Canadian withholding taxes and waivers have long been part of the landscape of Canadian taxes, and the vast majority of non-resident artists and Canadian buyers were well aware of these regulations. In recent years however, the Canada Revenue Agency (CRA) has been placing an increasing emphasis on compliance with annual filing requirements. Remaining tax compliant is now a necessary condition for any artist who wants to benefit from Tax Waivers, not to mention avoid penalties or assessments being levied against them by the CRA.
Non-resident artists performing in Canada through a corporate entity in a given year are required to file a Canadian T2 Tax Return – this is the primary element of tax compliance. A new element has entered the compliance requirements in recent years: that of filing T4 Information Returns.
T4A-NR forms are essentially tax receipts which a payer must issue to all staff having been paid for services in Canada in any given year – for a touring artist, this generally means supporting musicians, techs, and tour managers traveling with the artist on their Canadian dates. The form indicates the fees paid to each individual, and any tax amounts withheld from their fees, for work in Canada. These forms must be issued regardless of whether or not taxes were withheld from fees paid to staff.
The artist must send a copy of all T4A-NR forms along with a T4A-NR Summary to the Canada Revenue Agency no later than February 28th following any given year in which the artist performed in Canada.
This is actually not a new requirement – in other words, the law did not recently change in this regard. Never heard of it? We are not surprised! The CRA turned a blind eye to this requirement for many years in connection with touring artists.
It was not until late 2014 that we started seeing artists being penalized for not filing these T4 Returns for work in Canada in previous years. Unfortunately, throughout 2015 we continued to learn of penalties being assessed against new clients for the non-filing of these T4 Returns, and so we now consider these filings to be an unavoidable requirement for maintaining tax compliance in Canada.
We are very aware of the increasing burdens of Canadian tax requirements on touring artists and we remain dedicated to ensuring our clients’ Canadian tax matters are managed as efficiently and cost-effectively as possible.
Not sure if you are required to file T4 Returns this year? Wondering what the risks are of not filing in past years? Do not hesitate to contact us, we will be pleased to assist you with any non-resident tax issues.