Principal Issues: Whether withholding tax and information returns are required in respect of employment, scholarships, bursaries, fellowships and research grants paid to residents and non-residents students of Canada.
Position: Withholding tax and T4 information returns are required for payments in respect of salaries and wages paid to residents and non-residents of Canada.
Withholding tax is not required in respect of scholarships, bursaries, fellowships or research grants. A T4A information return is required to be filed by the payer in respect of such payments to residents and non-residents of Canada
Reasons: The withholding tax requirements under subsection 105(1) of the Regulations for payments made to non-residents does not apply to remuneration paid in respect of salary or wages. Withholding tax is required in respect of salaries or wages pursuant to the rules outlined in subsection 153(1) of the Act for both residents and non-residents of Canada and T4 information returns are required to be filed pursuant to Regulation 200(1).
Withholding tax is not required for amounts that are included in calculating a resident's income under either of paragraphs 56(1)(n) or (o), or, would have been required by paragraph 56(1)(n) or (o) to be included in computing the non-resident person's income for the year if the non-resident person were resident in Canada throughout the year.
