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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29968
Experience:  Taxes, Immigration, Labor Relations
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Canadian 1099??

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We are a US Corporation that has paid a Canadian individual a commission on the sale of equipment into Canada. Do we need to provide a 1099 type form to him and the country of Canada?

According to instructions - see
File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:
•At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8);
•At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
•Any fishing boat proceeds; or
•Gross proceeds of $600 or more paid to an attorney
So if that are commission - they assumed a payment for services and that reporting form is required.
As the payee is in Canada - you need to verify if services were provided in the US or abroad. Compensation for services provided in the US - there is a mandatory withholding, while there is no withholding if services were provided in Canada.
Also the payee might claim tax treaty benefits to avoid withholding by providing a signed form W8BEN.
Let me know if you need any help or clarification this matter.
Customer: replied 4 years ago.

My company is US based. We sold equipment into Canada with the assistance of a Canadian. We paid the Canadian individual the commission. At no point was the individual in the US when he performed the services. The services were performed to help us sell the product to the Canadian company.


Based on this - I am guessing we do not need to provide any documentation to the US or the Canadian company.

If your company doesn't do any business activities in Canada - there is no need to report anything to Canadian taxing authorities.

So far as services were NOT provided in the US - no need to report such services to the IRS - but in case of the audit - you should be able to proof that.
That is why you might be advised to retain signed form W8BEN and other documents to whom the payment made, for what services and where services were performed.

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