Actors - election to file a return
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You will find this information helpful if you are a non-resident actor who provides film or video acting services in Canada. The information also applies to corporations related to non-resident actors.
Generally, you are a non-resident of Canada for income tax purposes if you permanently live outside Canada and you do not have any residential ties with Canada. For more information, see Guide T4058, Non-Residents and Income Tax.
Tax liability of non-resident actors
As a non-resident actor providing acting services in Canada in a film or video production, you are subject to a 23% non-resident tax. The 23% tax is your final tax liability on the acting income.
If the acting income is your only source of Canadian income, you are not required to file a tax return. However, you may be able to reduce your tax obligation by electing to file a return. This means that, under section 216.1 of the Income Tax Act, you choose to report the acting income on a Canadian tax return.
What income does the 23% tax apply to?
The 23% tax applies to all amounts paid or credited to you, or to a related corporation, for acting services that you provide in Canada on a film or video production, including payments of residuals and contingent compensation.
The tax applies to fees for acting services provided in Canada, per diem payments for days in Canada, amounts paid on your behalf to third parties, and similar benefits. However, withholding of 23% is not required from reasonable travel expenses (airfare, hotels) paid directly to third parties on your behalf, and reasonable travel expenses reimbursed to you provided they are adequately supported by vouchers from the payer.
Receipts are not required for reimbursement of meals, including incidentals, to a maximum of CAN$100/day. For more details, see Per diems for non-resident actors providing acting services in Canada.
The 23% tax does not apply to other income earned in Canada (for example, for services as a producer or director, for example).
The person paying you for the services (your payer), whether a Canadian or a non-resident, has to withhold this tax and remit it to the CRA on your behalf. Your payer is also required to report, on an NR4 slip, the amount of income and any taxes withheld and remitted to us. Your payer will give you a copy of this slip for your records.
Electing to file a return
What is the benefit of electing to file a return?
Electing to file a return allows you to pay tax on your net Canadian-source acting income at graduated individual or corporate rates, instead of paying tax on the gross amount at the 23% rate. Depending on the amount of your income and expenses, the tax calculated on the net income may be less than the 23% tax on gross earnings.
Mr. Actor is a U.S. actor from California providing acting services in Canada. His contract with Production Co. Ltd. was signed on March 12, 2009.
Mr. Actor had the following acting income and expenses in 2009:
|Gross acting income||$80,000|
|Other allowable expenses||$8,000|
|Net acting income||$56,000|
|Tax payable on net acting income at graduated rates||$15,502|
It would be beneficial for Mr. Actor to file an elective return.
If he does, he will report and pay tax at graduated rates on his net acting income of $56,000. On the return, he will also claim the $18,400 non-resident withholding tax (which his payer had withheld and remitted to the CRA) to offset the tax payable.
Mr. Actor will receive a refund of the excess tax that was withheld, as long as he sends us his elective return by June 15, 2010.
When determining whether it is beneficial to choose to file a Canadian income tax return, remember that if you are reporting income on a Canadian income tax return from employment in Canada or from a business carried on through a permanent establishment in Canada, you will pay federal tax on that income plus tax to the province or territory where you earned the income. If you are reporting self-employment income from a business that was not carried on through a permanent establishment in Canada, you will pay federal tax on that income plus the surtax for non-residents and deemed residents of Canada.
When is my elective return due?
You have to send us your elective return on or before your filing due date for the year.
The filing due dates for Canadian tax returns are as follows:
Any balance of tax payable is due on or before April 30 of the year after the tax year.
Any balance of tax payable is due two months after the corporation's fiscal year end.
- An individual return is due on or before April 30 of the year after the tax year to which the return relates.
- A self-employed individual's return is due on or before June 15 of the year after the tax year.
- A corporate return is due within six months of the corporation's fiscal year end.
Where can I obtain a return to use in filing my elective return?
To obtain a package to be used in filing your elective return, contact the Non-resident services section in the applicable Tax Services Office (TSO). Clearly print "Actor's election" on the top of the return.
What if I send my return late?
If you send your elective return late, your election will be invalid. If the payer did not withhold the correct amount of non-resident tax from your acting income, we will issue a non-resident tax assessment to you.
Reduction of tax withheld
If I intend to elect to file a tax return, can I apply to reduce the tax withheld?
If you intend to elect to file a return and pay tax at the applicable rate on your net acting income, rather than pay the 23% tax on your gross acting income, you can apply to reduce the tax withheld. You have to do this before you provide the acting services in Canada.
To apply, you or your representative must complete whichever of the following applies:
- Form T1287 - Application by a non-resident of Canada (individual) for a reduction in the amount of non-resident tax required to be withheld on income earned from acting in a film or video production
- Form T1288 - Application by a non-resident of Canada (corporation) for a reduction in the amount of non-resident tax required to be withheld on income earned from acting in a film or video production
Send it to a the applicable TSO of the CRA for approval.
The TSO will estimate your tax liability and inform you and your payer of any reduction to the rate at which tax should be withheld.
If a reduction to the 23% rate is approved, you must file an income tax return on or before your filing due date for the year.
What happens if the CRA approves my request for a reduction but I don't file the elective return by the filing due date?
If we approve your application to reduce the tax withheld on your acting income, and you do not file your elective return by the filing due date, your election will become invalid. The CRA will assess you at the rate of 23% on your gross income from acting services in Canada.
Can I use my corporation to receive the fees for my acting services?
Yes, you may use a corporation to receive your acting fees. The 23% tax will be withheld from the gross amount paid or credited to the corporation for your acting services.
If I use a corporation, can I still elect to file a tax return?
The corporation can elect to file a tax return and pay tax on the income earned in Canada at the rate for corporations, taking into account the income and expenses attributable to the acting services provided in Canada. See Allocating income to Canada for acting services for information on how to allocate income when the services are provided both inside and outside Canada.
If a corporation elects to file a return and it has made payments to a related individual non-resident actor, the actor must also file an elective return.
Will payments to me from the corporation be subject to the 23% tax?
You have two options:
- The corporation may pay 23% tax on the total amount of the payments it receives for the acting services. In this case, there will not be any tax payable on payments to you from the corporation.
- The corporation may elect to file a tax return and pay tax at the rate for corporations. In calculating the corporation's income that will be subject to tax, you may deduct the payments made to you by the corporation. Then you must also file an individual tax return and pay tax on the income you earned for acting services in Canada, which would include the payments you received from the corporation.
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