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.
Dear Sirs:
This is in reply to your letter of March 28 concerning franchise fees paid to a U.S. resident. We apologize for the delay in replying.
Since you did not submit a copy of the relevant license agreement, we can reply in general terms only. Generally speaking, a lump sum franchise licence fee represents in our view a payment for the use of omen or more of the properties referred to in subparagraph 212(1)(d)(i) of the Income Tax Act, and is thus subject to Part XIII tax. Such a payment is also, generally speaking, considered to be for the use of one or more that the properties referred to in part 4 of Article XII of the Canada-U.S. Income Tax Convention (1980). Hence, the Canadian payor is obligated, pursuant to subsection 215(1) of the Income Tax Act, to withhold the applicable 10% rate of tax and remit same to the Receiver General by the 15th day of the month following the month in which the tax was withheld.
If the non-resident feels that the Part XIII tax was incorrectly withheld, he may file a form NR7-R (request for a refund) within two years from the end of the calendar year in which the relevant payment was made to him. Upon receipt of this request for a refund of Part XIII tax withheld, officials of the appropriate District Taxation Office will review the matter to determine the legitimacy of the non-resident's request.
Should you require additional information with regard to any of the above comments, or wish a further review of the matter at this time, please submit all relevant information and documentation to the Toronto District Taxation Office at the following address:
Toronto District Taxation Office Revenue Canada, Taxation Chief of Verifications and Collections 36 Adelaide Street E. Toronto, Ontario M3C 1J7
We trust the above comments will be of assistance.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1985
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1985
Email this Content