Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Request from non-resident taxpayer for cancellation of our demand for payment of taxes and penalties.
Position: Amount related to income earned in Canada. Taxpayer's advisor should be aware that amount probably is taxable in Canada with a FTC to be issued by New Zealand in respect of Canadian tax paid (mechanism will depend on how NZ tax system works).
Reasons: This file is being transferred to ITSO with a brief explanatory note.
September 11, 2002
International Tax Services Office Eliza Erskine
Non-Resident Withholding 952-1361
Accounts Division
2204 Walkley Road
2002-016138
Assessment for XXXXXXXXXX
We are writing regarding a facsimile we received from the representative of a New Zealand resident taxpayer (referred to above) requesting that we cancel our assessment of tax and penalties against the taxpayer. Based on the limited facts set out in the facsimile, we gather that tax and penalties have been assessed with respect to back-pay and interest paid to the taxpayer relating to the taxpayer's employment in Canada in and prior to XXXXXXXXXX. As the assessment was issued from your office, we are enclosing the file for your review and action.
The taxpayer (or the taxpayer's representative) appears to be unaware that, generally, income relating to employment in Canada is subject to tax in Canada. As you know, if the income is in fact taxable in Canada in accordance with the Canada-New Zealand Income Tax Convention, and if the taxpayer is resident in New Zealand for purposes of the Convention when the income is received, then New Zealand will also have the right to tax the income, subject to the requirement to provide relief from double taxation to the taxpayer (usually in the form of a credit for any Canadian taxes paid). We request that you explain this to the taxpayer (or the taxpayer's representative) when you communicate with her. We have not contacted the taxpayer ourselves.
We hope that our comments will be useful to you.
Jim Wilson
for Director
International and Trusts Division
Income Tax Rulings Directorate
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