Self-employment Services

A production company contracts with a non-resident, who provides services under a contract for services. We consider the worker to be self-employed.

Payments subject to withholding

Under section 105 of the Income Tax Regulations, any person who pays a non-resident a fee, commission or other amount for self-employment services provided in Canada must withhold 15% of the gross amount earned by the non resident.

Payments not subject to withholding

The CRA has an administrative policy that excludes the withholding requirement on certain travel expenses reimbursed to a non resident:

• meal expenses to a maximum of CAN$45 per day per person;
• accommodation expenses to a maximum of CAN$100 per day per person.

The payer of the expenses described above would not be required to retain vouchers.

Reasonable travel expenses in excess of the above amounts are also not subject to withholding. However, some rules and conditions apply:

• such expenses are limited to expenses incurred for transportation, accommodation, and meals;
• they must have been paid directly to third parties on behalf of a non-resident or reimbursed to a non-resident; and
• the expenses must be supported by vouchers retained by the payer.

Remitting tax withheld

The payer must remit the tax withheld to the Canada Revenue Agency (CRA) by the 15th day of the month following the month in which the amounts were deducted or withheld. Failure to meet these obligations may make the payer liable for the outstanding tax plus interest and penalties.

Reporting of payments by the payer

If you have paid amounts for the services of a self-employed non-resident in Canada, they must be reported on a T4A NR Statement of Fees, Commissions or Other Amounts Paid to Non Residents for Services Rendered in Canada. Be sure to take the following into consideration when preparing the T4A NR:

• Report the total gross amount of fees, commissions or other amounts paid. These amount must be reported even if the CRA has granted a waiver or reduction of the withholding tax.
• Travel expenses on which tax was not withheld have to be reported on the T4A NR information slip as travel expenses but are not included in the gross income on the slip.

For more information, see Guide RC4445, T4A-NR-Payments to Non-Residents for Services Provided in Canada.

Forms and publications

• RC4445, T4A-NR-Payments to Non-Residents for Services Provided in Canada
• T4A NR Statement of Fees, Commissions or Other Amounts Paid to Non Residents for Services Rendered in Canada