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Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience:  Nearly 30 years of varied tax industry exp. Tax Biz owner
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I have a tax question. I am a public speaker. If I speak

Customer Question

I have a tax question. I am a public speaker.

If I speak in Canada there is a speaker's tax and it appears that Canadian?? businesses are obligated to withhold a 15% tax.

I am a public speaker who has been hired to present a keynote speech in Canada. The company that is hiring me is based in the USA and they are going through a speaking agency in the USA. So the agency solely based in the USA is actually the one paying me for my services (in Canada).

The question is: is a company in the USA obligated under the law to withhold any taxes, or does this law only extend to businesses in Canada? Can the Canadian tax authorities penalize a company in the USA for not withholding taxes. It seems there is a jurisdictional question here.

The botXXXXX XXXXXne is I want to handle my own taxes without withholding by a business in the USA.

Here's a link to the rules in Canada:
http://www.cra-arc.gc.ca/E/pub/tg/rc4445/rc4445-12e.pdf
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.
Welcome. THANK YOU for choosing Just Answer. My name is XXXXX XXXXX my goal is to help make YOUR life, a little...LESS taxing.

Are you a U.S., or Canadian citizen?

Q: The question is: is a company in the USA obligated under the law to withhold any taxes, or does this law only extend to businesses in Canada?

A: Yes, there is a 30% tax withholding requirement for non U.S. citizens who earn U.S. source income. In order to be exempt from the withholding, non U.S. citizens have to complete a Form W8-Ben and give it to the employer, and the form has to be submitted timely to the IRS.

Link to form W8-Ben/instructions:

http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
http://www.irs.gov/pub/irs-pdf/iw8ben.pdf

-------------------------------------------------

Q: Can the Canadian tax authorities penalize a company in the USA for not withholding taxes.

A: There is a tax treaty between the U.S. and Canada. I do not see where it is stated in the treaty that the Canadian Tax Authorities can "penalize'" a U.S. company for not withholding tax. However, Articles 26 and 27 of the treaty do refer to Mutual Agreement Procedures and Exchange of Information between the two countries.

Link to full treaty:

http://www.irs.gov/pub/irs-trty/canada.pdf

Please let me know if I can be of further assistance to you regarding this matter.

Thank you again for using JUST ANSWER.


Customer: replied 1 year ago.

No, I am a USA citizen. The question here is whether Canada is requiring Canadian business or any business on the planet to withhold tax?

Customer: replied 1 year ago.

So is a USA business required under enforceable law to withhold any monies for providing services in Canada? Or does this withholding just apply to Canadian businesses hiring outside services?

Expert:  Tax.appeal.168 replied 1 year ago.
Hello Again Kevin,

Q: So is a USA business required under enforceable law to withhold any monies for providing services in Canada?

A: Whether it be Canada or any other foreign country, U.S. citizens are taxed on their worldwide income.

----------------------------------

Are you referring to the 15% withholding that you mentioned in your previous inquiry?
Customer: replied 1 year ago.

Sorry I must be confusing you.


 


I am only speaking about taxes in Canada.


 


I am a USA citizen living in Nevada hired to speak in Canada.


 


Is the USA company obligated under the law to withhold Canadian taxes?

Expert:  Tax.appeal.168 replied 1 year ago.
Q: Is the USA company obligated under the law to withhold Canadian taxes?

A: No, the USA is not obligated to withhold Canadian taxes.

As for the 15% tax that you mentioned in your previous inquiry, that applies to U.S. companies, not individuals. SEE BELOW:

If a U.S. company has employees performing services in Canada, it may be seen to be carrying on business in Canada. This result does not require a physical plant or office location, but can occur simply by soliciting orders or offering services for sale through an agent or employee. If a Company is deemed to be carrying on business in Canada, there will be corporate tax reporting requirements and potentially Canadian taxation. Where filing requirements are not met, significant penalties may result even where no tax is owed to Canada. Registration, collection and reporting requirements may also be necessary in many circumstances for Canadian Goods and Services Tax (GST) and Harmonized Sales Tax (HST).

 

 

A U.S. company rendering services in Canada is subject to a 15% tax withholding on their invoices under Regulation 105 of The Income Tax Act (and an additional 9% under Quebec tax law if services are rendered in Quebec). The Canadian customer is required to withhold and remit the tax to the Canada Revenue Agency (CRA) as well as file Form T4A-NR to report this tax withholding. The withholding is not a final tax but rather a tax instalment against a potential tax liability in Canada.

 

REFERENCE SOURCE:

 

http://www.gtn.com/newsletter_2012_06.php

 

 

Customer: replied 1 year ago.

Just to clarify this whole thread is really about one issue.


 


I'm hired as a performer to deliver a keynote speech in Canada. The company hiring me -- a speaker's agency --- is based the USA and has no offices in Canada.


 


The agency told me they must withhold 15% of my fee because of Canada law. They sent me these links:


http://www.cra-arc.gc.ca/E/pub/tg/rc4445/ and this one: http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rndr/rndr-eng.html


 


Is the speaker's agency wrong and they are not required to hold any of my fee?


 


Thank you again!


 

Customer: replied 1 year ago.

One more piece of information.


 


The company hiring me to speak through the agency is also based in the USA, not Canada. They are just having the event in Canada. So the USA client is paying the speaker's agency who is paying me.

Expert:  Tax.appeal.168 replied 1 year ago.
Kevin,

Reading a bit further, it does appear that the U.S. company has a requirement to withhold the tax, unless a certain waiver is completed and approved by the Canadian taxing agency. SEE BELOW:

A U.S. company will have payroll withholding and reporting obligations for both Canadian resident and non-resident employees, in relation to employment exercised in Canada, even if it does not have a deemed or actual PE in Canada. There is potential for significant penalties and interest charges if the company is not compliant with the tax withholding requirements.

 

 

However, if applied and approved by the Canada Revenue Agency in advance, a Regulation 102 waiver may be obtained for employees resident in the U.S. that will ultimately be exempt from Canadian tax under the Canada-U.S. tax treaty. This waiver would eliminate the need to withhold and remit payroll taxes in respect of their employment in Canada.

 

REFERENCE SOURCE:

 

http://www.gtn.com/newsletter_2012_06.php

 

Hopefully this clarifies matters for you.

Customer: replied 1 year ago.

Is this requirement the same for a US company hiring me to speak in Canada?

Expert:  Tax.appeal.168 replied 1 year ago.
Based on my understanding of the information that I have presented to you, my answer is yes.
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2534
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
Tax.appeal.168 and 4 other Tax Specialists are ready to help you
Expert:  Tax.appeal.168 replied 1 year ago.
Kevin,

Thank you for the high positive rating and the generous bonus. I do appreciate it. Even if prompted to do so, there is no need to respond to this post.

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