August, 2015
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.
If you would like to see the Draft Legislation, it can be found here on page 17 under the heading: “Withholding for Non-Resident Employers”: