TEI responds to proposed amendments to Canadian nonresident withholding rules.

PositionTax Executives Institute

On June 12, 2015, TEI submitted comments on the Canadian Government's proposals to provide targeted relief from the withholding and remittance requirements that otherwise apply to non-resident employers of non-resident employees who perform work in Canada. TEI expressed appreciation for the Government's interest in reducing red tape and excessive administrative and tax compliance burdens for businesses, but noted several areas where the proposals fall short. TEI offered recommendations for further reducing burdens on business taxpayers while, at the same time, ensuring that the Canada Revenue Agency is able to efficiently and effectively administer Canada's withholding tax regime. TEI's comments were prepared under the aegis of its Canadian Income Tax Committee, whose chair is Grant Lee of HSBC. Patrick Evans, TEI's Chief Tax Counsel, assisted with the comments.

On April 21, 2015, as part of Budget 2015, the Government released proposals to provide relief from the withholding and remittance requirements that otherwise apply to certain non-resident employers of certain non-resident employees who perform work in Canada. On behalf of Tax Executives Institute (TEI or the Institute), I am writing to express our comments on the Government's proposals relating to Regulation 102 in the form of amended subsections 153(1) and 153(6) and new subsection 153(7) of the Income Tax Act (Canada) (the Proposals).

Background on Tax Executives Institute

TEI is the preeminent international association of business tax executives. The Institutes more than 7,000 professionals manage the tax affairs of nearly 3,000 of the leading companies in North and South America, Europe, and Asia. Canadians constitute approximately fifteen percent of TEI's membership, with our Canadian members belonging to chapters in Calgary, Montreal, Toronto, and Vancouver. TEI members must contend daily with the planning and compliance aspects of Canada's business tax laws, including its treaties. Many of our non-Canadian members (including those in Europe and Asia) work for companies with substantial activities and investments in Canada. The comments set forth in this letter reflect the views of TEI as a whole, but more particularly those of our Canadian constituency.

TEI concerns itself with important issues of tax policy and administration and is dedicated to working with government agencies to reduce the costs and burdens of tax compliance and administration to our common benefit. In furtherance of this goal, TEI supports efforts to improve the tax laws and their administration at all levels of government. We believe that the diversity, professional training, and global viewpoint of our members enable us to bring a balanced and practical perspective to the issues raised by the Proposals.

Background

TEI has repeatedly encouraged the Government to reduce the compliance burdens associated with Regulation 102. The Institute's recommendations have been communicated through the pre-budget submission and consultation process, as well as many of TEI's liaison meetings with senior officials within the Department of Finance and Canada Revenue Agency (CRA). The principal reasons driving the need for Regulation 102 reform are:

* The onerous levels of administration and reporting imposed upon businesses and their employees;

* The resultant costs of compliance;

* The difficulty and impracticality in fully complying with these requirements for many businesses given the lack of de minimis exemption...

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