Non-Resident Employer Certification
Is this form for you?
This form is for employers who want to be certified by the Minister of National Revenue as a qualifying non-resident employer who has qualifying non-resident
employees working in Canada.
What is Non-Resident Employer Certification?
A non-resident employer certification removes the requirement to withhold tax from the salary, wages, and other remuneration the employer pays to
non-resident employees. A qualifying non-resident employer will be able to pay qualifying non-resident employees who are exempt from paying income
tax in Canada under a tax treaty without withholding and remitting tax, eliminating the need for non-resident employees to request waivers of withholding.
Non-resident employer certification will be valid for up to two calendar years.
Definitions
A Qualifying Non-Resident Employer:
In the case of an employer that is not a partnership:
• A qualifying non-resident employer at any time means an employer that is at the time of the payment
– Certified by the Minister of National Revenue under subsection 153(7) of the Income Tax Act and is either
• resident in a country that Canada has a tax treaty* with, or
• would be considered resident in a country that Canada has a tax treaty with, if that country treated the employer as a corporation for tax purposes
(e.g., a limited liability company formed in the U.S. that has not elected to be treated as a corporation for U.S. tax purposes).
In the case of an employer that is a partnership:
• A qualifying non-resident employer at any time means an employer that is at the time of the payment a partnership where at least 90% of the partnership’s
income or loss for the fiscal period that includes the time of the payment is allocated to members that are resident in a country that Canada has a tax treaty*
with. If the income of the partnership is nil for the fiscal period, the income for the period is deemed to be $1,000,000 for the purpose of determining a
member’s share of the partnership income.
* Canada’s tax treaties can be found on the Department of Finance Canada website at fin.gc.ca/treaties-conventions/in_force–eng.asp.
A Qualifying Non-Resident Employee:
• is resident in a country with which Canada has a tax treaty at the time of the payment;
• is not liable to income tax under Part I of the Canadian Income Tax Act on the payment because of the tax treaty** under which the employee is resident; and
• either works in Canada for less than 45 days in the calendar year that includes the time of the payment, or is present in Canada for less than 90 days in
any 12-month period that includes the time of the payment.
** A qualifying non-resident employer must refer to the applicable tax treaty between Canada and the non-resident employee’s country of residence to
determine the existence of a tax exemption and the criteria that must be met for it to apply.
How do you become a Qualifying Non-Resident Employer?
To become a qualifying non-resident employer, you must complete this form and send it to the Canada Revenue Agency (CRA) for approval. Applications
should be received at least 30 days before a qualifying non-resident employee starts providing services in Canada.
Upon review of the completed form, the CRA will issue a letter approving or denying the request. Once you receive an approval letter, you are considered a
certified qualifying non-resident employer and you do not have to withhold tax on remuneration paid to qualifying non-resident employees during the period of
certification. It is important to note that until you receive an approval letter, you must continue to withhold and remit tax on payments made to your employees
unless an employee-specific waiver has been provided to you by the employee.
Non-resident employees who are not qualifying non-resident employees or whose employer does not become certified can still apply to the CRA for a waiver of
withholding using Forms R102-R, Regulation 102 Waiver Application.
Obligations of a Qualifying Non-Resident Employer
Upon certification the non-resident employer must:
• track and record the number of days each qualifying non-resident employee is either working in Canada, or is present in Canada, and the income
attributable to these days (or any other criteria relevant to applying the treaty exemption) on a proactive basis;
• determine if the employee is resident in a country with which Canada has a tax treaty;
• evaluate and document if the qualifying non-resident employee’s remuneration is expected to be exempt from tax in Canada under a tax treaty between
Canada and the employee’s country of residence;
• determine if the qualifying non-resident employee either works in Canada for less than 45 days in the calendar year that includes the time of the
payment, or is present in Canada for less than 90 days in any 12-month period that includes the time of payment;
• complete and file a T4 Summary and Information Return for those employees who have provided employment services in Canada that are not excluded
by subsection 200(1.1) of the Income Tax Regulations. For more information, see Guide RC4120, Employers’ Guide – Filing the T4 Slip and Summary;
• file Canadian income tax returns as required by the Income Tax Act for the calendar years covered by the certification period;
• upon request, make your books and records available in Canada for inspection by the CRA for the purpose of administering the employer certification
agreement and the withholding requirements in accordance with paragraph 153(1)(a) of the Income Tax Act (ITA) and Regulation 102.
RC473 E (17) (Ce formulaire est disponible en français.)
Although qualifying non-resident employers do not have to withhold income tax on remuneration paid to qualifying non-resident employees during the period of
certification, they may still have to withhold Canada Pension Plan (CPP) contributions and/or Employment Insurance (EI) premiums. However, there are
exceptions:
• CPP contributions are not required if the employer does not have an establishment in Canada or if the employee has a certificate of coverage under
a Social Security Agreement between Canada and the country of residence of the employer (a certificate is not required for an employee residing in
the United States if they will be in Canada for less than 183 days). For more information about Canada’s international social security agreements,
go to canada.ca/en/services/benefits/publicpensions/cpp/cpp-international/apply.html;
• EI premiums are not required if the employee is covered under a similar program in his or her country, while working in Canada.
Employers who do not withhold and remit these required amounts without authorization from the CRA may be held liable for the whole amount with interest
and penalties. For more information, read Guide T4001, Employers’ Guide – Payroll Deductions and Remittances. Note that if you are required to withhold
and remit CPP contributions or EI premiums then, under the CPP/EI legislation, you will have to report the deductions on a T4 information return even if
subsection 200(1.1) of the Income Tax Regulations does not require the information return for tax purposes.
Revocation of certification
The CRA can revoke the certification at any time if the obligations of the non-resident employer certification agreement are not met, or if the facts presented at
the time of the request for certification were not correct. Should certification be revoked, the CRA will issue a revocation letter to the employer. It is important to
note that the employer may become liable to withhold and remit tax and be subject to any related penalties when the employer no longer meets the conditions
to be considered a qualifying non-resident employer, or fails to make reasonable enquiry to determine if a payment is being made to a qualifying non-resident
employee.
How and where to apply
Send the completed form to the Pacific International Waivers Centre of Expertise located at the Vancouver Tax Services Office at:
Regular Mail
Canada Revenue Agency – International Waivers
PO Box 470, STN MAIN
Surrey BC V3T 5B7
Certified/Registered Mail
Pacific International Waivers Centre of Expertise – VTSO
C/O International Waiver Program – Sec 445-15
9755 King George Blvd.
Surrey BC V3T 5E1
Link to Source: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc473.html