Part XIII and Regulation 105 of the Canadian Income Tax Act require that servicesperformed in Canada by foreign vendors are subject to Non Resident Tax. This isessentially a source deduction for income tax on income earned in Canada.
In order to comply with this requirement, Marine Atlantic must deduct 15% from allfees charged in relation to work performed in CANADA, along with travel time inCANADA. Service work performed outside of Canada, supplier parts or livingexpenses incurred for the duration of your visit in Canada is not applicable to the tax.The amounts will be remitted to the Canada Revenue Agency on your behalf. By theend of February Marine Atlantic will send you a T4ANR form which will summarizethe deductions for your tax reporting for the prior year.
The 15% withholding is based only on services rendered within Canada, and travelWITHIN Canada. On your invoices, please state separately the amounts for serviceswithin Canada, services provided while outside Canada, and expenses. Travel timewithin Canada and Travel time to arrive in Canada must be clearly separated. Failureto determine what is applicable for with-holding purposes, will result in the fullamount invoiced subject to the 15% with-holding.
If you wish to review the Canada Revenue Agency requirements, please refer to theCRA web site at http://www.cra-arc.gc.ca and search on “Regulation 105”.
In some circumstances a non-resident may be entitled to a waiver of the withholding.Details on the waiver process are on the CRA Website under Regulation 105.
If you have any questions on this requirement please contact Sherry Anderson,Corporate Accountant, at the telephone or e-mail address listed below.
Tel: (709) 695-4291