication, List of United States Organizations Exempt from Canadian Non-Resident Tax under Article XXI(1) of the Canada-United States Tax Convention (see 81 below for securities held in the name of a nominee). (g) If an organization or trust claiming to be exempt under Paragraph 1 of Article XXI of the Convention is not listed in the latest revision of that publication or is one that has received recognition under Paragraph 2, the payer should obtain from the organization, as authority for not withholding non-resident tax, a photocopy of the letter issued to the organization by the Department indicating the nature and extent of its exempt status.

Certificate of Exemption - 212(14)

79. The non-resident organization or trust described in 32 above may obtain a certificate of exemption (form NR602A) issued under subsection 212(14) of the Act. A certificate of exemption applies only to interest payable on any bond, debenture or similar obligation issued after June 13, 1963. (a) Application should be made on form NR6A, Application for Certificate of Exemption, accompanied by a certified copy or photocopy of (i) the instrument under which the applicant was established, incorporated or organized, and (ii) a certificate or letter of exemption from tax issued to the applicant by the country of residence. The application should be forwarded to the address specified in 78(e) above. (b) If and when an application is approved, a Certificate of Exemption entitling the holder to the aforementioned tax exemption is issued. The date of issue of such a certificate is determined by the date of the initial written request for exemption of the applicant. None may be issued retroactively; hence, there can be no refund of amounts withheld prior to the date of issue. (c) If an application is not approved, the applicant has the right to appeal such decision to the Federal Court of Appeal within 30 days from the decision of the Minister to refuse the application or such further PAGE 39

time as the Court of Appeal may allow (subsections 172(3) and (4) and 180(1) of the Act).

80. (a) Exemption limitations: A non-resident organization or trust to which a Certificate of Exemption (form NR602A) has been issued by the Department under subsection 212(14) of the Act is exempt from non-resident withholding tax on interest on any bond, debenture or similar obligation issued after June 13, 1963, paid or credited to the organization or trust during the term for which the Certificate of Exemption was issued (subparagraph 212(1)(b)(iv) of the Act). (b) Evidence of exemption: (i) Coupon bonds - The Certificate of Exemption, or a photocopy, must be presented when coupons are cashed. As evidence that the obligation was issued after June 13, 1963, coupons should bear the designation "AX", but in the absence of this designation, the issue date shown on the bond will govern. (ii) Registered obligations - A person paying interest by cheque on an eligible obligation is not required to withhold tax if (A) the owner of the obligation has furnished a photocopy of the Certificate of Exemption, (B) the obligation is registered in the name of the owner as shown on the Certificate of Exemption (see 81 below for securities held in the name of a nominee), and (C) the Certificate is in force on the date of payment (see (iii) below). (iii) As a result of the amendment to subsection 212(14) of the Act and the relevant provisions of the ITAR, Certificates of Exemption bearing reference to different provisions of the law have been and will be issued. These are as follows: (A) Certificate of Exemption (form NR602A), the serial number of which is prefixed "NR", issued under subsection 212(14) of the Act for a specified term as indicated by "Date of Issue" and "Date of Expiry" appearing on the certificate. (B) Certificate of Exemption with Limited Application (form NR602B), the serial number of which is prefixed "NRL", issued in accordance with subsection 212(14) of the Act, and PAGE 40

subparagraph 10(5)(b)(i) of ITAR in replacement of a previous Certificate of Exemption. Such certificates are dated January 1, 1975 and do not bear an expiry date, and unless formally withdrawn (see 33 above and 82 below), are valid indefinitely for interest payable on any eligible security acquired by the certificate holder on or before December 31, 1971.

Nominees

81. (a) In the case of a security held in the name of a nominee (including an approved special nominee) for an organization or trust to which a letter of exemption under Article XXI of the Canada-United States Tax Convention or a Certificate of Exemption under subsection 212(14) of the Act has been issued, the Canadian payer is obliged to withhold tax from any payment on the security unless the Department has provided the payer with written authorization to refrain from doing so for payments on the specific security (i.e., name of issuer, serial number, denomination and date of issue of the share or bond certificate) in question. (b) Authorizations referred to above are given only for securities held in the name of "approved special nominees," i.e., nominees who have been approved by the Department for the exclusive purpose of registering securities beneficially owned by tax-exempt organizations or trusts. Approval of a special nominee is merely an administrative concession that is accorded, under certain conditions and at the discretion of the Department, to United States financial institutions which administer the accounts of many tax-exempt organizations or trusts. Approval does not grant the nominee tax-exempt status. (c) For administrative purposes the Department may endorse arrangements such as the Tax Exempt Dividend Service (TEDS) procedure allowing income to flow through a nominee to exempt organizations free of withholding. The participants in such a procedure will be required to provide the nominee with a breakdown of tax exempt holdings in their account. The nominee will then summarize the information and notify a Canadian central withholding agent of the amounts on which withholding tax will apply. The central withholding agent will be responsible for the remitting and reporting as well as the withholding requirements. Canadian payers would be advised to direct 100% of the income payments PAGE 41

to the central withholding agent who has been authorized to withhold based on the above-noted notification.

