25 October 1989 Internal T.I. 58767 F - 25% Non-resident Withholding Tax on Pension Payments

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.

October 25, 1989

Dear 19(1)

We are writing in reply to your letter of September 14, 1989, wherein you suggested that the 25% withholding rate, applied by Canada on pension payments, is unfair and inequitable.

Our Comments

Paragraph 212(1)(h) of the Income Tax Act states, in part, that;

     "Every non-resident person shall pay an income tax of 25% on every amount that a person resident in Canada pays or credits, or is deemed by Part I to pay or credit, to him as, on account or in lieu of payment of or in satisfaction of, ... a payment of a superannuation or pension benefit,..."

Unless the statutory withholding rate is reduced by virtue of an International Tax Convention, any person making such a payment is required, by law, to withhold at the 25% rate.  Since the Tax Convention between Canada and South Africa was terminated on September 23, 1985, there is no provision that would permit withholding at at a lower rate in any circumstance.

We hope the above comments will be of assistance.

Yours truly,

for Director Business and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch