Form 1288 - Application by a corporation related to non-resident actor for a reduction of withholding tax on income earned in Canada
If you are a corporation related to a non-resident actor in a film or video production and would like a reduction in the amount of non-resident tax required to be withheld on your income earned in Canada, please complete Form T1288 as follows:
Section 1 - Information
This section contains important information you will need before you apply for a reduction in the amount of tax withheld from the corporation's income.
Attach a copy of the actor's contract to support the information you provide on Form T1288. For this application, a "contract" means any enforceable agreement that governs the terms of the acting engagement in Canada.
Section 2 - Identification area
- Business Number
If the corporation has a valid Business Number (BN), enter it here. The Business Number is a 15-character number, such as 12345 6789 RC0002. You can find more information on the BN in our guide called The Business Number and your Canada Revenue Agency Program Accounts.
You should also consult this guide if the non-resident corporation does not have a BN yet and needs one.
- Tax year beginning; Tax year ending
In the spaces provided, enter the first and last days of the corporation's tax year (year first).
- Corporation name
Enter the full name of the corporation (do not use abbreviations). Please make sure punctuation is correct.
- For the services of (F/S/O)
Enter the actor's name.
- Legal name
If the actor's legal name differs from his or her professional name, enter the legal name here.
- Canadian province or territory of work
Enter any provinces and territories in which the acting services will be provided.
Enter the address of the corporation's head office, including the street number and name; city; state, province, or territory; and zip or postal code.
- Mailing address
Complete this area if the corporation's mailing address is different from the address you indicated above.
- Country of residence
Enter the corporation's country of residence.
- Date of entry into Canada; Date of departure from Canada
Enter the actual dates the actor entered Canada and departed from Canada. If the actor entered and departed from Canada more than once, use the additional information area on the final page of the application form to record all dates.
- Is this the corporation's first application for this tax year?
Check yes or no to indicate your answer to this question.
Section 3 - Payer identification
The payer is the person or company who pays the corporation. After processing your application form, the CRA will advise the payer in writing of the applicable rate at which to withhold tax from each payment.
Enter the information requested on the application form.
Section 4 - Allocation of income
A non-resident corporation is subject to Canadian tax on income earned in Canada. When the income is earned for acting services provided both inside and outside Canada, you have to allocate the income accordingly. The corporation is not subject to tax in Canada for the part of the income that applies to services provided outside Canada. You can find information on allocating income at Allocating income to Canada for acting services.
Enter the information requested on the application form.
Section 5 - Payment for services - current contract
Enter the frequency of the payments (i.e., weekly, bi-weekly, monthly, or other), the amount of the payments to be received, and the total payment under the contract. Enter the dates of the first and final payments. Give this information in Canadian currency.
Section 6 - Other payments
Report, in Canadian currency, estimated amounts for the following types of income:
- income earned from a previous contract to provide acting services in Canada during the current tax year;
- income to be earned from a future contract to provide acting services in Canada in the current tax year;
- income from residuals and contingent compensation received or to be received during the current tax year for providing acting services in Canada in any year; and
- income earned from non-acting activities in Canada during the current tax year.
If the corporation elects to file a return and pay tax on the net Canadian-source acting income at corporate rates, you must report all acting income received during the year, including the types of income listed in this section. We will consider this information when deciding whether the corporation would benefit from filing a return. When a corporation elects to file a return and has paid a related individual actor, the actor must also file an elective return.
Section 7 - Income statement information
- All revenue and expense amounts must be reported in Canadian currency.
The latest conversion rates are available at the Bank of Canada's Web site at: www.bankofcanada.ca.
Make sure you have attached a copy of the contract for acting services.
- Gross Canadian source acting revenue
Gross Canadian source acting revenue is the total compensation for the acting services provided in Canada. If some of the acting services are provided outside Canada, you have to allocate part of the compensation to Canada, based on the number of days the actor is present in Canada. Generally, the amount allocated to Canada would be the gross compensation under the contract, multiplied by the percentage you calculated in section 4. In this way, you exclude revenue for services provided outside Canada from the gross Canadian source revenue. To find out more about this, see Allocating income to Canada for acting services.
Gross Canadian source acting revenue includes:
- fees for services provided in Canada;
- per diem payments for days in Canada;
- amounts paid to third parties on the actor's behalf;
- amounts to be reimbursed to the actor;
- similar benefits.
- Expenses related to acting services provided in Canada
As a rule, you can deduct any reasonable expense incurred to earn professional income. However, since you cannot deduct personal expenses, enter only the business portion of expenses on the application form. Allocate expenses the same way you allocate income. Expenses that are specifically related to the services provided in Canada may be wholly claimed against the Canadian income. General expenses may be allocated on a reasonable basis between Canadian and non-Canadian income.
The most common expenses are listed below:
- agent's fee for services;
- business manager's fee for services;
- personal manager's fee for services;
- professional fees;
- other expenses not listed above (specify the type of expense).
Attach supporting documents.
- Net income from acting services in Canada
Net income is the difference between gross Canadian source acting revenue and allowable expenses. We will use the amount for the current contract, plus any other income noted in section 6, to decide whether the corporation would benefit from electing to file a return under section 216.1 of the Income Tax Act. When the amount of tax payable if the corporation reported the income on a tax return is less than 23% of the gross acting income, we will approve a reduction in the withholding tax. We will then advise the payer to withhold tax at a reduced rate from any payments made to the corporation.
Section 8 - Certification by the corporation
Complete and sign the certification area. In signing, you authorize the CRA to notify the payer in writing to reduce the 23% withholding tax on the acting income.
If you wish to authorize your representative to discuss confidential tax matters with the CRA, you must complete and attach RC59, Business consent for access by telephone and mail.
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