Rates for Part XIII tax
Non-residents have to pay a 25% tax on amounts that are taxable under Part XIII. However, this rate can be reduced to a lower rate or an exemption can be given under the provisions of the Income Tax Act or a bilateral tax treaty between Canada and another country.
As the Canadian payer or withholding agent, you are responsible for withholding and remitting Part XIII tax at the correct rate.
If you pay or credit or are considered to have paid or credited a taxable amount to persons in countries that have tax treaties with Canada, you should verify the rate given in the Income Tax Act first. Then verify if a reduced rate or an exemption applies under the treaty.
The negotiation of new tax treaties and renegotiation of existing tax treaties is an ongoing process. For this reason, you should verify tax treaty rates and exemptions on a regular basis.
You can use the online Part XIII Tax Calculator to determine your Part XIII tax liability. The CRA developed this convenient and interactive tool to help you determine your tax liability in an accurate and timely manner. For more information, go to Non-Resident Tax Calculator.
The 25% Part XIII tax will apply to any taxable amounts you paid or credited to persons in non-treaty countries.
The 25% Part XIII tax also applies to payees in countries with which Canada has a tax treaty that is not yet in effect.
A Part XIII tax rate of 23% applies to the gross amounts paid, credited, or included as a benefit for acting services rendered in Canada by a non-resident actor, including payments of residuals and contingent compensation. This rate applies only to the acting services of the actor in a film or video production. For more information, go to Non-resident actors.
For more information about tax treaties, go to Information Circular IC76-12R, Applicable rate of Part XIII tax on amounts paid or credited to persons in countries with which Canada has a tax convention. The information in that circular also applies if you are considered, under Part I or Part XIII of the Income Tax Act, to have paid or credited to residents of these treaty countries amounts that are taxable under Part XIII.
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