ITA regulation 102 requires employers to withhold tax on remuneration paid to non-resident employees who are employed in Canada. This requirement can be avoided by seeking a treaty-based waiver (regulation 102 waiver) or certification as a qualifying non-resident employer. However, often there is not sufficient time to do this before the employment is to begin, or there is a lack of awareness of the rules. Where the employer must withhold tax, should the amount be based on the non-resident employee’s Canadian income or worldwide income? Clarification from the CRA would be appreciated. Specifically, regulation 102 imposes withholding on “any payment of remuneration . . . made to an employee in his taxation year. . . .” The definition of “remuneration” under regulation 100(1) does not specify that the remuneration is only in respect of Canadian employment. Accordingly, a cross-border non-resident…
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