Helping international entertainers succesfully navigate Canadian tax issues.
The Canadian Government recently introduced Draft Legislation with the intent of reducing the circumstances in which a Non-Resident Employer- Artist is required to file for a R102 Waiver to avoid the necessity of withholding 15% from their employee wages.
Currently under Canadian law, all Non-Residents who have staff working for them in Canada are required to withhold 15% on their wages in the absence of a Waiver issued by the CRA. In the context of touring artists, this kind of Waiver relieves the artist’s obligation to withhold taxes from the wages it pays to its musicians, crew, and other staff traveling on their Canadian tour. But of course securing this R102 Waiver creates an additional level of work for the touring artist who are faced with incurring risk of being taxed and penalized by the CRA if they do not secure this Waiver and then do not withhold 15% from their staff wages (and remit these withholdings to the CRA).
Regrettably this proposed legislation does not eliminate the need for Artists to file for R102 Waivers in all circumstances. Under its current language, it would only apply to US staff who are earning less than $ 15,000 Can in Canada during any calendar year and all non-artistic staff (i.e. tour manager, technicians, etc..) from Tax Treaty countries with Canada. Therefore this legislation would not apply for instance for musicians from England, France and Germany. But given that a majority of Non-Resident Artists performing in Canada are from the US, and given that most US staff earn less than $ 15,000 Can in any calendar year, this legislation becoming law would be a significant help to US artists touring Canada.
It should be emphasized though that this Draft Legislation has not yet been formally debated by the Canadian Parliament and given that Canada is currently in the midst of a Federal Election campaign (which may result in a change of government), there is no guarantee that this legislation will become law. There may be greater clarity around this towards the end of 2015.
for Non-Resident Artists performing in Canada.
Non-Resident Artists losing interest in performing in Canada.
The Canadian Arts Presenting Association (CAPACOA) recently sent a detailed letter to the Canadian Minister of Finance and the Canadian Minister of Revenue with suggestions on how to streamline the Regulation 105 Waiver procedure. The letter outlines how complicated it has become for a Non-Resident Artist to successfully file for an R105 Waiver which is resulting in Non-Resident Artists losing interest in touring Canada or requesting higher performance fees from Canadian presenters (to offset the loss of the 15% withholding tax).
– Increase and Index the Waiver Threshold of Artist Fees not Subject to Tax.
CAPACOA’s letter is written on behalf of seventeen performance arts organizations, representing more than 1,000 stakeholders in the performing arts sector.
As all our clients know, the R-105 tax waiver application process includes the application for a Secondary Withholding waiver – that is, a waiver from the artist’s obligation to withhold taxes from the fees it pays to its musicians, crew, and other staff traveling on their Canadian tour. In order for this Secondary Withholding waiver to be processed, each individual traveling to Canada must have an Individual Tax Number (ITN) from the Canada Revenue Agency.
We used to submit these items with the other R-105 application, that is no later than 30 days before the artist’s first Canadian performance, but the rules regarding ITN applications have changed. The CRA now processes these requests through a separate department and requires ITN application documents to be submitted 6 weeks before the first date – that means 2 weeks earlier than the rest of your tax waiver application.
So, whether your whole group is coming to Canada for the first time, or you just have a new guitarist who needs an ITN, be sure to contact us as soon as possible so we can help you with your applications and avoid unnecessary delays!
Did we lose you at “Secondary Withholding”? Find out about it in our FAQ.
RAM Management has been assisting American and other foreign entertainers in obtaining Canadian tax waivers for over a decade. We have extensive experience and relationships with Tax Services Offices (TSOs) throughout Canada that will ensure the process is as efficient as possible.
All of the content found on this website is provided for informational purposes only and should not be considered to be a definitive legal opinion or legal advice. Each entertainer’s particular circumstance is unique so we strongly advise that you contact our office (or another law or accounting office) for more specific advice regarding your particular circumstance.