Loss of Exemptions

82. (a) An organization or trust to which a Certificate of Exemption has been issued under subsection 212(14) of the Act (or is deemed to have been issued under that subsection by virtue of subparagraph 10(5)(b)(i) of the ITAR) and which loses its exempt status will receive formal notice from the Department of withdrawal of its exemption. (b) The formal notice referred to above will not be issued (i) when a certificate is invalidated by specific legislation, e.g., a certificate issued under subsection 106(9) of the pre-1972 Act which in accordance with the provisions of subparagraph 10(5)(b)(ii) of the ITAR is deemed to expire on December 31, 1974 for interest payable on eligible securities acquired after December 31, 1971, or (ii) when a certificate issued under subsection 212(14) of the Act is not renewed upon expiry.

Exemption: Other Organizations

83. Non-resident insurance companies and fraternal benefit societies (see 52 above) may make application for Certificate of Registry to The Office of the Superintendent of Financial Institutions Ottawa, Ontario K1A 0H2 Instructions regarding applications may be obtained from the same office upon written request. Registered companies and societies must file an annual return on form T2016 within the six-month period immediately following the end of the year at the Taxation Centre (a) where the Corporation Income Tax Return, form T2, is filed, or (b) for the area in which the Chief Agent for Canada resides, if no Corporation Income Tax Return, form T2, is required to be filed.

Residents of Canada Temporarily Absent

84. If a person who is considered to be a resident of Canada for tax purposes has a foreign mailing address during a period of temporary absence from Canada, that person must obtain confirmation of residency in Canada from a taxation office in order to not have the PAGE 42

non-resident withholding tax withheld from payments. That office should be supplied with the following facts: (a) address in and outside Canada; (b) dates of departure from, and intended return to Canada; (c) place of residence of dependants; (d) name and address of Canadian payer; (e) amounts, type and period of payments by payer; and (f) other relevant and important data for reaching a determination of Canadian resident status (i.e., an ambassador, minister, officer or servant of Canada, Member of the Canadian Armed Forces, etc.). If following a review of the facts the taxation office is satisfied that the applicant is resident in Canada, that office will issue written authorization to the Canadian resident payer not to withhold non-resident tax from such payments to the addressee.

Request for Tax Reduction by Non-Residents of Canada

85. A non-resident of Canada receiving pensions, alimony or similar payments (see 53(e) above) from sources in Canada may file an Application by a Non-Resident of Canada for a Reduction in the Amount of Non-Resident Tax Required to be Withheld (form NR5). This form may be obtained on request from any district office. One completed copy of form NR5 is to be forwarded to Revenue Canada, Taxation International Taxation Office 875 Heron Road Ottawa, Ontario K1A 1A8 If following a review of form NR5, the Department is satisfied that the tax on taxable income as determined is less than the non-resident withholding tax otherwise required, the Department will issue written authorization to the Canadian resident payer of the pension or similar amount to reduce the withholding tax in accordance with that determined on the authorization. A non-resident of Canada who has received such approval shall file a T1 Individual Income Tax Return for the taxation year within six months after the end of the taxation year. The T1 return forms shall be sent to the non-resident by the Ottawa District Taxation Office when ready for public distribution. (See also 53(e) above.) PAGE 43

Appendices

86. Two appendices are attached: 1. List of Canadian returns and forms referred to in this Circular. 2. Reporting of income received from sources within the United States. PAGE 44

APPENDIX 1

LIST OF CANADIAN RETURNS AND FORMS

T1 Federal Individual Income Tax Return (for Non-Residents) T2 Corporation Income Tax Return T3 Trust Information Return and Income Tax Return (Summary and Supplementary) T5 Return of Investment Income (Summary and Supplementary) NR1 Return of Income Received from Sources Within the United States on Behalf of Non-Residents of Canada NR4B Return of Amounts Paid or Credited to Non-Residents of Canada (Summary and Supplementary) NR5 Application by a Non-Resident of Canada for a Reduction in the Amount of Non-Resident Tax Required to be Withheld NR6 Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real Property or Receiving a Timber Royalty NR6A Application for Certificate of Exemption NR7-R Application for Refund of Non-Resident Tax NR601 Non-Resident Ownership Certificate - Withholding Tax NR602 Non-Resident Ownership Certificate - No Withholding Tax NR602A Certificate of Exemption NR602B Certificate of Exemption with Limited Application PD7AR-NR Non-Resident Tax Remittance Form T2016 Insurance Companies Non-Resident Tax Return (for the year ending 19__) T2023 Election in Respect of Loans from Non-Residents T2047 Agreement in Respect of Unpaid Amounts NRTA1 Authorization for Non-Resident Tax Exemption

APPENDIX 2

REPORTING OF INCOME RECEIVED FROM SOURCES WITHIN THE

UNITED STATES ON BEHALF OF OTHER PERSONS AND THE

WITHHOLDING OF ADDITIONAL UNITED STATES TAX

Address of person

for whom income

was received

Canadian return

on which report

to be made

Filing date

Additional United

States tax to be

deducted

Canada

T5 Return

Last day of February

Nil

United States

NR1 Return

March 15

Nil

United Kingdom

NR1 Return (report total only)

March 15

Nil

Countries, other than Canada and the United Kingdom, with which the United States has a treaty reducing withholding tax to 15% or less

Separate list for each country, to be filed with NR1 Return

March 15

Nil if name and address of person for whom income was received is reported with NR1 Return

15% if name and address not reported

Other countries

NR1 Return (report total only)

March 15

15%

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